Expenses when I buy a villa in Marbella, Benahavis, Estepona…

What are the expenses that I will face if I buy a villa in Marbella, Benahavis, Estepona or Sotogrande? We must consider two types of expenses: Expenses in the purchase and expenses after the purchase.

 

Expenses in the purchase of a villa in Spain

We will see in detail the following expenses: legal services, the notary’s fees, taxes paid when buying a home in Spain and the property registry expenses.

 

No real estate agency fees when I buy a villa in Marbella

The real estate agency fees are paid by the seller and are included in the price of the property.

 

Expenses in a real estate lawyer in Marbella

Once you have found your house, our collaborating real estate lawyers will advise you on all legal aspects related to the sale. Among the work done by a real estate lawyer we mention the following:

— Opening a bank account in a Spanish bank.

— Procedures for obtaining the Foreigners Identification Number (Número de Identificación de Extranjeros, NIE), necessary for any legal action in Spain, including the purchase of a home.

—Procedures for obtaining the residence permit —if necessary— or certificate of non-residence.

— Verification of the legal and economic situation of the home. It is vital to verify that everything is in order before buying a property.

— Obtain a certificate of the property in question in the Property Registry. The certificate specifies who owns the property and whether there are any charges on it, such as mortgage loans that have not yet been paid.

— Check at the town hall that the home in question has the corresponding building license and habitability certificate.

— Check that the owner(s) have paid for all housing services, such as water and electricity, municipal taxes and community expenses. For this, he/she will obtain the corresponding certificates and/or invoices.

— Preparation of the documents for the sale, including the earnest money contract, the contract of sale and the deed which will then be signed before a notary.

— Payment of the notary’s fee.

— Registration of the property in the Registry, with updated data of the new owner.

— Signing by Power of attorney: in case it is impossible for the buyer to travel to Spain for any specific procedure, he may grant powers to his legal representative to sign it on his behalf.

— Attorney’s Fees: Fees paid to the attorney are usually of 1% of the purchase price of the property.

 

Which are the notary fees when I buy a villa in Marbella

Who pays the notary fees when I buy a villa in Marbella? According to the law, the seller is in principle bound to pay the notary for the costs of granting the deed, while the buyer must pay the expenses of the first copy of this deed.

However, the law leaves the parties the option to agree and distribute these expenses as they wish. In practice, it is customary for the buyer to take responsibility for all the notary fees. The notary’s fees are applied on the base of a scale established by law.

 

Taxes I must pay when I buy a villa in Marbella, Benahavis, Estepona…

What taxes do I have to pay when I buy a villa in Marbella? In general terms, taxes directly related to the purchase of a finished home are about 10% to 12% of the price. In terms of taxation, it is necessary to distinguish between new homes —acquired directly from the developer or builder— and second-hand homes.

                      — New homes: For the new properties, the buyer pays 10% of the price as Value Added Tax (VAT) plus the so called Tax on Transmissions and Documented Legal Acts (Impuesto de Transmisiones y Actos Jurídicos Documentados), in this case under the modality called simply Tax on Documented Legal Acts (a tax imposed on the signature of all notarial documents).

If we talk about commercial premises, a parcel bought directly from a developer or a garage that is not attached to a house, VAT is 21%.

What is the amount of the Tax on Documented Legal Acts? In the Autonomous Community of Andalusia, where the Costa del Sol is located, the general rate is 1.5%, which will be applied to the first copies of notarial deeds.

There are two exceptions: In the case of the purchase of homes with a mortgage loan under 35 years old and a real value of the home less than 130,000€, the tax will be 0.3%. For the purchase of homes by persons with a degree of disability equal or superior to 33% and with a value less than 180,000 €, the amount of this tax will be 0.1%.

In summary, when buying a new house in Marbella or another place in Andalusia, the buyer pays the following taxes:

— Value Added Tax (VAT): 10%.

— Tax on Documented Legal Acts: 1.5% (except in the case of the two bonuses set out in the previous paragraph).

— TOTAL: 11,5%

                   — Second hand homes. In the case of second-hand homes, the buyer pays the Tax on Patrimonial Transmissions and Documented Legal Acts (“Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados”), in this case under the modality called Tax on Onerous Patrimonial Transmissions (“Impuesto sobre Transmisiones Patrimoniales Onerosas”).

The amount of this tax for Andalusia and Ciosta del Sol is 7% of the sales price. There are some exceptions to this rule, depending on the value of the property and the age of the buyer. Consult us by phone or email for more details.

On the other hand, the seller will pay the Tax on the Increase of Value of Urban Land (“Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana”), or “municipal surplus” —a tax paid to the city council which taxes the increase in the price of the land.

He/she will pay as well the Patrimonial Gains Tax (“Impuesto sobre Ganancias Patrimoniales”), commonly known as “state surplus”, or simply “surplus”, which taxes the difference between the original purchase value and the sale value (put links to expenses of the sale of a home).

 

Which are the Property Registry fees in Spain

Who pays registration fees when I buy a villa in Marbella, Benahavis or Estepona? The registration costs are exclusively for the buyer and are stipulated by law and according to a scale that depends on the value of the property.

It is important to remember that contracts signed between the two parties, buyer and seller, have legal effects between them, but for them to be valid before third parties, they must be registered in the Property Registry.

 

Who pays the mortgage expenses when buying a home in Spain

In the event that the buyer subscribes a mortgage loan to pay for his home, we should answer the following question: who pays for the expenses generated by the mortgage on a house in Spain?

According to the new Spanish mortgage law, which has come into effect on June 17th, 2019, all the expenses generated by the mortgage on a house (notary, registry, management and Tax on Documented Legal Acts) are paid by the bank.

 

Expenses after the purchase of a home in Spain 

We distinguish between annual expenses and monthly expenses.

 

Annual expenses for the owner of a home in Spain

— Real Estate Tax (Impuesto de Bienes Inmuebles, IBI). It is a tax on real estate property imposed by the town hall. It corresponds to a percentage of the cadastral value of the property and may vary according to the municipality where the property is located.

Since 2017 in Marbella it is 0.76%. An important detail: before formalizing the purchase of a property, the seller must provide a copy of the last IBI receipt paid.

— Non-Resident Income Tax (“Impuesto Sobre la Renta de No Residentes, IRNR”). Foreigners who own property in Spain and do not reside in the country are required to pay an annual tax, which must be paid from the year following the purchase of the property.

The Spanish State Tax Agency considers that non-resident owners obtain economic benefits from their property and therefore allocate to each property an annual income of 1.1% or 2% of the cadastral value, depending on when it has been updated.

This is the taxable base. If the cadastral value of the property has been updated in the last 10 years, the corresponding income is 1.1%. If the cadastral value was updated more than 10 years ago, the allocated income is 2% of the cadastral value.

What percentage of this taxable base must be paid to the Spanish Treasury? Owners who reside in a EU member state, Norway or Iceland pay 19% of the taxable amount. This is a reduced rate applied in 2016. Owners who are resident in countries outside the European Union and that are neither Norway nor Iceland pay 24% of that taxable base.

— Patrimony Tax in Andalusia. This tax affects all owners, residents and nonresidents, whose net patrimony exceeds 700,000€, as holders of assets equal to or less than this amount are exempt from payment.

In 2008, the government of the Autonomous Community (Junta de Andalucía) suppressed the payment of this tax, but in 2011 it was temporarily reestablished —for two years— and it has been successively extending the obligation to pay it.

The taxable base is the net value of the patrimony. In order to calculate the net value of a property, the highest of the following is taken: the cadastral value, the purchase price or the value established by the Administration for the purposes of other taxes.

In the calculation we also take into account the mortgage loans that weigh on the home or homes. Residents in Spain may benefit from additional benefits, depending on their personal circumstances. The amount of the Patrimony Tax in Andalusia varies between 0.24% and 3.03% of the tax base, according to a progressive scale.

— Garbage collection tax: It is an annual tax that municipalities charge for the mentioned service. In the case of Marbella, within the urban area, the properties located in the first category streets pay € 86,88 per year and villas € 125,11. Outside the town, the flats pay € 185.35 and the villas € 278.05.

— Ownership of a non-resident company: When a property belongs to a corporate entity located in a jurisdiction classified by Spain as a “tax haven”, an annual tax of 3% of the cadastral value must be paid.

 

Monthly expenses for the owner of a home in Spain

Communal Expenses: These are the fees paid to the Community of Owners for the services and maintenance of the common areas when the property is in an urbanization or condominium.

At the time of signing the deed of purchase and sale in notary, these fees must be currently paid and the owner must provide a certificate issued by the community of owners, stamped and signed by the administrator. The cost of this certificate will be borne by the owner (seller).

 

Taxes to pay when renting your home in Spain

Which are the income taxes I have to pay when I rent my house (seasonally or long term) and I am not a tax resident in Spain?

The answer is the Rental Income Tax and, in terms of the calculation of the amount, it strongly reminds that of the Non-Resident Income Tax (IRNR, see above). Since 2016, owners residing in a EU member country, Norway or Iceland will pay 19% of the rental income.

On the other hand, owners residing in countries outside the European Union and which are neither Norway nor Iceland will pay 24% of the income. Certain expenses, such as the payment of community bills, the Annual Property Tax (IBI) or part of the home insurance, will be deductible from the base of this tax.

Similarly, any investment directly related to the property, such as repairs, installation of air conditioning or the fees charged by the real estate agency for finding the tenant.

Important note: If I rent my property (for example, for 3 weeks in a year) and pay the Rental Income Tax, this period will not be taken into account for the IRNR declaration.

This tax is paid on an annual basis and, for your convenience, we can put you in touch with a fiscal adviser’s office that will be in charge of all procedures. The cost of these does not usually exceed 100 €.

 

Important notice about the costs of buying a home in Marbella or anywhere else in Spain: All laws and regulations are subject to change. The information contained in this section has been collected as a guideline for potential buyers of property in Spain, without implying any contractual obligation.

If you wish to know the expenses related to the sale of a home in Spain, we invite you to read our article Expenses when I sell a villa in Marbella, Benahavis, Estepona...