A simplified breakdown of the costs involved in purchasing a property in Alicante and Malaga province
Purchasing a property in Spain's sought-after regions, such as the Costa Blanca and Costa del Sol, involves several costs beyond the property's purchase price. These expenses vary depending on whether the property is a new build or a resale. Understanding these costs is crucial for effective financial planning. We have put together this article to give you a quick rundown of the costs involved for both areas.
1. Taxes Costa Blanca
New Build Properties:
- Value Added Tax (IVA): Levied at 10% of the purchase price. For instance, a new build property priced at €300,000 would incur €30,000 in IVA.
- Stamp Duty (Actos Jurídicos Documentados - AJD): Set at 1.5% of the purchase price on the Costa Blanca. In our example, this equates to €4,500.
Resale Properties:
- Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP): Applied at a flat rate of 10% for properties on the Costa Blanca. Therefore, a resale property costing €300,000 would result in a €30,000 ITP.
Costa del Sol
New Build Properties:
- Value Added Tax (IVA): Levied at 10% of the purchase price. For instance, a new build property priced at €300,000 would incur €30,000 in IVA.
- Stamp Duty (Actos Jurídicos Documentados - AJD): Set at 1.2% of the purchase price on the Costa del Sol. In our example, this equates to €3,600.
Resale Properties:
- Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP): Applied at a flat rate of 7% for properties on the Costa del Sol. Therefore, a resale property costing €300,000 would result in a €21,000 ITP.
2. Professional Fees
Notary Fees: The notary formalises the sale, and fees are generally between 0.5% and 1% of the property's price. For a €300,000 property, this ranges from €1,500 to €3,000.
Land Registry Fees: Registering the property in your name typically costs between 0.5% and 1% of the purchase price, amounting to €1,500 to €3,000 for a €300,000 property.
Legal Fees: Engaging a solicitor is advisable to ensure due diligence. Legal fees are usually around 1% of the purchase price, so approximately €3,000 for a €300,000 property.
3. Additional Costs
Gestoría Fees: For administrative tasks such as transferring utility contracts and registering the property, gestoría services may charge between €250 and €500.
Banking Costs: If you're transferring funds from abroad, currency exchange fees may apply. Additionally, obtaining a banker's draft for the purchase can incur fees, sometimes around 0.5% of the draft's value. These costs can be mitigated by using a currency exchange specialist
Mortgage-Related Costs: If financing the purchase, expect costs for property valuation (approximately €500) and potential mortgage arrangement fees, often around 1% of the mortgage amount.
Summary
For new build properties, total additional costs are approximately 14.2%-14.5% of the purchase price, broken down as follows:
- IVA: 10%
- AJD: 1.2% Costa del Sol and 1.5% Costa Blanca
- Professional and administrative fees: around 3%
For resale properties, additional costs are approximately 10%-13% of the purchase price:
- ITP: 7% in the Costa del Sol and 10% on the Costa Blanca
- Professional and administrative fees: around 3%
These estimates provide a general guideline; actual costs can vary based on specific circumstances and regional regulations. It's advisable to consult with local professionals to obtain precise figures tailored to your situation.
