Costs of buying and selling a home: what is paid on top of the price

The costs of a purchase are not a fixed percentage applied to the price. They are a set of different items, with different rules, and the weight of each changes according to the type of home, who is buying and how the transaction is financed. The bulk of it is the tax; the rest is scale fees and services. It is worth understanding them separately, because that is the only way to know which can be worked out in advance and which still depend on a check.

ITP or VAT: the first question is whether the home is second-hand or new

This is the fork in the road that shifts the figure most. A second-hand home is taxed under Impuesto sobre Transmisiones Patrimoniales (ITP), a tax devolved to the Generalitat de Catalunya. The general regional rate applies, with reduced rates for certain groups (young people, large or single-parent families, people with a disability) provided the main-home and income requirements are met.

The metro's a new build, by contrast, is not subject to ITP: the first delivery of a home is subject to VAT, at the reduced state rate applicable to housing, and there is also the tax on Actos Jurídicos Documentados (AJD). They are two regimes that do not mix, and confusing them when working out the figure leads to serious errors.

Within ITP, checking whether any reduced rate applies is no small detail. On the price of a home, the difference between the general rate and the reduced rate is a significant amount. If the requirements are met and the rate is not claimed, too much tax is paid; if it is claimed without the requirements being met, a supplementary assessment follows later. That check is done before signing the arras, while there is still room to adjust the transaction.

Actos Jurídicos Documentados: which one is paid by whom

AJD is charged on formalising a registrable notarial document. On a new-build purchase it is borne by the buyer and is settled together with the VAT. It should be distinguished from the AJD on the mortgage loan, which is a different tax and which is payable by the bank, not by the buyer. It is a common confusion, resolved by looking at the lender's schedule of costs to see what each party bears.

Notary's fees and Land Registry

Both are governed by regulated scale fees, calculated according to the value of the property and the length of the deed. They are not open to negotiation, nor do they vary from one notary's office to another on commercial grounds, but they do vary with the complexity of the document: a deed with special conditions, with several sellers or with a simultaneous mortgage cancellation is longer and costs more.

Registration at the Land Registry is what gives security against third parties. A sale and purchase is perfected by consent, but it is the deed that allows registration, and it is registration that protects. Skipping that step is not a saving: it means staying outside the system that protects you as an owner.

By law, the choice of notary is the buyer's. It is a right that is little used and worth using.

Gestoría and valuation

The metro's gestoría is optional, unless the lender requires it in order to handle the taxes and the registration. Where there is a mortgage, the bank usually requires its own, and that cost must appear in the schedule of costs the lender provides before signature. Without a mortgage, the paperwork can be handled by the buyer or by their solicitor.

The metro's valuation is necessary only where there is mortgage financing, and it is borne by the buyer. It is a cost paid at the start of the process and it is not recovered if the transaction is never signed, which is worth knowing before commissioning it.

Who pays what

The usual split is the one set out in this table, taken from the guide to buying and selling on this same site. Usual does not mean compulsory: the allocation of costs and taxes is one of the clauses that must be set out in writing in the arras contract, precisely so that there is no argument on the day of signature.

What the seller pays, in a little more detail

The metro's plusvalía municipal (the tax on the increase in the value of urban land) taxes the rise in the value of the land. Following the case law of the Tribunal Constitucional there are two methods of calculation, the objective one and the one based on the actual gain, and the more favourable of the two may be applied. If there has been no increase in value nothing is payable, but it must still be declared and proved with the deeds of acquisition and transfer. It is a step that gets forgotten and is then demanded later with a surcharge.

The IRPF on the capital gain is declared in the following year's tax return and taxes the difference between the transfer value and the acquisition value, with deductible costs and taxes. There are significant exemptions: reinvestment in a main home within the statutory time limit and the transfer of the main home by people over 65. The fact that the sale is paid for this year while the tax arrives the next is one of the reasons for having the sums done from the outset.

The metro's cancellation of the mortgage at the Land Registry surprises many people: even though the loan has been repaid, the charge remains registered until it is formally cancelled, and the deed of cancellation and its registration have to be paid for. And the certificates (the cédula de habitabilidad and the energy performance certificate) are for the seller's account and are required in order to transfer.

The costs that are not taxes and throw the figure out just the same

There is a second category, which appears in no calculator and which in practice carries weight. The levies approved by the residents' association even if they have not yet been billed: the association's certificate must show them, and who bears them is a matter of agreement. The IBI (municipal property tax) for the current year, whose apportionment between buyer and seller is also agreed, and whose unexpired instalments are secured against the property itself, so that the seller's debt can end up affecting the buyer. Any outstanding works identified by the building fitness certificate, arising from the technical inspection, required in Catalonia once a building reaches a certain age. And the connections and changes of account holder for the utilities.

None of these items depends on a tax rate: they depend on the particular property and on what its papers say. That is why the prior checks at the Land Registry and on the documents are not a bureaucratic formality but the part of the work that avoids surprises over the amount.

When the sums have to be done: before the arras

The arras contract is the private document that binds both parties before the notary and, in practice, the most important one in the transaction. The usual form is arras penitenciales under article 1454 of the Código Civil, which allow withdrawal: if the buyer withdraws, the sum handed over is forfeited; if the seller withdraws, twice that amount must be returned. For the deposit to be penitenciales the contract must say so, because in case of doubt the courts tend to treat it as confirmatory, in which case there is no right to withdraw, only the obligation to complete.

That means that discovering the hole in the budget after signing the arras leaves two ways out, and both are bad: withdrawing and forfeiting what was handed over, or signing with the figures out of line. The arras contract must state the total price and the method of payment, the sum handed over and its legal nature, the maximum deadline for signing the deed, the allocation of costs and taxes, the state of charges and the undertaking to have them cancelled, the possession position and, if the purchase depends on financing, a condition subsequent allowing the sum handed over to be recovered if the mortgage is refused. This last clause is the one that prevents the most trouble.