Mijas Rentals and Sales S.L. answers the most commonly asked questions. This guide offers you some basic knowledge you need in order to have a successful purchase. As always, we are here to assist you in any property needs you may have. Please e mail or ring us directly if you need further help.
Q: What costs are involved when buying a property in the Costa del Sol:
A.When about to make a property purchase, we always recommend you retain a lawyer. We can recommend several qualified solicitors that speak your language.
As for costs involved and the buying process, it is relatively straightforward. You select a property, and agree to specific terms with the seller. You may choose a private sale, coming to terms agreed upon by both parties involved. The customary percentage in Marbella is 10% of the purchase price, and must be paid in full during the purchase process. Once the purchase is complete, a deed of conveyance or in Spanish "EscrituraPública" must be signed by both parties in front of the Notary - Office of a Spanish Public Notary.
Q: What about taxes?
A: As you can well imagine, taxes will be involved. For example, the Transfer Tax (I.T.P.), which is on a sliding scale depending on costs. This can be 8%, 9% and 10%, paid by you the buyer, for the purchase of any type of property. This includes villas, flats, plots, commercial plots, garages, etc.
On new residential buildings purchased directly from a developer there is VAT (IVA), charged at 10% of the value; this includes STAMP DUTY at 1.5% - these are paid by you, the buyer. When it comes to commercial properties and garages purchased directly from a developer, the VAT (IVA) is 21% plus STAMP DUTY at 1.5%.
When it comes to re-sales, the property transfer tax is on a sliding scale and will depend on cost of the re-sale. This includes the following:
- 8% up to 400,000 € on all re-sales properties
- 9% 400,001 € - 700,000 € on all re-sales properties
- 10% From 700,001 € on all re-sales properties
Garages not annexed to properties (2 maximum)
- 8% Up to 30,000 €
- 9% 30,001 € - 50,000 €
- 10% From 50,001 €
Exceptions to the Rules
The Spanish Government has made several, often beneficial changes to the purchase of property in Spain. There are certain exceptions to tax rates; however this depends on a few very important factors.
If you purchase a property, where the value does not exceed 130,000 euros, the property is to be used as a permanent home, and the buyer is under 35 years of age, the transfer rate is 3.5%. This rate applies as well to homes that do not exceed 180,000 euros and the buyer is purchasing for permanent home, and is certified as having a disability (33%). Please note that the value that the Tax office will take into consideration would be the Tax value, given by them, and not the market value., so it could be the case that a valuation needs to be done to settle the real value.
The rate is at 2% if the property is purchased by an individual or company within the real estate business. If the purchase is made in order to re-sale, it must be specified on the purchase title deed. New owners have 5 years to re-sell the property, and if not sold within this time period will have to pay the difference.
Real estate transactions done between companies or the self employed pay 0% on IVA and only a 2% STAMP DUTY.
In all cases, you should know that there is a municipal tax that must be paid. This shouldn't be confused with Capital Gain Tax, which sellers are responsible for when they sell their property.
Q: Do I have to pay legal fees?
A: By law the notary requires 20% from the buyer, and 80% from the seller, unless another agreement was reached. However the standard agreement in this sense is that the buyers assumes the payment of all expenses related to the purchase except the Plusvalia tax that belongs to the vendor.
It is advised you seek a solicitor to help you with a few other legalities. The lawyer will carry out a title search, making sure there are no liens or embargoes against the property. Legal fees usually cost 1% of the purchase price of the property.
Q: How much are estate agent fees?
A: The fees for estate agents will vary depending on where you are investing in Spain or Andalucía province. Always make sure to ask the estate agent for his or her commission fees.