Purchasing or Owning a Property in Andalusia, Spain – What Costs to Consider?

Intro

If you’re thinking about owning a property in Spain, you’re probably wondering about the various costs that come on top of the estate price. In addition to ‘typical’ fees like notary costs or property taxes in Spain, there are a few others you might not have seen elsewhere.

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But let’s start this post with some good news: 

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If you buy a property through a real estate agency, which is the most effective and safest way to acquire real estate in Spain, then the agent’s fee will be paid by the seller. 
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Whether you’re buying your dream home or maintaining one, understanding the associated costs can help you manage your finances better. Here’s a list of costs, verified with our legal expert in late-2024.
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Buying the house – One-time costs

Transfer tax in Andalusia (resale properties only)

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If you’re buying a pre-owned house or apartment, you’ll have to settle one tax called the Property Transfer Tax (ITP). It applies only if the property is sold for the second time (or more) and must be paid by you as the buyer. 

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If you deposit before the sale is finalized, it won't be included in the tax calculation, as the tax is based on the final sale price of the property. The ITP rate in Andalusia and Costa del Sol in 2024 is 7%. To give you a comparison, the neighbouring Costa Blanca has a higher rate, i.e., 10%. 

For example, buying a property for €500,000 would mean €35,000 (7% of €500,000) in transfer tax.

The total Property Transfer Tax must be paid within 30 working days of signing the deeds. The transaction isn’t subject to VAT, and the stamp duty is already included in the tax. If you’d like to buy a garage space in a car park, you’ll also have to pay a transfer tax. Its rate will depend on the price of the parking space. 

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VAT and stamp duty (for new developments)

If you’re a first-time buyer, i.e., purchasing straight from the developer, you’ll need to pay:

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• VAT (IVA), which is 10% of the purchase price
• Stamp Duty (AJD), of 1.2% in Andalusia. The region decided to lower it from 1.5%.

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So, for a new apartment costing €200,000, you would pay €20,000 in VAT and €2,400 in stamp duty. The total costs would then be €22,400.
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Additional costs

Notary fees: If you want to own a property in Spain, you'll need to work with a notary to finalise the contract. They will prepare the official document, known as the title deeds, to transfer ownership to you. They’ll also oversee the signing of the deeds by both you and the seller. 

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How much they’ll charge will depend on the property price and the contract’s complexity. Generally, you pay the notary an advance, which they then deduct from your final cost. The advance amount (you’ve guessed it) depends on the property value, but it’s usually around €1,000 if we’re talking about a property under €500,000 in price.

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• Land Registry Fees: You must also register the property under your name at the relevant land registry office (Registro de la Propiedad) and settle a registration fee. The costs depend on the number of entries – you should expect around €700-800 per entry. The reason why we’re mentioning “per entry”, is because sometimes you’ll actually need to handle 2-3 separate ones – one for the house or apartment itself, and one or two for the garage and storage unit (if applicable). The good news though is that you’ll likely receive a discounted fee for these complementary assets.
  
  
• Legal fees: It’s usually around 1% of the property price + VAT, and covers contract reviews and negotiations. But each legal office has a minimum fee, which they set themselves. Similarly to land registry fees, you likely won’t need to pay 1% on all properties. If you’re just buying a garage or parking space, you’ll probably pay a minimum fee only.
  
  
• Banking Costs: Includes mortgage arrangement fees and appraisal fees. If your local currency is the euro, you can avoid banking fees. However, if you're transferring money in a different currency, you'll need to consider exchange rates and transfer fees. 

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Once you have the funds, you'll pay the seller on the day you buy the property. The most common payment method is a banker’s cheque, which you bring to the notary’s office and hand to the seller when signing the deeds. You can also pay through a real-time bank transfer like Target2. Keep in mind that cheques come with banking fees, typically around 0.5% of the cheque’s value, though you can try to negotiate. Fees vary by bank, with some charging as little as €50, so it's a good idea to check the costs in advance. Some banks could also charge you an account-opening fee or require you to purchase life or health insurance if you’re taking out a loan. These are all commercial fees, so there isn’t one standard.

After buying – ongoing costs

Property Taxes in Andalusia

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Local Property Tax (IBI): This tax is based on a percentage of the property's cadastral value, which is an assessed value used for tax purposes. It takes into account things like the property’s location, size, and type, and is usually lower than the market value. Each city hall sets it individually. On average, for a property valued at €300,000, it will be around €700.  

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Wealth tax: This additional tax is aimed at high-net-worth individuals with significant assets, and doesn’t function in Andalusia (another argument in favour of buying here). 

That said, the region has a different tax that applies if you’re buying a property worth €2,000,000 and over. In English, we could call this a “tax on big fortunes” – Imposto de Grandes Fortunas. It’s a progressive tax, and you’ll pay a higher fee on properties of €10,000,000 and over. Make sure to ask your lawyer about the applicable cost.

Community fees

Community fees are important for keeping shared spaces in housing developments well-maintained. These fees can vary but usually cover things like upkeep of common areas, trash disposal, security, pools, and other amenities. In a mid-range development, you might pay around €200 a month, or €2,400 a year. In more upscale developments, the fees can be quite a bit higher.

Taxes on earnings made on your property 

Capital Gains Tax (CGT)

Paid to the tax office, this cost relates not only to purchasing the property but also to all the profits you make while owning – or renting it out. It’s an annual fee, and its amount will depend on whether you live there all year long yourself or rent it out.

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Your costs if you’re an EU or EEA resident: If you rent it out, you’ll pay 19% of your income – and if you don’t, you’ll pay 19% of the 1.1% or 2% cadastral value. The reason why it’s either 1.1% or 2% is that some cities have lowered their cadastral values in the last decade, while some haven’t (at least yet).

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I know this can be a bit mind-boggling, so let’s put this into a scenario.

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Say that you rent out your place for six months, between March and September. Let’s assume you’ve made €7,000 through this time. You would have to pay a CGT tax of €1,330 for this period, and a “regular” 1.1% or 2% of your cadastral value for the remaining period of the year.

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Your costs if you’re not an EU or EEA resident: all of the above will apply, but you won’t be paying a 19% rate – instead, you’ll have to pay 26%.

Plusvalia

This tax is only paid when you sell your property. If, for example, you were able to purchase your apartment or villa for €250,000 a few years back, but are selling it for €310,000 today, you will pay the tax for the profit. Its exact value depends on multiple factors, including the cadastral value for the city. Once again, you’ll need to ask your notary or lawyer to calculate it if you ever decide to sell – estimating it at this point is too far in the future.

An example of cost estimates 

To give you a clear idea of the costs when buying and maintaining a property in Andalusia, here's a table that breaks down the expenses based on a realistic example of purchasing a €500,000 property in one of the towns, as an EU citizen, without using it for short-term rentals:

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Buying a property in Spain costs will differ

Understanding the financial implications of property ownership in Andalusia is crucial. Real estate prices in Spain differ greatly depending on the type of property and its location. This means that the costs you can expect in notary fees and taxes will also vary. Meanwhile, some other fees will be the same regardless of the type of estate you purchase. It’s important to understand what the Spanish real estate law looks like before you buy a house in Spain. 

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Read our dedicated article to find out what you need to know about Spanish law as a foreigner buying property in Spain.

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