Property Buying Costs in Ibiza – A comprehensive guide

Buying a house in Ibiza involves various costs beyond the property’s price.

This guide will help you understand these expenses and plan effectively. Legislation may change, and different providers may charge differently, but this guide will give you an indication of the additional costs surrounding property purchase in Ibiza.

Transfer Tax (ITP) and VAT

For second-hand properties, buyers must pay the Property Transfer Tax (ITP), which ranges from 8% to 11%, depending on the property’s value. For new builds, a 10% VAT (IVA) applies, along with a 1.5% stamp duty.

Transfer tax for existing homes can be quite substantial, especially for higher-value properties. This tax is tiered, meaning the percentage increases with the property’s price. For new constructions, VAT is straightforward but also represents a significant upfront cost.

Notary and Registration Fees

Notary fees and property registration costs are essential parts of the transaction. Typically, these costs range from 0.5% to 1% of the purchase price. Notaries handle the public deed of sale, while the registration fees ensure the property is recorded in the official registry.

These fees ensure the legality and official recording of the property transaction. Notary fees cover the drafting of the official sale document, while registration fees are for entering the transaction into the land registry.

Legal Fees

Hiring a lawyer is crucial to navigate the legal aspects of buying a property in Ibiza. Legal fees usually amount to approximately 1% of the purchase price. Lawyers assist with due diligence, ensuring that the property is free of legal issues and that the transaction is smooth.

A lawyer’s role is vital in verifying the property’s legal status and ensuring the contract’s fairness and legality.

Mortgage Costs

If you’re financing your purchase with a mortgage, expect additional costs. These include property valuation fees, which are necessary for the bank to approve the loan, and mortgage setup fees. Mortgage costs can amount to around 3% of the property’s value.

Obtaining a mortgage involves several additional steps and costs, such as the valuation of the property by a certified appraiser, bank fees for processing the mortgage, and possibly opening a Spanish bank account.

Local Property Taxes (IBI)

The Impuesto sobre Bienes Inmuebles (IBI) is an annual local property tax based on the official assessed value of the property, which may differ from its market value. This tax varies depending on the property’s location and size but is a recurring cost that homeowners must consider.

IBI is akin to a council tax, funding local services, so it’s essential to budget for this ongoing expense.

Banking Costs

Transferring money from abroad and issuing a bank cheque for the property’s payment can incur additional banking fees. We advise to check with your bank about these costs in advance to avoid surprises during the transaction.

Additional Considerations

In secured communities, there may be community fees for maintenance and shared services such as pools, gardens and security.

Real estate agent fees, typically 5% the purchase price, should also be considered and are included in the marketed sales price and are normally always paid by the seller.

Understanding the full scope of costs associated with buying a property in Ibiza is crucial for effective financial planning.

By accounting for taxes, legal fees, mortgage expenses, and other related costs, you can ensure a smooth and well-prepared purchase process.

Villa Contact is here to guide you through every step, ensuring you make an informed investment in your dream home on this beautiful island.