About this 2021 guide
This is the latest information about the costs involved if you’re thinking about buying property in or around Javea, on the Costa Blanca in Spain.
What’s covered in this buyers cost guide?
- How much does it cost to buy a property in Javea?
- Other areas of Spain
- Hidden costs
- Payments before completion
- 2020 Buying costs summary
- What payments are after completion
How much does it cost to buy a property in Javea?
As a quick calculation, calculate an extra 12% on top of the purchase price.
To cover property transmission taxes (stamp duty), Notary and Registry administration.
Did you know?
Other areas of Spain incur different purchase costs and taxes.
Don’t forget about hidden costs
Normal extra costs include things like Notary, Registry, lawyers and property transmission tax / stamp duty.
But there may be more hidden costs that you haven’t accounted for in the excitement of finding a home to buy!
Maybe you need finance to buy a property? So, this would have an extra buying cost that you need to account for. Like a bank survey, opening fees or other bank products that may be linked with a mortgage.
What payments are before completion?
Mortgage survey & fees
If you need finance in the form of a mortgage, the bank will arrange for a valuer to visit the property which is part of the procedure the bank follow to gauge the value of a property.
The bank will base how much they will lend depending on their value of the property and the purchase price.
A bank valuation is obligatory when contracting financial help in the form of a mortgage.
Banks contact a central hub of qualified companies, so if you’re not happy with the result of a bank valuation, you can request for it to be done again by another company, but paying again of course.
Bank valuation fees
How much does a bank valuation cost?
A bank valuation’s price can vary and there is no legal limit, but usually it will cost between 200 and 750 euros. It tends to be more expensive, the higher the valuations.
Sometimes, banks do offers to entice business and it can be in the form of a free valuation, providing you take out the mortgage with them.
A new law was passed in 2019 on 16th June (Ley 05/2019), to clarify which mortgage expenses are paid by the customer and those paid by the bank. Expenses being notary, registry, administration of the mortgage.
Property Transfer Tax (Stamp Duty)
How much is stamp duty in Spain?
- Transfer tax or stamp duty, for secondhand property, is 10% of the sale price.
- If buying a new build (first ownership) it’s 10% IVA (VAT) plus legal documentation tax (in Spanish AJD); totalling 11,5% for new builds.
- A 21% IVA (VAT) tax rate is charged if buying a plot of land, commercial premises or garage.
Who is the Notary?
The Notary is the person authorised to perform certain legal formalities, especially to draw up or certify contracts, deeds and other documents used for varied jurisdictions.
Unlike other countries; in Spain, you have to sign the purchase/sale deed in-front of a notary for the title to be excepted and inscribed in the property register.
How much are Notary fees?
Notary fees in Javea, Spain are approximately 1% of the purchase price.
To cover all the administration costs and you may receive a small rebate once everything has been finalised.
To formalise the property purchase process, the new property title deed needs to be presented to the official Spanish land registry (Catastro) so it’s registered in your name – you being the new owner.
Having your new property registered, makes future sales easier and gives you an element of protection.
How much is it to register a property?
Registering a property in the land registry is approximately 1% of the purchase price.
How much are conveyancing fees for buying a property in and around Javea?
You must employ a lawyer to act on your behalf when buying property in Javea.
Some lawyers may try and charge up to 1% of the purchase price – this is a bit hefty. Lawyers should charge in the region of 1000 – 3000 euros – depending on how complicated the sale process is – for a normal property purchase transaction.
This fee is usually charged in stage payments, throughout the buying process.
They will outline the basic buying process, he/she informs you of any discrepancies or irregularities that may arise after carrying out extensive searches on the property you’re buying and will draw up contracts and accompany you to the notary upon completion.
2020 Buying costs summary
- Re-sale / secondhand property purchase costs: Add 11-12% on top of the purchase price
- New build property / first time sold: 10% plus legal documentation tax
- Plot of land, commercial premises or garage space: 21% tax
Important note: Transmission tax is 10% of the purchase price OR 10% of the assessed value multiplied by 3.7 – WHICHEVER IS THE HIGHEST VALUE
A new law was passed 2019 on 16th June (Ley 05/2019), to clarify who pays the mortgage set up expenses which now looks like this:
Break-down of costs for buying property with a mortgage
Notary – 500-1250 euros
Registry – 350-700 euros
Admin – 200-600 euros
Property transfer tax – 10% (of sale price) for re-sale property, 10% IVA for new build, 21% IVA for plots of land or garage spaces
Bank valuation – 450-1000 euros
IAJD (legal documentation tax) – 0,5% – 1,5% of sale price
“If buying a resale property its about 12% on top
of the purchase price”.
If buying a new build property the cost is slightly cheaper.
Looking at the figures it seems like it will be a lot cheaper, when in actual fact the difference isn’t that much. And it goes the other way, in favour of the Spanish tax man; if buying land or a garage space, as prices on these items tend to be cheaper and so, they charge the higher rate of 21%.
NOTE: ALL ABOVE PRICES ARE AN APPROXIMATION ONLY
What payments are after completion?
Before completing on the house purchase, you should get a quote from a couple of removals companies and choose which suits you best.
The price a removals company will quote you, will depend on how many items or cubic meterage you want transported.
You may even need a storage solution, so don’t forget to ask the removals company if they can offer this service too – as not all removals companies offer this option.
After visiting the property and deciding it’s the one you want to buy; you may wish to do some light or heavy renovation works.
If this is the case, ask your agent if you can visit the property with a builder before completion to get a price for the works because after the sale is completed you’ll need access to these funds to do the renovations.
Most service charges are changed to the new owners’ name and bank account for direct debit payment.
Apart from the gas companies who will charge the new owner for a full revision and check of the installation and also, to set up a new contract with them.
In some cases a seller may have just filled the gas tank or paid for a full bank of bottles, so in this situation an extra bonus price may be agreed between buyer and seller.
Town tax (IBI)
I.B.I. tax which is universally known as council or municipal tax, is a tax based on the cadastral value of the property and is paid once a year.
In Javea its payable to the town hall and they even offer slight reductions for different payment schemes like; if paid early January (the usual payment window is August-October), or in instalments throughout the year, or if you are a pensioner.
When selling a property, legally you are liable to pay the IBI for the year if you were the title owner as from January.
However, in most cases, if a property is sold in June for example, a rebate can be agreed with the buyers (new owners) for the 6 months of non-ownership.
If buying an apartment or townhouse belonging to a residential community with shared pool and gardens, you will have to pay community charges.
This charge is usually broken down into quarter yearly payments and in some cases garage spaces and private store rooms may incur a small charge too.
Most communities are administered by an independent company, who are there for you to reach out to for help, general information and complaints.
Should extra works be voted for by residents (Eg. repainting, new terrace, pool refurbishment etc.) the administration company will obtain a minimum of 3 quotes (usual practice) and the residents then vote the best option. Works are either paid for from the community bank account if there are enough funds, or an extraordinary monthly or quarterly charge is added to the regular fee.
Before completion all the information regarding extraordinary and ordinary community payments and the last minutes of the community’s reunion should be made available to potential buyers.
You can get a quote from a reputable local insurance company before completion which has to be agreed, contracted and paid for after the completion of the sale.
Once you’ve signed the new escritura (property title deed) and are the official owner, you will need to have accounted for monthly mortgage repayments.
Usually this is set up as a direct debit. If you miss a payment, you may be charged a slight penalisation fee and the quicker you can get back on track to paying before the deadline date each month, the better.
Spanish wealth tax is only based on your Spanish assets. Assets such as real estate and items like antiques, cars, jewellery, investments and savings.
Residents have an extra 300k allowance for their main residence if not owned in the name of a company.
So, if a couple are fiscal residents in Spain and they own a property in joint name, their total allowance is 2 million euros and non-fiscal residents have 700,000+700,000 euros = 1,400,000 euros total allowance.
The taxable rate for Spanish wealth tax is between 0,2% and 2,5% of the value of assets.
Touristic property licence
If you’re thinking about renting the property out to help pay for itself, essentially you should have the property registered with the tourist board before you start.
The whole process of administration, documents, compatibility certificate and town hall taxes costs less than 500 euros, so just get it done to avoid any problems and to give yourself peace of mind.
Registration codes vary between if you are a one property renter or if you are deemed a tourist company. As a private individual they start with VT and as a company they start with EGVT.
If you’re not going to live in the property full-time; it’s a good idea to employ someone to keep an eye on the place for you in your absence.
Whether there is a power cut, a bad storm or it needs a general clean and change-overs for new rentors coming in, having frequent visits made to the property is so worth it.
Property maintenance and management can be tailored to each owners’ needs. Seriously think about this point, as many hope they can get on without it but end employing someone later on – after something drastic has happened.
Get quotes for this before purchasing your home because after the sale’s completion; this should come into effect if you’re not going to stay in the property full time.
Vicens Ash property management team can advise you as to what services we offer and how we charge for them.
Just let us know what you need and we’ll explain the maintenance packages and ad-hoc services to you, and I’m sure you’ll feel glad in knowing that someone will keep an eye on the property when you’re not here.
Pool and garden maintenance
If you’ve bought your dream villa, if it has a pool and/or garden, you’ll need to account for their upkeep.
We’ll tell you how much is being charged at present by the current employed person, and you can either continue with the same person or maintenance company or look for an alternative – obviously, we can pass you a quote from a reputable source.
In most cases, these services are charged on a monthly basis, paid yearly or every six months.
Garden maintenance could vary; as to how often you want the garden done and how much rubbish it generates. Gardeners in the Javea area are taxed (or charged) for rubbish disposal and they are sanctioned if caught using the public green skips.