The Cost of Buying and Owning Property in Andalucía
In this article, we will outline all the costs and expenses of buying as well as owning a property in Spain. It goes without saying that any one thinking about buying a property in Spain should be aware of these costs and expenses in order to make well informed decisions.
The costs associated with BUYING a property in Andalucia
The selling price
Obviously, the most important cost will be the selling price of the property in question.
Unless otherwise explicitly specified, property prices as advertised on portals and estate agent´s websites are always net of taxes and other expenses. But given that it is always the seller who pays estate agent fees, prices do include these estate agent´s fees.
Costs, taxes and expenses when buying
Generally speaking and as a rough guide, when buying a property in Andalucía, you have to add between 8% and 11% of the purchase price for re-sale properties and between 10% and 15% of the purchase price for new properties.
In what follows, we will delve a bit deeper in the various cost components that make up this percentage. In addition, we will address the costs one faces once one becomes the owner of the property.
We have to make a distinction between two specific scenarios:
- Costs and taxes associated with buying a new home from a developer (or bank) = FIRST TRANSMISSION
- Costs and taxes associated with buying a home which was sold before (= resale home) = SECOND AND SUBSEQUENT TRANSMISSIONS
2.1. Costs associated with buying a new home from a developer (or bank) (=first transmission)
2.2. Costs associated with buying a resale home in Spain (second transmission)
These are the costs that you will incur when buying a Spanish property that has been sold before and are the Transfer tax and the Stamp Duty.
2.3. Costs associated with both new build and resale property purchases in Spain
2.3.1. Estate Agency Fees
As mentioned before, estate agency fees or commissions are paid by the seller unless otherwise agreed, and will be incorporated into the sale price. If the buyer uses a search agency then search fees are paid by the buyer.
2.3.2. Lawyer Fees
2.3.3. Notary and Land Registry Fees
Costs associated with OWNING a property in Spain
General maintenance costs, Home Insurance
Obviously there will be maintenance costs (cleaning, repairing, utility bills, pool and garden maintenance etc) associated with owning a property in Spain. These will be very individual and linked to the size and type of the property you own.
We like to draw special attention to the community fees as they can be considerable yet are very often overlooked. Owners of property that is part of any (gated) complex with security services and landscaped gardens and in which common zones are shared with other owners ( known as the Comunidad de Propietarios) will have a shared liability to paying community fees for the upkeep of the common areas, and any other services mentioned above.
Apart from these community fees and general maintenance costs, there are a several taxes and fees that you face as a property owner in Spain.
IBI = Municipal Property Tax (Impuesto Sobre Bienes Inmuebles)
This tax is collected by the local government and is very similar to the council tax in the UK. Irrespective of whether you are a resident or not, as an owner of a property in Spain you will be subjected to the IBI tax. This tax is calculated on the basis of the cadastral value (an administrative value that is usually lower than the market value, sometimes considerably so) and will be set by your local town hall. The IBI tax rate goes from 0.405% – 1.16% of the catastral value depending on the Spanish region.
Personal Income Tax for Non Residents (Impuesto sobre la Renta de No Residentes – IRNR)
Non-residents who own property in Andalucía have to pay an annual income tax that varies according to whether the property is rented out or not.
Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.
Annual Wealth Tax (Impuesto Sobre Patrimonio)
This tax affects residents on their worldwide assets and non-residents with assets in Spain over € 700,000. There is a further exception of € 300,000 for the main residential home.
This wealth tax is an annual tax, payable on the total value of your taxable assets on the 31st of December. If you are a resident in Spain, you are liable to be taxed on your assets worldwide. If you are a non-resident, then only on your Spanish assets. The progressive tax rates range from 0.2% up to 2.5%.
This tax has been changed several times in recent years, so check with your accountant for the latest situation.
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