foreing investor
Closing costs in real estate transactions refer to the set of additional expenses, beyond the property’s purchase price, that buyers and sellers must cover to complete a real estate transaction. These costs vary depending on factors such as the type of property, whether it’s a new build or resale, and local legislation. For a foreign investor buying a property on the Costa del Sol, closing costs include, but are not limited to, specific fees and taxes relevant to the transaction:
1. VAT (Value Added Tax)
For new-build properties in Spain, the applicable VAT is 10% for residences and 21% for parking spaces (limited to two per property) and storage rooms sold directly by the developer.
2. Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP):
For second-hand properties, the ITP varies by Autonomous Community, generally between 8% and 10%, it depends on the property.
3. Tax on Documented Legal Acts (AJD)
For mortgages, you must pay AJD, which is calculated on the total mortgage liability (capital, interest and costs). The rate varies according to the autonomous community, generally 1.5% in Andalucia.
4. Notary fees
The Notary fees for the deed of sale and, if applicable, for the mortgage deed, are fixed by tariff and depend on the price of the property.
5. Land Registry Taxes
The cost for registering the purchase in the Land Registry, which is also calculated according to the price of the property.
6. Administration
If you decide to hire a company to handle the administrative procedures, you will have to pay for their services. This cost may vary.
7. Property valuation
In order to obtain a mortgage, the financial entity will require an official valuation of the property, the cost of which depends on the valuation company but is usually between 250 and 600 euros.
It is important to bear in mind that this list gives a general overview and that there may be other minor or specific costs depending on the particular situation of each buyer. It is always advisable to obtain a detailed estimate of all associated costs before proceeding with the purchase.
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