Notary fees for Real Estate purchase contracts in Spain
When engaging in a property purchase in Spain, one of the essential costs to consider is the notary fee. The notary plays a vital role in ensuring the legality and authenticity of the transaction, making their services indispensable. Understanding these fees and who bears them is crucial for anyone involved in the real estate market in Spain.
The Role of the Notary in Real Estate Transactions
In Spain, notaries are responsible for verifying documents, advising parties, drafting and signing deeds, and ensuring tax obligations are met in real estate transactions. Their involvement guarantees the legal security and correct completion of the sale and purchase, thus protecting the interests of both buyer and seller.
Determining the Notary’s Fee
Notary fees in Spain for property purchases do not have a fixed price. They are determined based on several factors and follow a tiered structure, meaning the percentage applied decreases as the value of the transaction increases. Factors influencing the cost include the property’s value, the complexity of the process, and the number of deed copies required. Generally, notary fees are around 0.5-1% of the purchase price. For instance, for a property valued at €100,000, the fee might be around €675, while for a property worth €1 million, it could be around €1,000.
Understanding the role and fees of notaries in Spain is critical for a smooth real estate transaction. These fees, which are based on the property’s selling price and transaction complexity, are typically paid by the buyer. With the notary’s essential role in ensuring the legality and security of the transaction, their fees are a necessary and worthwhile cost in the property purchasing process.
Who Pays the Notary Fees?
In real estate sales between private individuals in Spain, costs are usually distributed between the buyer and seller. Traditionally, the seller pays the municipal capital gains tax and mortgage cancellation costs, if applicable. The buyer typically covers the notary fees related to the deed of sale, registration costs in the Land Registry, applicable taxes (such as Transfer Tax or VAT), and any appraisal or mortgage-related expenses if a new mortgage is constituted.
For mortgage signings, since the introduction of the Law regulating real estate credit contracts in June 2019, notary fees associated with mortgage formalization are borne by the bank, not the customer. This legislation aims to give more protection to the consumer and clarifies the distribution of mortgage expenses.
Additional Aspects Affecting Notary Fees
Notary fees, which can range from €600 to €1,500, depend on various factors such as the property’s value, number of deed copies required, the presence of guarantors, and the complexity of the contract.
After finalizing the sale and purchase agreement, the next step is registering the document in the Property Register. This fee, also based on the property’s value, typically ranges from €600 to €1,500.
Agency or Attorney Fees
If the transaction involves an agency or a lawyer, additional fees may apply. These are usually 1% of the transaction cost, excluding VAT. However, some lawyers may charge an hourly rate or a flat rate for standard real estate transactions.
Taxes for New Properties
For new properties, the buyer is required to pay VAT (IVA), generally 10% of the asking price. This tax varies by region; for example, in the Canary Islands, VAT is replaced by IGIC at 7%. Some regions offer reduced tax rates for large families.
Taxes for Resale Properties
In the case of resale properties, buyers must pay the Property Transfer Tax (ITP), which ranges from 6% to 10%, depending on the region. Again, reduced rates may apply for large families. In Andalusia, for example, the rate was reduced to a single 7% on secondary housing until December 31, 2021.
While notary fees are a significant part of the costs involved in real estate transactions in Spain, they are just one component of the overall expenses. Buyers and sellers must also account for registration fees, agency or attorney fees, and various taxes, which can add an average of 10-12% to the total cost of the property. Understanding these costs is essential for effectively planning and budgeting for a real estate transaction in Spain.