Property buying costs in Tenerife
I have been told to set aside 10% for costs above my purchase price. This seems an awful lot, is this correct?
The amount of 10% is often used as a rough guideline to keep in mind when looking at property, it is helpful because it is easy to calculate, however your final costs will depend on what you buy and if you have a mortgage with a Spanish bank or not.
If you buy a new property direct from the constructor, you will have to pay 7% igic (VAT), then 1% transmission tax over and above the agreed price. After this you will be responsible for the payment of the Public Notary who will transact your purchase, and the registration of the property at the land registry. This is not a fixed cost but could be in the region of 2000€ for an average purchase. In addition we always recommend the use of a lawyer of the purchasers choosing which will incur additional fees.
For a resale property, the costs differ in that there is no igic to pay but the transmission tax applicable is 6.5% of the agreed price. Again you will have to pay the notary, land registry and legal fees.
If you require finance in order to buy your Tenerife property and decide to process this via a Spanish bank this will incur a few additional costs such as the costs of a valuation report on the chosen property and normally an opening commission which would be a small percentage of the amount of the loan.
All in all the standard fees on top of the agreed price can be in the region of 8% - 10% however a reputable estate agent will provide you with an estimate of costs tailored to your own situation and based on the property you wish to purchase.