Stage 2 of 6

Stage 2: Budget the taxes, costs and financing

§ 1Why the money comes before the search

The first stage ends with a decision to buy in Spain. This stage turns that decision into numbers: what the whole purchase costs, how you will pay for it and how the money gets to Spain. The next stage is choosing where to buy and what to buy, and your budget sets the price range you search in.

The order has one awkward feature. The largest extra cost is the purchase tax, and it depends on two things you have not chosen yet. A home sold by an earlier owner carries the transfer tax of the region where it stands, and a first sale of a new home by the developer carries VAT and a deed tax. So budget in a range. Take the regions on your shortlist, work out both types of home, and redo the sums when a real home appears.

The order matters for a second reason. A lender decides how much of the price it will finance, and the taxes and fees on top are yours to find. Know your cash before you speak to a lender.

§ 2What this stage settles

By the end you should hold four things:

• A total budget with four layers: the tax, the fees of the professionals, the set-up of the home and a reserve.
• A decision to borrow or to pay from your own funds, with the papers that decision needs.
• A route for the money: a Spanish bank account, a way to convert and send currency, and a paper trail for each payment.
• A list of answers from your adviser and your lawyer, in writing, on the tax, the base it is calculated on and the deadline.

Where a scale or a rate was not read in an official text, the page prints no figure, and the budget line waits for a written quote.

§ 3Costs and taxes: build the budget from rates, quotes and documents

The section on costs and taxes has nine chapters. Read them in the order below, and keep all nine chapters on taxes and costs open as the map.

Set the frame with the four layers

The four layers of purchase costs is the chapter to read first. It takes the tax, the professionals, the set-up and the reserve in turn, and it ends with a test: every line needs a source, either a rate from an official page or a written quote.

Two notes sharpen it. Worked examples with regional rates applied shows the arithmetic on an illustrative price, and says what it leaves out, which is the notary, the registry and the lawyer. Unlisted costs such as translations and bank charges covers what buyers forget, from community debts to the exchange margin on a large transfer.

Resale: the regional transfer tax

The tax agency draws the dividing line. A home sold by an earlier owner carries the transfer tax, ITP (impuesto sobre transmisiones patrimoniales), set by the region where the home stands. How the resale transfer tax is set and filed gives the rule: the base is the higher of the official reference value and the price paid, and the tax is paid after signing. The registrars give 30 working days as the usual deadline, which varies by region, and registration waits for the payment. Madrid, for example, has a general rate of 6%, while Catalonia uses a scale of 10% to 13%.

The pages disagree on one region. In the Valencian rate and its conflicting sources, the Ministry of Finance table gives 9% for housing from June 2026, while the Valencian tax agency page, which shows no date, still lists 10%. The note takes the agency page to be out of date, and says we did not read the regional law itself, so ask your adviser to confirm the rate in writing. Many regions also lower the rate for young buyers, large families or a main home, and the conditions for reduced transfer tax rates lists those we verified. A buyer who misses one condition pays the general rate.

New build: VAT and stamp duty on the deed

A first sale of a new home by the developer carries VAT, at 10%, and the notarial deed carries a second tax, AJD (stamp duty on documents), at a rate the region sets. VAT and AJD on a developer's sale adds two cautions. A price quoted without VAT is a lower number than the one you will pay, and the AJD base needs a calculation on your own deed. In the Canary Islands the tax is IGIC, and the chapter prints no current rates because it verified only the 2018 text.

Two notes help with the comparison. A fair comparison of new build and resale tax says to put each home on one sheet with price, taxes, fees, work needed, date of use and protections. Leaving AJD out of the new-build total makes it look cheaper than it is. What English speakers mean by stamp duty shows why Spain has two taxes behind that phrase.

Fees: who charges what, and who pays

The notary and the registry charge by state scales, and the lawyer and the gestor (the agent who files the paperwork) agree their fees with you. Who charges what among notary, registry, lawyer and gestor prints no amounts, because we have not verified the current scales. It does give the civil code default: the costs of granting the deed fall on the seller, and those of the first copy and later documents fall on the buyer, unless the contract says otherwise. Contracts often move more to the buyer, so read the clause on expenses.

The fee you control most is the lawyer's. What an engagement letter from a lawyer should list explains the hoja de encargo: the services, the fee, the tax on it and what is excluded. It also says to appoint a lawyer who acts only for you, and not one proposed by the seller or the developer.

The bills that start after the keys

The yearly bills of a Spanish owner covers IBI, the municipal property tax, the waste fee, community charges, insurance and utilities. IBI accrues on the first day of the year, and the property stands as security for unpaid IBI, so ask the seller for the last receipt before you sign. Building a yearly budget from the seller's documents lists what to ask for: the last IBI receipt, the waste bill, the community statement and minutes, the insurance policy and a year of utility bills.

Taxes that reach you later

Four chapters matter now even though they bite later. The municipal land-value tax on a sale is normally the seller's. If the seller is an individual who does not live in Spain, the law makes the buyer liable in the seller's place, and when a buyer owes the seller's plusvalía explains why a private agreement does not bind the town hall. The chapter prints no coefficient, because the national rules were rewritten in 2021 and amended since.

Buying from a non-resident seller brings a second duty. How a sale of the home is taxed explains that the buyer must withhold 3% of the agreed price and pay it to the tax agency within one month, and the withholding a buyer pays on a non-resident sale shows how it works at the notary.

If you will own the home from abroad, what a non-resident owner files each year gives the returns on model 210. The rate on property income is 19% for residents of the EU, Iceland, Norway and Liechtenstein, and 24% for everyone else, and the filing windows changed from 2026. An empty home is still taxed, which tax on a home you never let explains.

Last, inheritance and gift tax for Spanish property describes a state tax whose yield belongs to the regions, so the reliefs depend on the region.

§ 4Mortgages, banking and transfers: decide how to pay and move the money

The section on mortgages and money advises the same order: fix your budget, then decide whether to borrow. All six chapters on financing and money gives the map. It names no lender, bank or currency firm and prints no current rate.

Decide whether to borrow

Spanish law fixes how a lender informs you, how a notary advises you and which costs of the mortgage deed the lender bears. It does not say how much a lender must lend, or to whom. What lenders decide for non-resident borrowers says so plainly, and says that no official figure exists for the usual deposit or loan to value. We print none.

Two notes turn that gap into questions for a lender. The deposit and the cash beyond it points out that lenders usually do not finance the taxes and fees, so the deposit is only part of the cash you need. Loan to value and a low appraisal gives the Bank of Spain market average for loan to price, 80.4%, which is an average over all borrowers and sets no limit for you. A low appraisal can shrink the loan and raise the cash you need.

The mortgage in its legal order

The legal sequence from enquiry to signing runs as follows. The lender assesses your solvency and orders an appraisal that you pay for. It gives you the standard information sheet (FEIN) and the warnings sheet (FiAE) at least ten calendar days before you sign, and you meet a notary of your choice who must advise you on them. The lender bears the notary and registry fees of the mortgage deed.

Three notes cover the practical points. What a pre-approval is worth says it is an early indication and is usually not binding. It does not protect you if the loan fails, so ask your lawyer about a financing condition in the private contract. Which mortgage costs the law puts on the lender gives the split, and tells you to check each line of the information sheet against it.

The timetable and the legal minimum admits that we found no official figure for how long a mortgage takes, and warns against agreeing a short completion date with the seller before you know the lender's timetable.

Rates and repayment

Fixed, variable and mixed rates compared describes the three types and Euribor, the index a variable loan usually follows. For loans signed on or after 16 June 2019, early repayment is capped at 2% in the first 10 years, then 1.5% for fixed loans and 0.25% in the first 3 years, or 0.15% in the first 5 years if agreed for variable loans. The caps on early repayment adds that two Bank of Spain pages give different figures when a variable loan is switched to a fixed rate, so the note states none.

If your income is in pounds or dollars, the currency risk of a euro loan matters. Most Spanish mortgages are in euros, and a mismatch makes the instalment move with the exchange rate. The test it proposes is simple: convert the instalment at a rate much weaker than today's for your currency, and borrow less if you could not pay it.

Paying without a mortgage

The checks on paying with your own money starts from a fact many buyers do not expect. No loan means no lender's file, but the bank that receives the money, the notary, the agent and the lawyer each have a duty to know who is paying and why. Documents that show where your money came from matches each source (salary, a sale, an inheritance, a gift) to the evidence. It found no official list of accepted documents, and suggests a one-page summary on top of the file.

Cash has legal limits. The Tax Agency gives €1,000 where one party acts in a business or professional capacity, and €10,000 for private individuals with tax residence outside Spain. The cash limits for a purchase adds that a home purchase of any size goes through the banking system, and the notary records how the price was paid.

The account and the transfers

No law requires a Spanish account to buy, but in practice you need one for the taxes, the bills and the direct debits, and most lenders want one. Opening a Spanish account as a non-resident reports that banks decide what they ask for. The Bank of Spain says banks offering payment accounts must offer a basic account to people who reside legally in the EU, and someone outside the EU should not assume the same right. What a bank asks a non-resident to bring lists the usual items: identity papers, the NIE, proof of address and the reason for the account. Ask each bank for its list in writing before you travel.

Moving money to Spain and what it costs breaks the cost into the exchange margin, which is the gap between your rate and the mid-market rate, and the fees. Ask each provider for a quote for the same amount, route and day, and compare the euros that would arrive. The payments come in stages: reservation, deposit, balance at the deed, then taxes and fees. Do not leave the conversion of the balance to the last day. Fixing an exchange rate with a forward contract explains the tool that removes rate uncertainty, and warns that it can leave you with a loss if the purchase is delayed or falls through. Fraudsters send changed account details by email, so confirm any change by phone, using a number you already hold.

§ 5Where buyers get stuck at this stage

The first trap is a single percentage to add to the price. Why no single percentage fits every purchase shows that none comes from an official source, and gives four questions to put to any figure: which region, new or resale, which costs and what date.

The second is a base above the price. On a resale the reference value can exceed the contract price, so ask your adviser for it before you agree a price.

The third is a loan that comes out smaller. If the appraisal is below the price, the lender may lend against the lower figure, and you must find the difference. Ask the lender, before it orders the appraisal, what it costs and what it does if the value falls short.

The fourth is a first large transfer that is held. The receiving bank may hold funds while it completes its checks. Allow extra weeks, send a small test first, and tell your lawyer and the notary when the money leaves your account.

The fifth is a non-resident seller. Two charges can land on you: the withholding on the price, and the seller's plusvalía. Put both in the contract and let your lawyer arrange them before the deed.

Last, two answers are still open. Sources disagree on the Valencian rate, and two Bank of Spain pages disagree on the cap when a variable loan switches to a fixed rate. Take both questions to your adviser and ask for the answer in writing, with the source.

§ 6How to know you are ready for the next stage

You are ready to move on when you can tick every line below.

• You can name the tax that applies to each type of home on your shortlist, the region's rate and the base it is calculated on.
• Every fee in the budget comes from a written quote that says what it includes.
• The budget holds a reserve, and the yearly bills come from the seller's documents instead of averages.
• You know whether you will borrow. If yes, you hold written offers with the standard information sheet. If no, the file that shows where your money came from is ready.
• A Spanish account is open, or you know what the bank needs, and a small test transfer has arrived.
• Your adviser has confirmed the tax, the base and the deadline in writing.

If one line is open, close it before you look at homes in earnest. A price range tested against the tax, the fees and the payment route stops you falling for a home the budget cannot carry. With the budget, the payment route and the written answers in one folder, you can start the stage on choosing where and what to buy.

Tax note. Rates depend on the region, the type of property and the buyer, and they change. Figures here are dated and sourced; examples are illustrative and show their assumptions. Confirm yours with the regional tax agency or a tax adviser.