Expenses to take into account when buying a home

Expenses to take into account when buying a home.

If you are immersed in the adventure of buying a home, surely you are interested in knowing the expenses you will have.

When buying a home, it is necessary to know the extra expenses that you will have and it will help you to know if the operation is within your expectations. Not knowing or ignoring them can cause you some unpleasant surprise when taking the step. For all these reasons, it is more than convenient to take them into account when setting the maximum amount that we will allocate to such an important investment.

Below we detail what they are, which vary depending on the Autonomous Community.

TAXES

For the calculation of taxes, it will be necessary to distinguish whether it is a new or second-hand home.

In the case of new construction, the purchase will be subject to two taxes:

  • VAT (Value Added Tax) of 10% in general, and 4%, reduced, in cases of protected housing, although the latter may vary depending on the autonomous community. The exception is in the Canary Islands, where the tax is called IGIC (General Indirect Canary Tax) and is 6.5% in general and 3% in social housing.
  • IAJD (Tax on Documented Legal Acts) that varies depending on the CCAA, from 0% in the Basque Country, to a maximum of 1.5% in Andalusia, Aragon, Cantabria, the Valencian Community, Extremadura, Galicia….. This The tax should not be confused with the IAJD of mortgage loans that from June 2019 in application of Law 5/2019, of March 15, regulating real estate credit contracts, will be assumed by the bank.

In the case of used housing, the tax will be:

  • ITP (Tax on Property Transfers), which also depends on the CCAA and ranges between 4% and 10%. This tax has a lower percentage if it is an Official Protection home, if the buyer is under 35 years of age, if he has some type of disability, in the case of a large family,….

NOTARY

In all home purchases, both new and second-hand, a notary must intervene to carry out the Deed of Sale. This will be chosen by the buyer and its cost, also called tariff, is regulated by the State and ranges between €600 and €1,000 depending on the purchase value.

PROPERTY REGISTRATION

The deed drawn up by the Notary must be registered in the Land Registry. Like the previous one, this expense is set by the State, depends on the value of the property and is between €250 and €700.

MANAGEMENT

These formalities of the registration of the Deed in the Land Registry and other paperwork can be contracted to an Agency with a liberalized cost, which ranges between €200 and €350.

To the price of the house that we are going to acquire, we must add approximately 13% of additional expenses.

MORTGAGE EXPENSES

If financing is necessary through a mortgage, the following expenses are generated:

  • Mortgage appraisal. . Normally, banks finance 80% of the lower of the values ​​between the purchase price and the property value, according to the entity. And to know the latter, you have to hire an Appraisal Entity to carry out a mortgage appraisal. Its cost varies between €250 – €600 and depends on the value of the property and the appraisal entity. It is valid for 6 months and can sometimes be used to go to different banks in search of the best financing.
  • Mortgage Opening Commission.. It will depend on the bank and it is around 2% of the value of the mortgage. Here also comes into play each entity that can sometimes considerably lower this percentage.

Let's take an example

Suppose that we are going to acquire a €200,000 second-hand home in the Valencian Community, that we do not have access to any type of aid or subsidy, that we will need bank financing, and that our allergy to paperwork leads us to hire an agency. In this case as expenses we will have:

  • 10% of the ITP on the purchase price: €20,000
  • Notary fees: approximately €700
  • Property Registry: approximately €250
  • Management: €200
  • Mortgage appraisal: €450
  • Opening commission: €4,000

This yields the not insignificant figure of €25,600, that is, around 13% of the value of the home to be purchased.

If we add to this 20% of the value of the home that the bank is not going to finance us, that is, €40,000, we arrive at an amount of €65,600.

Conclusion, to buy a home with financing, we will have to have 33% of the purchase value available

Isn't it true that these are not negligible percentages to not take into account?