Buying property in Spain is an exciting investment, but many buyers overlook the hidden costs involved in the purchasing process. Beyond the listing price, various taxes, legal fees, and maintenance expenses can significantly impact your budget. Here’s a breakdown of the additional costs you should consider before making a purchase.

1. Property Taxes

• Property Transfer Tax (ITP): If you are buying a resale property, you will pay between 6-10% of the purchase price, depending on the region.
• VAT (IVA) and Stamp Duty: For new-build properties, VAT is 10%, and stamp duty (AJD) ranges from 0.5-1.5%.
• Annual Property Tax (IBI): This local tax varies by municipality but typically ranges from 0.4-1.1% of the property’s cadastral value.
• Wealth Tax: Non-residents owning property in Spain may be subject to wealth tax if their total assets exceed a certain threshold.

2. Legal Fees and Notary Costs

• Lawyer Fees: Hiring a lawyer is essential for due diligence. Expect to pay around 1-2% of the purchase price.
• Notary Fees: Signing the title deed (Escritura) before a notary is mandatory. Fees generally range between €600-€1,500.
• Land Registry Fees: Registering the property in your name will cost 0.1-0.5% of the purchase price.

3. Mortgage-Related Costs

• Bank Fees: Spanish banks charge between 0.5-2% for mortgage arrangement fees.
• Valuation Fees: Before approving a mortgage, banks require a valuation report, which costs between €300-€800.
• Mortgage Stamp Duty (AJD): If you take out a mortgage, an additional 0.5-1.5% tax applies, depending on the region.

4. Ongoing Maintenance and Utility Costs

• Community Fees: If the property is in a residential complex, monthly fees for shared facilities (pool, gardens, security) range from €50-€500.
• Utilities (Electricity, Water, Gas, Internet): Monthly costs depend on usage but typically range from €100-€300.
• Home Insurance: While not mandatory, home insurance is recommended and costs between €200-€1,000 per year.

5. Additional Expenses

• Estate Agent Fees: Usually paid by the seller, but in some cases, buyers may be responsible for a percentage.
• Currency Exchange Fees: If buying from abroad, fluctuations in exchange rates can impact the final cost.
• Property Management Fees: If renting out your property, management companies charge 5-15% of rental income.

Final Thoughts

While buying property in Spain is a rewarding investment, hidden costs can add up quickly. Understanding these expenses will help you budget accurately and avoid unexpected financial surprises. Whether you are purchasing a home for personal use or as an investment, working with experienced real estate professionals and legal advisors can help ensure a smooth transaction.