A good option to obtain profitability is to buy a property in order to lease it or sell it after renovation at a higher price. If you are thinking of investing in this type of property, it is advisable that you know what are the expenses in the purchase of an apartment or house to invest, since it will influence the total price that will be necessary to invest and the profitability of the operation.

Expenses in the purchase of an apartment or house for investment purposes

When buying an apartment or house, in order to obtain future benefits, it is necessary to take into account, in addition to the sale price of the property, all the associated expenses, since these will increase the final amount that will have to be disbursed, due to the fact that in the purchase of an apartment who pays the expenses is the buyer. The main expenses when buying a house are as follows:

Notary

One of the most important documents in the purchase of a property is the deed of sale, since it proves the ownership at a legal level and ratifies its situation and charges.

In order to correctly process the public deed of sale, it is necessary to pay the notary fees, both in the case of the purchase of a new home as well as in the case of a used one.

The amount to be paid for the notary’s services is regulated by the State, so the price will be the same in any office we go to. Thus, the prices of the notary’s services are between 500 and 875 euros on average. The variation in the amount is due to the value of the property to be acquired. VAT must be added to the above prices.

Land Registry

The deeds are registered in the Land Registry, for which a payment of between 400 and 750 euros is required, depending, as in the previous case, on the value of the property. VAT is also added to this amount.

Gestoría

The gestoría is a company that can be contacted to carry out the formalities related to the sale and purchase, to receive advice and to settle taxes .

Although it is not obligatory, it is common to use it especially in cases of home purchase with mortgage, although it is recommended in all cases . Unlike the notary’s office, the price of the agency is not regulated and is usually around 300 euros.

Appraisal of the house

When applying for a mortgage to a bank for the purchase of a house, the interested party will have to pay for the appraisal of the house so that the bank knows the amount to be financed.

This appraisal is valid for six months and the cost of performing it varies depending on who performs it, although it is usually between 250 and 600 euros.

Opening commission

Most banks charge this fee when granting a mortgage loan. The amount of the origination fee can be up to 2% of the amount of the loan requested.

Taxes on the purchase and sale of a home

In addition to the expenses in the purchase of an apartment, certain taxes are also applied to the purchase and sale of a house that the buyer will have to pay and that will make the amount of the purchase higher.

Value added tax or VAT

VAT is applied to the purchase of new homes and is 10% of the value of the property. It may be 4% if so established by the corresponding Autonomous Community for public housing. In the case of the Canary Islands the IGIC is applied, which is 6% on the price of the property.

Property Transfer Tax (ITP)

This is the tax paid on second-hand homes, equivalent to the VAT on new homes. The percentage to be paid varies depending on the Autonomous Community where the property is located, although it is usually between 6% and 10%.

There are reductions to these percentages in the case of subsidized housing, when the buyers are young or for families with many members, which can go down to 4%.

The expenses when buying a house are very important when taking into account the total amount that will be necessary when acquiring a property for investment purposes. Some of the most important additional costs are the notary’s office, the land registry, the agency, the appraisal of the house and the opening commission of the mortgage loan. In addition, you will also have to pay taxes when buying a house, such as VAT, stamp duty and transfer tax.

If you are thinking of buying a house to invest, and you have doubts about expenses and taxes, contact us and we will advise you.