When purchasing property in Spain, one typically pays 10% in acquisition costs, which is higher than in many other EU countries. Costs for new Spanish properties are slightly higher than for resale properties (e.g., an additional 1% or 1.5%). Most fees are based on the declared value of the Spanish property, which is often significantly lower than the actual purchase price.
According to the Public Charges Act of 1989, it is no longer possible to declare a very low figure, and there are heavy penalties for underestimating the total value of a property. Local governments use maintenance tables to calculate the fiscal value of a property, which is the value at which the property should be declared.
However, if you have purchased a property at a bargain price, the wisest course of action is to declare the market value rather than the purchase value. In any case, tax authorities still reserve the right to reassess the taxable value of the property. It is widely understood that the figure in the deed of sale should be 1.6 times the fiscal value (still far below the actual sale price) and in no case less than 20% of the sale price.
If the tax office finds that the declared value is lower than their appraisal, they can charge an additional 6% fee, plus administrative costs. If the deed declaration is 12% or 20% below the market value, the buyer may be taxed based on the difference between the declared value and the authority's estimated value, as if it were a gift.
If your estimated property price is 50% lower than the official valuation, the authorities also have the right to purchase the property at the lower valuation within two years. Price declaration is common now, but declaring too low carries risks. Revaluation can be conducted within 4 years and 6 months after the purchase. If a property is revalued, the revaluation must specify the builder or surveyor who performed the estimate and explain the reasons for the appreciation. If you disagree with the estimate, you may file a protest, which must be done within a limited time frame (usually one month).
Fees payable for purchasing Spanish property include:
1. Transfer Tax (resale properties only)
2. Value Added Tax (new properties only)
3. Stamp Duty (new properties only)
4. Land Tax
5. Notary Fees
6. Legal Consultation Fees
7. Deed Registration Fees
8. Surveying Fees (optional)
9. Sales Agency Fees
10. Utility Fees
Most taxes are paid by the buyer, with the exception of land tax and sales agency fees. However, the contract may stipulate that the buyer bears all costs, including land tax. This is legal as long as the buyer agrees, as the law simply states that when costs are not specified in the contract, they are shared, and who pays what is usually a matter of negotiation. Before signing a Spanish property purchase contract, it is essential to ensure you know what the total costs are.