When budgeting for your property, please bear in mind that you will incur a number of costs over and above the purchase price of the property that you have chosen.  As a rough rule of thumb allow approximately 10% if paying all cash and as much as 14% if you are intending to take out a mortgage.

To break these down for you:

Legal fees

Most good lawyers will charge between 1 and 1.5% of the value of the property, normally with a minimum charge of 2000 Euros.

Stamp Duty on resale properties

Known as IPT (Impuesto sobre Transmisiones Patrimoniales) and only applicable to resale properties is 7% of the declared value of the property in the case of non-commercial properties and 16% for commercial properties.  Please note that some apartments are classified as ‘Apartamentos Turísticos’ and are therefore classified as commercial.  The same goes for build plots with no existing structure on them.

Stamp Duty on new properties

Known as IAJD (Impuesto sobre Actos Jurídicos Documentados) and only applicable to new properties bought direct from the developer is 0.5% of the declared value of the property.

Value Added Tax

Known as IVA (Impuesto sobre el Valor Añadido) and only applicable to new properties bought direct from the developer (not to be confused with properties that have been bought off-plan by an investor and then sold on or ‘flipped’ which are treated as re-sales) is 7% of the declared value of the property in the case of non-commercial properties and 16% for commercial properties.

Notary fees

These are incurred on completion of the property for drawing up the Title Deed and witnessing signature.  They are fixed by law and are based on a complicated sliding scale depending on the amount of land and size of property. Fees usually amount to between 200 Euros and 1000 Euros.

Registration and handling fees

These are incurred for inscribing the title deed in the land registry and are typically 60% of the Notary fees.

Mortgage costs

If you are intending to purchase using a mortgage then you will also have to pay stamp duty of 1% on the lifetime value of the loan that you have taken out.  Please note that the lifetime value is the sum being borrowed plus the total interest accumulated over the lifetime of the mortgage.  There is normally also a valuation fee (which will vary from bank to bank but is normally in the region of Euros 300-400) and in most cases a setup fee of 1% of the value of the loan.  You may also get hit for the handling fees and registration of the mortgage which will be similar to those for the Title Deed.

And finally...

Plusvalía

You may also get asked to pay the Impuesto sobre el Incremento del Valor de los Terrenos (IVT) - commonly known as plusvalía after its original name the ‘arbitrio municipal de plusvalía’ - a municipal value-added tax.  This should be paid by the vendor but it is reasonably common practice for the purchaser to pay this since, if the vendor doesn’t bother, the resulting fine will be applied against the property and hence hit the purchaser if the vendor can no longer be found.

The plusvalía is based on the valor catastral of the land (i.e. not on the value of the building), and is levied on the increase in this value since the last sale.

The tax is levied at a rate between 10% and 40% depending on the area and the length of time since the last sale. So an apartment in a modern urbanization with little ground last sold a couple of years ago will pay far less plusvalía than a finca rural with large grounds which was last sold 20 years ago and where the land has just been re-zoned for urban development.

Your lawyer will be able to find out exactly how much the plusvalía will be from the local municipal tax office, which keeps records of land values.