a) Payment of Taxes: In general terms, the first payment in public deed for a new home by a developer is subject to value added tax (at the reduced rate of 10% of the purchase price) and stamp duty (at the rate established in each individual autonomous community, and which is usually between 0.5 and 1%, in Madrid this is 1%). However, in particular cases and taxpayer situations, certain allowances and exemptions may apply. The reduced VAT rate of 10% will also apply to the purchase of up to two parking spaces per dwelling and annexes located therein acquired jointly in the same public deed. Otherwise, the purchase of parking spaces and storage rooms acquired individually will be taxed at the general rate of 21%. In the case of a second-hand property, the transaction would be subject to a property transfer tax called the Impuesto sobre Transmisiones Patrimoniales Onerosas (at the rate established in each Autonomous Community, in Madrid this is 7%). The transfer of ownership would also require the payment of the Tax on Gains in Value of Urban Land (or Municipal Gains Tax) by the seller.
b) Legal Expenses: These are fees charged by the notary for the execution of the deed of sale, and are calculated in accordance with a tariff set by the government. These fees vary depending on the sale price as reflected in the deed of sale.
c) Registration Costs These are the fees charged by the registrar for the registration of the sale and purchase in the Land Registry. Like the notary’s fees, these are calculated according to a tariff set by the Government, and they vary depending on the sale price of the property.
d) Administrative or Processing Fees: These are the fees charged by the gestoría (this is a sort of agency that deals with official administrative processes in Spain) for carrying out the formalities subsequent to the signing of the deed of purchase (payment of taxes, registration, processing of capital gains, change in ownership of the property in the Land Registry). This may also include certain expenses prior to the signing of the deed, such as the verification of the title deeds and the state of encumbrances on the property.