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When buying an average-priced resale property in Spain, you should budget for a further 9% of the purchase price to cover legal fees, taxes and disbursements. If, however, you are buying a property at the lower end of the market, this percentage may be higher.
These taxes and expenses are:
1 - Transfer Tax of 5% (I.G.I.C.) where you are buying a new property in the Canary Islands from a developer plus a document tax of 0.75%. Until the end of 2011, the I.G.I.C. has been reduced to 2.5%. 
2 - Transfer Tax of 6.5% (Derechos Reales) where you are buying a resale property from a private owner.
3 - Plus Valia Tax, which is a form of capital gains tax but is not based on the overall increase in value of the property but solely on the increased value of the land. This is calculated at various rates on the annual increase in value since the previous sale. Strictly speaking, this a tax against the seller, but it has been normal in the past in Tenerife for this to be paid by the buyer, although more frequently now it is the seller who will pay this.
4 - Land Registry Fees which are calculated by reference to the value of the property and the number of pages that the Escritura de Compraventa amounts to. It will generally be in the region of 0.5% of the declared value.
5 - Notary Fees which again are calculated by reference to the value of the property and the number of pages that the Escritura de Compraventa amounts to. It will generally be in the region of 0.75%
6 - Your lawyer’s fees which as everywhere will vary from lawyer to lawyer. In our own case these amount to 1% of the price paid for the property with a minimum of 1,200 €.
If you are instructing Michael Rhodes Legal Services to represent you, the 9% can be broken down as follows:
| Transfer Tax (Stamp Duty) | 6.5% |
| Land Registry Fees | 0.5% |
| Notary’s Fees | 0.75%* |
| Search Fees | 200 € |
| Michael Rhodes Legal Services' Spanish Conveyancing Fee (minimum 1,200€) | 1%* |
| Power of Attorney (if required to be signed in the U.K.) | 200 € |
| Power of Attorney (if being signed in Spain) | 125 € |
| Foreign Office Legalisation Fee (if Power of Attorney required to be signed in the U.K.) | £34 |
| Obtaining N.I.E. (per person) (including tax) | 85 € |
| Petty Incidentals (faxes, bank charges, etc.) | 25 € |
| Law Agent's Fee | 150 €* |
| Courier Fees (if necessary) | 50 € |
| * Subject to Canary Islands IGIC (Sales Tax) at the prevailing rate (currently 5%) | |
Additional work, such as the the setting up of Standing Orders for Supply Accounts, or the completion of Spanish Tax Returns are charged separately. Further details are available upon request.
As the Owner of a Spanish Property you will be liable to Spanish taxation, even though you may only be planning to spend two or three weeks a year in Spain. This Fact Sheet does not deal with the tax implications for those planning to become Resident in Spain or for those who spend more than 183 days a year there. Please ask us for further advice on these matters.
As a non-Resident you are liable to Income Tax upon any income arising in Spain. This will include interest earned on any Spanish Bank Account and any Letting income from your Spanish property. Even if you do not let out your Property, you will not avoid Spanish Income Tax but instead your Property will become liable to a notional income of 1.2% of the rateable value (Valor Catastral) and you will pay 24% tax on that figure.
From the 1st January 2008 this tax has been abolished, although there is talk of this being reintroduced.
The annual rates, known as I.B.I., will, as in the U.K., vary from Municipality to Municipality (Local Authority). They are, however, much lower than Council Tax in the U.K. and will generally be in the region of £300 for the average-sized property.
You will have community fees to pay to an owners’ association, which is explained further under the heading of Community of Owners.
