Expenses associated with buying a property (I)

Expenses associated with buying a property (I)

When buying a house you have to know that there are certain expenses entailed besides the purchase price. Here is a summary of the expenditures.

Expenditures prior the purchase:

– Appraisal costs
Appraisal is necessary when applying for a mortgage.

– Notary costs for the preliminary contract
Before signing the final deed of sale, you should sign a private contract where the characteristics of the operation are well specified.

Expenses of the transaction:

– The notary deed of sale
Certifies the change of ownership and, although not compulsory, is highly advisable. If a mortgage is involved in the purchase and there is no subrogation two notarial deeds must be signed: one for the purchase and another for the mortgage. The costs are regulated by law.

– VAT: Only applicable when the property is of new construction and you buy directly from the property developer.

– Property Transfer Tax: Only applicable when the property is second-hand, it represents between 5 and 8% of the deed price, depending on the autonomous region.

– Stamp Duty Tax: It is paid for signing at the Notary and registering every deed at the Register. It can range from 0,1 to 1,5%.

– Business Agency expenses: Only applicable when a mortgage is entailed in the purchase.

– Taxes on the Increased Value of the land: It is calculated according to the cadastral value of the land, the number of years one has owned the property and the rate of increase and tax rate established by the tax regulation in force.These taxes are borne by the seller.

– Registration in the Land Registry. The expenses vary according to the value of the property. The rates are approved by the Government and rarely exceed 1%.

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