Costs Of Buying And Owning Property In Barcelona

Taxes, Fees and Subsequent Maintenance

Costs of Buying Property in Barcelona

There are a number of fixed costs involved in Buying Property in Barcelona which you should bear in mind when calculating the overall cost of your purchase.

These costs include taxes, commissions and fees most of which are applied at the same rates in the rest of Spain.

However, some rates, such as the ITP, are set by the Autonomous Community so Catalonia has different rates to Andalucía, for example.

As the property market in Barcelona is dominated by second hand rather than newly built properties, I will be focusing on the costs that apply to used apartments and houses.

Furthermore, it is important to bear in mind that there are also running costs involved once ownership has been transferred to you..






Costs Prior To Buying A Property In Barcelona

Impost Sobre Transmissions Patrimonials (ITP)

The Impost Sobre Transmissions Patrimonials or ITP is a property transfer tax, which here in Catalonia runs to 10% of the selling price and is paid by the buyer.

As it is a transfer tax, which is paid when ownership is transferred from seller to buyer, it is not paid on new build homes, where VAT and stamp duty is applied instead.

Legal Fees

I strongly advise you to hire a lawyer (abogado in Spanish or advocat in Catalan) to guide you during the buying process.

Your lawyer will draft and review contracts on your behalf and explain all the legal and administrative issues you face so it is a good idea to hire an English-speaking one.

He or she will also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the necessary documents to complete the purchase (property registration, tax payments, etc.).

Lawyers charge according to the service you require but a straightforward property purchase with no complications should cost between €1,500 and 2,500.

Beware of lawyers who charge you 1% or 1.5% of the property price in the case of expensive properties because essentally the amount of work is the same.

The lawyer I normally work with charges a flat rate of €2,000 and you can Contact Me if you are planning to visit Barcelona and want to arrange a preliminary meeting.

Notary Expenses

Notary expenses are nearly always paid by the buyer and are normally between 0.5% and 1% of the purchase price declared in the deeds of sale, although they may be lower.

The Property Registration outlined below is handled by the Notary, who will often require payment before beginning the registration process.

Property Registry Inscription Fees

Expenses related to inscribing the sale with the land registry are normally paid by the buyer, and are calculated based on the purchase price declared in the deeds of sale.

You should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.

Agency Fees

Estate agent fees or commissions are paid by the seller so are not visible to the buyer but are built into the sale price of the property.

Although it is sometimes possible to buy directly from the owner, most sellers use an estate agency who generally include their commission of between 3% and 6%.

If you use a Property Search Agent or Personal Propert Shopper, such as me, then the 3% finders fees are paid separately by the buyer.

As I outline in my Property in Barcelona article, the potential savings and security that hiring someone to act completely on your behalf make the cost more than worthwhile.

Banking Costs

To pay for the property, you will more than likely need to write a banker’s cheque.

In order to do so, you will need to open a bank account in Barcelona and transfer money from your bank in your country.

The cost of transferring the money can go up to 0,4% of the amount transferred and the banker’s cheque will most likely cost 0,5% of its amount, although the rate is often negotiable.

There's little I can do about the fees on banker's cheques but most of the banks I work with here in Barcelona are prepared to waive transfer fees until the property purchase is complete - after that, you're on your own, I'm afraid!


Other Possible Costs

Income Tax When Buying From Non-residents

If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211).

If this is not done the property will be considered by the tax authorities as the asset and qualify as a capital gains tax liability of the seller.

Mortgage costs

Buying with a mortgage will incur a number of additional costs.

Firstly, the cost of the property valuation that the mortgage provider requires before granting the mortgage is paid by the buyer and can cost around 500 Euros.

There will be the costs of the mortgage itself, which will vary according to the provider, and even according to the particular branch.

There is also usually some kind of opening fee of around 1% of the value of the mortgage and finally a mortgage will increase the Notary expenses.

If you need more information, you may be interested in reading my article on Obtaining Mortgages for Non-Residents.

Suveyor's Fees

Bear in mind that it may be prudent to carry out a survey of the property and the cost of this will depend on the complexity of the survey and the size of the property.

Summary of Buying Costs

In conclusion, you should allow for up to 15% of the purchase price in taxes and other costs with probably a minimum of around €15,000 on even the most modest property.

If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved. 


Costs Of Owning A Property In Barcelona

Just like anywhere else, there will of course be running costs associated with Owning a Property in Barcelona.

Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills etc. and will be determined by the size and type of the property you buy.

Obviously a large house with a garden and pool in Pedralbes will require much more effort and cost to maintain than a small apartment.

For cleaning a figure starting at 10 Euros an hour would fairly typical in Barcelona but this may also depend on the area and whether or not the contracted hours are in blocks or not.

Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Barcelona face.

Impost Sobre Béns Inmobles – IBI

The Impuesto Sobre Bienes Inmuebles or IBI is a property ownership tax applied by the local authority, in this case the Ajuntament de Barcelona, irrespective of whether the owner is a resident or not.

The value of IBI is based on the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall.

The tax rate varies from 0.4% – 1.1% of the valor catastral depending on the Spanish region and at the time of writing, the rate was 0.75% in Barcelona but this could well change.

Impost sobre la Renta de No Residents – IRNR

Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.

Non-rented properties

Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property.

The tax rate is calculated as 25% of 2% of the valor catastral of the property, so the tax on a property with a valor catastral of 200,000 Euros would be as follows:

Property value for tax purposes = 200,000 Euros
Taxable base (2%) = 4,000 Euros
Tax (25%) = 800 Euros

Rental Properties

If non-residents rent out their property, they are obliged by law to declare the income they earn and pay taxes on it.

The taxable base and the tax rate will be determined by the laws depending on individual circumstances and take into account any double taxation treaty between Spain and the non-resident's country of origin.

In many cases non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain.

However, property owners resident in Spain will be required to pay income tax based on earnings throughout the year and the final tax rate will depend on the level of income earned.

Community Fees

Owners of property that is part of any development, building, or complex in which common zones are shared with other owners are by law obliged to be members of a community of owners, known as the Comunidad de Propietarios.

This will involve paying community fees for the upkeep of communal areas, and any other services that the community vote for.

The fees will vary according to the extent of the common areas, the costs of maintaining them, and the services that the community vote for.

A budget for annual community expenses is approved by majority vote of all owners (or representatives) who are present at the annual general meeting of the Comunidad de Propietarios.

Insurance

Household insurance will vary according to the circumstances of the owner and the type of property.

However, you should bear in mind that insurance is a obligatory if you have a mortgage with a local bank and highly recommended if you are away from your property for long periods throughout the year..

Utilities

Once Water, Electricity, Gas and Telephone are transferred over to your name you will have to pay connection and services fees whether you are using the property or not.

The bills normally arrive every two months and can be paid directly through your bank account.



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