I’ve seen many friends discussing buying property lately. I just finished the closing process for a second-hand apartment here in Barcelona, and let me tell you, my wallet took a huge hit! I was so focused on the property price and the mortgage that I underestimated the closing costs, and the final bill was a real shock. So today, I’m going to break down all the ‘extra’ money you need to prepare when buying a property in Spain, besides the property price itself. These are one-time costs, not to be confused with ongoing expenses like the property maintenance costs in Spain. I hope this serves as a good heads-up for future buyers.
First, you need to distinguish whether you’re buying a new build or a second-hand property. The taxes for these two are completely different and represent the largest portion of your expenses.
Main Taxes: New Builds vs. Second-Hand Properties
New Builds
If you’re buying a brand-new property directly from a developer, you’ll mainly pay two types of taxes:
- Value Added Tax (IVA): This is generally 10% of the property price. For example, for a €500,000 home, the IVA would be €50,000. In the Canary Islands, the equivalent is the IGIC tax, which has a lower rate of around 7%.
- Stamp Duty (AJD): The full name is Actos Jurídicos Documentados. This tax varies by autonomous community, typically ranging from 0.5% to 1.5% of the property price. You have to pay this on top of the IVA; there’s no getting around it.
Second-Hand Properties
When buying a second-hand property, you don’t pay IVA, but you do pay a different tax:
- Property Transfer Tax (ITP): The full name is Impuesto de Transmisiones Patrimoniales. This tax is also set by each autonomous community, with rates usually between 6% and 10%. For instance, it’s 6% in Madrid but 10% in Catalonia. I just bought in Barcelona and paid the full 10%—it really hurt!
Besides the major taxes mentioned above, which make up the bulk of the [property purchase costs in Spain], there are a bunch of other miscellaneous but unavoidable fees. I’ve organized them into a table for your reference. These fees generally apply whether you’re buying a new or second-hand property.
| Fee Item | Spanish Name | Approximate Cost | Description |
|---|
| Notary Fees | Notaría | €600 - €1,200 | Based on the property price and number of pages in the deed; fees are regulated by law. |
| Property Registry Fee | Registro de la Propiedad | €400 - €800 | To register your name as the legal owner of the property. |
| Lawyer/Gestoría Fees | Honorarios Abogado/Gestoría | 0.5% - 1.5% of the property price | To handle all paperwork, check for debts on the property, etc. |
| Bank Appraisal Fee | Tasación | €300 - €600 | If you need a bank loan for the purchase (or for future projects like renovating a property in Spain), the bank will send an appraiser to value the property. |
A safe way to budget is to set aside an additional 10%-15% of the property price to cover all these closing costs, taxes, and miscellaneous fees. For example, if you’re buying a €300,000 second-hand property, you should have an extra €30,000 to €45,000 in cash ready. I hope this post helps those who are currently house-hunting or preparing to buy. Buying a property is a major decision, so make sure your budget is solid. Don’t get caught off guard by the final bill like I did.
