Guide to Costs, Taxes, and Ongoing Expenses for Properties on the Costa del Sol

Selling a property in Costa del Sol can be a rewarding process with the right guidance. At MC Estates, we are here to ensure your property stands out and achieves the best possible sale. Here’s our step-by-step guide to help you navigate the selling process with ease.

Costs Associated with Purchasing a Property

When buying a property on the Costa del Sol, buyers should be aware of several one-time costs:

1.1 Taxes on Property Purchases
  • New Property (from developers):
    • VAT (IVA): 10% of the purchase price for residential properties.
    • Stamp Duty (AJD): 1.5% of the purchase price.

  • Resale (second-hand) Property:
    • Transfer Tax (ITP): Progressive rates depending on the price of the property:
      • Up to €400,000: 8%
      • €400,001–€700,000: 9%
      • Over €700,000: 10%
1.2 Legal and Administrative Costs
  • Notary Fees: €800–€2,000 depending on the property price and complexity.
  • Land Registry Fees: Typically 0.5%–1% of the purchase price.
  • Lawyer Fees: Around 1% of the purchase price (plus VAT, 21%).
  • Bank Fees:
    • Mortgage arrangement fee: 1%–1.5% of the loan amount.
    • Valuation report: €300–€700.
1.3 Other Costs
  • Surveyor Costs (optional): €300–€700, depending on the complexity.
  • Currency Exchange Fees (if applicable): Charges depend on the provider.

Costs Associated with Selling a Property

When selling a property, sellers are liable for certain taxes and costs:


2.1 Taxes
    • Capital Gains Tax (CGT):
      • Residents: Progressive rates between 19%–28%.
      • Non-residents: 19%.
      • Deductible expenses include renovation costs (with invoices) and purchase-related expenses.

 

  • Plusvalía Municipal (Local Capital Gains Tax):
    • Calculated based on the increase in land value during ownership.
    • The amount depends on the location, cadastral value, and length of ownership.
2.2 Agent Fees
  • 5% of the sale price, plus VAT (21%).
2.3 Other Costs
    • Mortgage Cancellation Fees (if applicable):
      • Early repayment penalties range from 0.25%–1% of the outstanding balance.
      • Notary and registry costs for cancellation: €800–€1,000.

 

  • Energy Efficiency Certificate (EEC): €150–€300 (required by law).

Ongoing Costs for Property Ownership

Property owners in the Costa del Sol face regular expenses:

3.1 Taxes
  • IBI (Property Tax): Annual tax based on the cadastral value. Rates range from 0.4%–1.1%.

  • Basura (Rubbish Collection Tax): €100–€300 per year, depending on the municipality.

  • Non-Resident Income Tax (if applicable):
    • Calculated as 1.1%–2% of the cadastral value, taxed at 19% for EU citizens and 24% for non-EU citizens.

  • Wealth Tax (if applicable):
    • Progressive rates on net assets exceeding €700,000 (or €1,000,000 in Andalucía for residents).
3.2 Community Fees
  • Vary based on the community’s facilities (e.g., pools, gyms). Typical fees: €50–€500/month.
3.3 Insurance
  • Home Insurance: €300–€1,000/year, depending on coverage.

  • Mortgage Insurance (if applicable): Often required by lenders.
3.4 Utilities
  • Electricity: €50–€150/month, depending on consumption.

  • Water: €30–€60/month.

  • Internet/TV Packages: €30–€80/month.
3.5 Maintenance Costs
  • General upkeep, including pool cleaning, gardening, and repairs, can range from €500–€5,000 annually.

Example Scenarios

4.1 Buying a Resale Apartment for €300,000
  • Taxes: €24,000 (ITP at 8%)

  • Notary & Registry Fees: €3,000

  • Lawyer Fees: €3,630 (1% + VAT)

  • Total Estimated Costs: €30,630
4.2 Selling a Villa for €500,000 (Non-Resident)
  • Agent Fees: €30,250 (5% + VAT)

  • CGT: €19,000 (19% on €100,000 profit assuming no deductions)

  • Plusvalía Tax: €3,000

  • Total Estimated Costs: €52,250

5. Additional Notes

  • Double Taxation Treaties: Many countries, including the UK, have treaties with Spain to avoid double taxation on rental income and capital gains.

  • Residency Considerations: Becoming a resident affects taxation significantly (e.g., no non-resident tax, lower CGT rates).

  • Mortgages for Non-Residents: Typically up to 70% of the property value.

  • Tax Updates: Andalucía has recently reduced wealth taxes and some other regional levies to attract investment. Confirm rates with a local expert.

6. Recommendations

  • Always consult a specialized lawyer or tax advisor.

  • Obtain written estimates for all fees before committing to transactions.

  • Factor in currency fluctuations if purchasing from abroad.
This guide provides a general overview. For personalized advice, consult a qualified professional familiar with property laws and taxes in Spain.

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