The various costs of selling a property in Spain!
Selling a property in Spain involves several costs that sellers should be aware of to ensure a smooth transaction. Understanding these expenses can help in planning and avoiding any unpleasant surprises.
We've compiled a detailed overview of the costs of selling property in Spain to help you through the process.
Table of contents:
- Overview of the main costs for selling a property in Spain
- Real estate agent fees
- Legal fees
- Capital Gains Tax
- Pluslavia Tax
- Mortgage cancellation fees
- Notary and registry fees
- Energy Performance Certificate
- Costs of repairs and improvements
- Currency exchange costs
- Moving costs
- Costs of selling property in Spain: A summary
Overview of the main costs for selling a property in Spain
Selling a property in Spain involves costs you must consider before starting the process.
Here is a quick overview of the main expenses involved:
- Real estate agent fees: Typically 3-6% of the sale price.
- Legal Fees: Typically 1-2% of the sale price.
- Capital Gains Tax: 19%, 21%, or 23% depending on profit/residency status.
- Plusvalia Tax: Rates vary based on location.
- Mortgage cancellation fees: 0.5-1% of the remaining mortgage balance.
- Notary and registry fees: 0.1-0.5% of the final sale price.
Let's dive into these costs a bit further...
Real estate agent fees
When selling a property in Spain, real estate agent fees are one of the most significant costs to consider.
Although the fees typically range from 3% to 6% of the final sale price, the percentage may vary depending on the region of Spain, property value, and any specific services provided by the agent of your choice.
This fee is generally paid by the seller and is usually negotiated and agreed upon before listing the property for sale.
Spanish real estate agents offer a wide array of services that justify these fees, including property valuation, marketing, viewing logistics, negotiating with potential buyers, and assisting with the necessary paperwork.
They will also provide you with expert knowledge of the local market, which will help you when setting a competitive selling price, and achieving a quicker sale.
Additionally, local real estate agents often have extensive networks and advertising resources to reach a broad audience, thereby increasing the property's visibility.
Although Spanish real estate agent fees can add a considerable cost to selling your Spanish property, the expertise, and support provided by a skilled estate agent will significantly ease the process and potentially result in a higher sale price.
Legal fees
When selling property in Spain, you must work alongside a lawyer to ensure any transactions adhere to legal requirements and to safeguard your interests.
Lawyer fees in Spain typically range between 1% to 1.5% of the sale price of the property. However, this can vary based on the complexity of the sale and the region.
These fees cover a variety of essential services, including drafting and reviewing the sales contract, ensuring that all documentation is in order, verifying that the property is free of encumbrances, handling negotiations, and managing the transfer of funds.
Lawyers will also assist with tax calculations, ensuring that Capital Gains Tax and other applicable taxes are correctly assessed and paid.
They may also help you to obtain necessary certificates such as the Energy Performance Certificate, and resolve any potential legal issues that could delay your Spanish property sale.
Legal fees are a necessary expense to selling a property in Spain, their expertise is invaluable in navigating Spain's legal system regarding property and will provide you with peace of mind and ensure a smooth transaction.
As well as making sure you save on transferring your sale proceeds back home, our team at EasyFX can put you in contact with our expert partners and network of reputable lawyers in Spain for your Spanish property sale.
Get in contact with us today for more information.
Capital Gains Tax
In Spain, the Capital Gains Tax (CGT) is something you have to consider before embarking on the journey of selling a property in Spain.
This tax is levied on the profit made from selling a property and should be paid by both Spanish residents and non-residents.
The CGT rate in Spain varies depending on the seller's residency status and the amount of the gain.
If you are a Spanish resident, the tax rates are progressive - starting at 19% for gains up to €6,000 (£5,106.10) but increasing to 21% for gains between €6,000 (£5,106.10) and €50,000 (£42,550.55).
Any gains over €50,000 (£42,550.55) will be taxed at a 23% rate.
If you are a non-resident, you will be subject to a flat rate of 19%.
The gain is calculated by subtracting the original purchase price and associated costs (such as legal fees and improvements) from the selling price.
There are some allowances and exemptions available, however.
Reductions and exemptions from Spanish Capital Gains Tax
- Main residence: If the property is your primary residence and you are over the age of 65 or have lived there for at least three years, you may be exempt from Capital Gains Tax.
- Reinvestment: Sellers who reinvest the proceeds into another primary residence within two years may also be eligible for tax relief.
Pluslavia Tax
The Pluslavia Tax, which is locally referred to as the Impuesto sobre el Incremento de Valot de los Terrenos de Naturaleza Urbana (IIVTNU), is a municipal tax imposed on the increase in the value of urban land when selling property in Spain.
Calculated based on the property's cadastral value and the number of years the property has been owned, the tax specifically targets the appreciation of the land itself, not the overall property value.
The cadastral value (valor catastral) is an official valuation of real estate properties in Spain.
The value is determined by the local government, which is then recorded in the Cadastre, a comprehensive register of property ownership and characteristics.
The cadastral value is calculated based on various factors including:
- Property location
- Property size
- The main use/function of the property
- The age of the property
- The materials used to construct the property
- Market conditions
The cadastral value is typically lower than the market value but is periodically updated to reflect any changes in the property or its surroundings.
Understanding the cadastral value is crucial if you are looking to sell property in Spain, as it may influence the tax rates or fees you are required to pay.
The rates and calculations for the Pluslavia Tax can vary between municipalities. However, recent reforms have aimed to make the tax fairer, allowing sellers to demonstrate if no real gain was made to potentially avoid the tax.
Despite these reforms, the Pluslavia Tax still remains an important financial consideration for property sellers in Spain, which may impact the net proceeds from your property sale.
Mortgage cancellation fees
If you are selling a property with an existing mortgage, you will need to account for mortgage cancellation fees, which can be a significant expense.
Mortgage cancellation fees are incurred when the outstanding mortgage is settled before its term ends - a process often required to transfer the property free of liens to the new owner.
Typically, mortgage cancellation fees include a cancellation penalty.
The penalty usually ranges from 0.5% to 1% of the remaining mortgage balance, depending on the terms of the mortgage contract.
Properly managing these fees will ensure an easier transaction process and help avoid unexpected financial burdens.
Notary and registry fees
Notary and registry fees are important costs to also consider when selling a property in Spain.
Notary fees
This fee is incurred for the formalisation of the sale, including the drafting and signing of the public deed of sale (escritura pública de compraventa).
The notary fee is based on a sliding scale relative to the property's sale price which typically ranges from 0.1 to 0.5%.
The notary ensures that all legal requirements are met and that the transaction is accurately recorded.
Once the sale deed is notarised, it must be registered at the local land registry.
Registry fee
The registry fee, which is also based on the property's sale price, will range from 0.1% to 0.2%.
The total of both fees is on average around several hundred to a few thousand euros, again, depending on the property's sale value.
These costs are crucial to the process of officially transferring ownership of the property and making sure that the buyer is legally recognised as the new owner, which will prevent any future disputes regarding property ownership.
Energy Performance Certificate (EPC)
In Spain, an Energy Performance Certificate (EPC) is a mandatory document required when selling a property. The certificate provides an assessment of the property's energy efficiency and rates i ton a scale from A (most efficient) to G (least efficient).
The EPC includes information on a property's energy consumption and carbon dioxide emissions which will help you when making any improvements to energy efficiency.
Obtaining an EPC involves an inspection by a certified assessor, who evaluates various factors such as the property's insulation, heating systems, and windows. The EPC is valid for ten years and must be presented to potential buyers at the time of listing the property.
The cost of obtaining this certificate can range from €100 to €500, depending on the size and location of the property.
Costs of repairs and improvements
Another group of costs to consider when selling a property in Spain is the potential repairs and improvements needed which can impact the return on investment.
Basic repairs
Basic repairs, such as fixing leaks, updating any plumbing systems, or repainting, typically range from €1,000 to €5,000 depending on the extent of the work needed.
Renovations
If the property you are selling requires more extensive renovations, like kitchen or bathroom remodels, you will be looking at around €10,000 to €30,000.
Structural repairs
Any structural repairs or upgrades, such as roofing or electrical systems may add another €5,000-€20,000 to overall selling costs. Again, this will depend on the work required.
Aesthetic improvements
You may consider improving the aesthetic of the property you wish to sell in Spain, like landscaping or changing the interior, this work will range between €2,000 to €15,000, depending on space and the specific changes you require.
It is important to consider the above costs.
They may enhance the property's marketability and potentially increase the sale price, providing a higher return. However, it is essential to balance the expenditure with the expected increase in property value.
Currency exchange costs
When selling a property in Spain, currency exchange costs can significantly affect the net proceeds, especially for non-residents.
Fluctuations in exchange rates can lead to substantial variations in the final payment received.
To mitigate this risk there are several options you can think about including forward contracts, or other currency options that will lock in exchange rates for future transactions, but, depending on the service, these may come with additional fees.
Some currency exchange providers and traditional banks will place transaction fees and offer less favourable exchange rates for international money transfers. These costs can vary depending on the service you choose and range between 0.5% to 5% of the total amount you're looking to transfer from your Spanish property sale.
We advise that you choose a provider with competitive rates and low fees.
At EasyFX, we can help you buy and sell property abroad, especially in Spain, where we have been supporting customers with their overseas property transactions since 2008.
With no added-on transfer fees, dedicated account managers to support you throughout the process, and exchange rates that favour you, make sure to speak to us today and find out how we can help and save you thousands on your Spanish property sale.
Moving costs
If you are planning to move to a new property once you sell, moving costs are a critical aspect to consider too.
These costs will include:
- Hiring professional movers: €500 to €2,000 (depending on the distance/volume)
- Packing materials: €500 to €2,000 (depending on the volume of items and protection needed)
- Insurance for valuable items
- Temporary storage fees
Costs of selling property in Spain: A summary
To summarise, selling property in Spain involves various, important costs, that can add up significantly.
By understanding these expenses and planning accordingly, sellers can ensure a smoother and more financially efficient sale process.
Engaging with professionals such as real estate agents, lawyers, and financial advisors can provide valuable guidance and help navigate the complexities of the Spanish property market.
Let EasyFX make your Spanish property sale, easy.
As experts in foreign exchange, our goal at EasyFX is to make your international property sale and money transfer, easy and affordable.
We work with you to get the best exchange rate available, at the right time, for your Spanish property sale. Your proceeds no longer have to go into a bank's pockets, and instead, stay with you.
As an FCA, FINTRAC, and FSMA-regulated financial institution, you can trust us with your money, which is always kept in safeguarded client accounts.
If you'd like to know more about how we can support and help with your Spanish property sale, please get a free transfer quote, today!
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