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There are several expenses and taxes that must be paid to formalize the transaction and become the owner of the property.
Two weeks ago we discussed the taxes that come into play when we buy or sell a house. Today we go a little farther and look at the expenses in general.
Between the appraisal of the house, the notary, the registry and the corresponding taxes (VAT, ITP…), it is recommended to have savings of between 10% and 12%, depending on the Autonomous Community, of the price of the house.
All of them are compulsory expenses that revolve around the purchase and sale of a property, although the ‘bill’ to be paid will depend on whether it is a new or used house and the amount of the same.
We summarize what each one consists of and what their approximate price is in 2021:
Purchase and sale expenses
The notary’s office
One expense to take into account when buying a house, whether new or used, is the notary’s office.
The fees of the notaries, called tariffs, are regulated by the State and all charge the same for identical services.
In the case of the granting of the public deed of sale, the prices are between 600 and 875 euros, depending on the price of the property. For example, for an apartment of 100,000 euros you would pay approximately 850 euros, while for an apartment of 250,000 euros you would have to pay approximately 1,000 euros.
The Land Registry
It also costs money to register the deeds signed by the notary.
Again, the fees are fixed by regulation and depend directly on the price of the property, although they are usually between 400 and 650 euros.
Taxes related to the sale and purchase
The buyer of a home must also have an extra cushion to pay taxes, although the amount will depend on the price of the house and whether it is new or second-hand.
As for the expenses and tax in the purchase of a new home, the most important tax is the VAT, which in 2021 amounts to 10%
(6,5% in the Canary Islands.
A second tax must be added to the VAT: the stamp duty (IAJD). This tax is still paid by the buyer and will depend on each Autonomous Community. In Catalonia, this is 1,5%.
On the other hand, for used homes, the most important tax is the Transfer Tax (ITP).
In this case, the amount depends on the percentage applied to the deeded price and on the autonomous community in which the house is located, although as a general rule a rate of between 6% and 10% is applied.
Management fees, an optional expense
The only optional expense of the purchase and sale of a property is that of the gestoría, the entity that the client can hire to process the liquidation of the taxes and to carry out other paperwork.
They are free professionals, so in this case, there are no specific rates, and they are usually hired only when a mortgage is opened to acquire the property. Their approximate cost is 300 euros.
If the buyer is acquiring the new or used home through a mortgage loan, some additional costs must be added to those associated with the sale and purchase.
Appraisal of the house
If the buyer is going to apply for a mortgage, he will have to pay an appraiser to value the property and the bank will know what percentage of financing can be granted.
In general, the entities are lending an amount equivalent to 80% of the purchase price or the appraisal value, although some are financing 90-100% of the purchase price, usually taking the lower of the two.
In 2021, the appraisal costs between 250 and 600 euros, depending on the entity performing the appraisal, the type of property and its valuation. The appraisal is valid for 6 months from the date of issue.
Since the entry into force of the new Mortgage Law in June 2019, the rest of the expenses are assumed by the bank: such as a notary, registry, and AJD.
This commission can reach up to 2% of the capital loaned, according to what has been agreed with the financial entity. And this amount is deducted directly from the money given to the mortgagor. However, there are many banks that do not apply this penalty.
IAJD (Stamp Duty Tax)
This tax is payable whenever a notarial document is subscribed which then must be registered in the registry and with the economic amount. Since November 2018, a decree-law came into force which obliges banks to be the ones to pay this tax from then on.
Notary fees are those incurred for the granting of the public deed of the mortgage loan. This expense is assumed by the entity since June 2019.
The Land Registry
It also costs money to register the deeds signed by the notary. Again, the fees are fixed by regulation. This expense is assumed by the entity since June 2019.
The bank that grants us the mortgage is the one who selects an agency to perform the administrative work and carry out all the procedures. This expense is assumed by the entity since June 2019. And it is that the agency must return the surplus money to the mortgagor and deliver the invoices and the deeds after paying the notary and registry expenses that are not assumed by the financial entity. We remind again that the AJD is paid by the bank.