Mortgage is not the only expense that must be faced when buying a home. To own an apartment you have to pay other economic amounts that you must take into account and add to the total amount. We want to help you do your calculations and, from Hermes & Mathew, we specify the taxes and expenses associated with a sale.
Taxes and expenses of buying a property
At the tax level, it is not the same that you acquire a new construction home than a used one. Depending on the Autonomous Community (CC.AA) in which you are, you will also end up paying one amount or another.
One of the tax rates that you will not be able to escape is VAT (Value Added Tax). This tax is currently 10% of the total amount of a home, that is, if you buy a flat for 150,000 euros, the VAT payable will be 15,000 euros. The exception to this percentage is if you reside in the Canary Islands or have access to public housing. In the latter case, each Autonomous Community has set a different rate.
- The Property Transfer Tax (ITP)
If you decide on a used home, the tax that will have to be paid is the Tax on Patrimonial Transmissions (ITP). In this case, the amount to be paid will also depend on the Autonomous Community where the property is located and its value (price set in the deed). In any case, the rate that is applied is usually around 6% -10%.
- The Tax on Documented Legal Acts
It is a tax that is applied to any notarial, commercial and administrative document and it is a tax that is collected directly by the Autonomous Communities.
Until last year, it was a tax that was borne by the person applying for a mortgage. However, since October last year this situation has varied with changes in the regulations. In the event that a real estate loan is requested, it is up to the bank to pay this tax.
Expenses of buying a property
Until a few months ago, there were no regulations that established who was responsible for paying the expenses associated with a mortgage loan and, therefore, traditionally, it was the client who ends up facing all the payments. However, this situation has radically changed as a result of the entry into force, a few months ago, of the Mortgage Law (5/2019, of March 15). This legislative text that regulates mortgage contracts clearly defines whether it is the bank or the client who must bear the associated expenses.
- The appraisal
It is the responsibility of the home buyer to pay the price of appraising a home. The appraisal is the only way that the value of the property is known so that the bank decides how much it finances the client. As a general rule, banks usually give a mortgage of 80% of the appraised value.
The current price of appraising a flat is between approximately 300 and 600 euros.
- Mortgage opening commission
When a mortgage is granted there is a commission charged by the bank with which the loan is signed. Normally it is around 2% and, as a general rule, it is usually discounted from the total amount given in credit. In any case, not all banks apply this commission so it is advisable to inquire about it in advance.
When you buy the house you have to make a public deed. This mandatory procedure requires hiring the services of a notary who will have to pay a fee. Since the entry into force of the new Mortgage Law, this expense must be paid by the bank.
- Property registration
Once the deed is available, it must be registered in the Land Registry. This procedure also has a cost that is stipulated by law. However, since June 2019, the bank must also assume it.
- Management expenses
After the bank accepts the mortgage, a series of administrative procedures must be initiated that requires the services of a manager. Again, the fees derived from this work must be paid by the bank.
In short, to buy a home you not only have to find out about the procedures to apply for a real estate loan and the associated interest rate but also the extras that must be paid. And if you are looking for a flat, remember that Hermes & Mathew is the benchmark real estate agency in Barcelona specialized in high-end properties, always in the best areas of the city.