The mortgage is not the only significant outlay when buying a property. In fact, there are numerous costs and taxes that must be incurred in order to formalize the transaction and become an owner.
These costs include the appraisal of the property, notary fees, the relevant registries and the corresponding taxes, such as VAT and ITP. It is recommended to have savings equivalent to 10% to 12% of the price of the property, varying according to the autonomous community and whether it is a new or used property.
What are the costs associated with buying a home in 2024?
For example, in the case that you are buying a 200,000 euro property in Tenerife, this is what you would have to pay adding up all the expenses: notary fees, fees of the professionals involved and taxes. It should be remembered that some expenses, such as notary fees, vary between several percentages, so the resulting figures may be approximate:
|Notary ( 0,2% - 0,5%)
|Land registry ( 0,1% - 0,25% )
|Lawyer (depends on the company)
|AJD ( 1%)
|ITP ( 6,5%)
The new tax value of homes:
Since January 1, 2022, the new reference value of the Cadastre is operative. This value is the taxable base for taxes as important as the Transfer Tax (ITP). That is to say, as we have seen, it is the key to determine how much tax has to be paid for the purchase of a house.
This change was included in Law 11/2021 on measures to prevent and combat fraud, approved in July 2021, although its implementation was postponed until 2022. After the modification, the taxable base is no longer the 'real value' that has generated so many headaches for the Treasury in recent times and is now the 'market value', which is determined by the reference value of the Cadastre.
In other words: in the case of properties acquired since January 1, 2022, taxpayers must declare according to the reference value of the Cadastre, since it is presumed to be the market value, regardless of the value for which it is deededed. However, if the deed value is higher than the reference value, this will be the taxable base for the taxes that apply depending on the case -ITP for the purchase of used homes or Inheritance and Gift Tax for inheritances and donations-. Taxing below what the regulations dictate can result in inspections by the Tax Authorities, and even in a sanctioning file for the taxpayer.
In the event that the taxpayer believes that the reference value does not correspond to the market value, he must appeal and prove it to the tax authorities. Therefore, the burden of proof falls on the citizen. To do so, they can provide appraisals of the property, photographs or a notarial deed justifying the real state of the property.
The arrival of this change generated uncertainty, especially because not all properties are 'assigned' this new reference value. In such a case, and as taxpayers are only obliged to pay tax on the "market value", they can rely on the deed value and it will be up to the Treasury to prove that the deed value does not correspond to the market value if it does not agree with what the taxpayer has declared.
Navigating the complexities of the new property tax landscape is crucial. At DOM TENERIFE Real Estate, we're here to assist at every step, ensuring you're delighted with your new home, leaving the paperwork on us!