Expenses you must assume when buying a home

We agree that buying a home, whether new or second-hand, is one of the most important decisions of our lives and also a moment of happiness. We buy the property for personal enjoyment and as a first residence or to rent to third parties, usually having a home in our name will accompany us for life. But the total price of housing is not the only expense to be faced. As collegiate administrators of properties in Valencia, we explain all the expenses you have to assume when buying a home, since it is a complex and, above all, expensive process.

To this are also added the different taxes that will have to be paid depending on the autonomous community in which the property is located, which also varies depending on whether the purchase is made with a mortgage or without it.

Expenses of buying a home without a mortgage

As you will read below, the expenses involved in acquiring a property represent previous savings of between 10 and 12 percent of the total price of housing, although this will depend, as we said, on the autonomous community. Thus, in general terms, the costs to be borne by the buyer are as follows.

Notary fees

Whether it is a new or second-hand house, this expense is fixed. The State regulates the fees of notaries when the purchase is made in a public deed, so they all charge the same, but the amount varies depending on the number of copies of the deed and the total of the operation.

Thus, depending on the price of the house, the notary fee ranges between 600 and 1,000 euros which, of course, will not be deducted from the total price of the house, as it is an additional expense.

The Land Registry

One consequence, so to speak because it is a mandatory action, of the notary’s signature is to register the deeds. That is, the public deed of the purchase of the home, which must be registered in the Property Registry.

The fees are also set by the State and depend on the price of the property.

Management services, optional expense

The process of registering the deed and settling taxes when buying a property without a mortgage can be done directly by the buyer, so it is the only optional expense. The fees of the managers are free and there are no specific fees, but, in general, they range between 300 and 400 euros.

Taxes linked to the sale: VAT, ITP and AJD

This point is more complex, because we talk about taxes that depend on factors such as the price of the house, whether it is new or second-hand and the autonomous community in which it is located.

  • The most important tax is the VAT(Value Added Tax), whose tax rate for new homes amounts in 2021 to10% on the value of the house, unless the home is officially protected, which in that case will be reduced to 4%. This, as we say, is usually because there are communities, such as the Canary Islands, in which the percentage of new housing is 6.5.
  • If the home that is purchased is second-hand, the tax that is applied is the Property Transfer Tax (ITP),which also depends on the community and the total price of the house. It is between6 and 10 percent and can be raised or reduced by several factors, such as being a young buyer, with a disability, large family or that it is a VPO home.
  • Finally, the Tax on Documented Legal Acts (AJD)is imposed on both new and second-hand homes when making the deed of sale. Once again, it depends on the autonomous community and has a fixed and variable part. This second applies only to new housing and with a mortgage.