Buy a new home or reform your present one?

We'll explain the pros and cons of each of these options, so you can decide which one is best for you
When buying a home, one of the first decisions is whether to choose a new home or a pre-owned home that can be renovated. The criteria used to make this decision are quite variable and will reflect the tastes, needs, and individual possibilities of the buyers. Furthermore, it is important to remember that buying a new home involves certain costs and taxes that differ from those of a pre-owned home. This means that we can differentiate between the fixed and variable expenses that go along with acquiring a home, depending on whether it is new or pre-owned.
Upper banner Fixed-rate mortgage Upper banner Fixed-rate mortgage
BBVA Fixed Mortgage
Enjoy the peace of mind of paying the same amount every month, with no surprises.

Fixed expenses when purchasing a home

The expenses that appear below are related to administration and management costs as well as payment of taxes. These costs vary depending on whether a mortgage is requested to finance the purchase of the home.

  • Notarization. The public purchase and sale document is formalized before a notary, and is needed in order to enter the sale into the Property Register and take advantage of the protection that this entry gives to the buyer. If a mortgage loan has been granted for the purchase, a loan document is also formalized before the notary at the same time as the purchase and sale document. This means that two notarized public documents are signed, the purchase and sale document and the mortgage loan document. The cost of formalizing these two documents is calculated based upon the price of the property and the amount of the mortgage loan granted.
  • Register entry. It is always advisable to enter the purchase and sale document into the Property Register, because when notice of this is published it provides protection against third-party claims. However, if there is a mortgage loan associated with the purchase this register entry will be mandatory, and in this case entry of both the purchase and sale document and mortgage document is required. The cost of the register entry will be determined based on the amount of the sale.
  • Tax on Documented Legal Acts (IAJD in Spanish). This is a tax paid on documents such as deeds, certificates, and notarized wills. When a home is sold the buyer must pay, depending on the region of Spain, between 0.5% and 1.5% of the price of the sale contract, as long as the sale represents a first transfer for purposes of VAT. If a mortgage loan has also been granted then an amount between 0.5% and 1.5% (again depending on the region of Spain) of the total mortgage liability must also be paid. For a mortgage of €100,000 euros, the Stamp Duty for the deed of sale would be equivalent to €1,000 (for a rate of 1%) and if the mortgage responsibility amounts to €130,000, the Stamp Duty would be equivalent to €1,300 (for a rate of 1%).

If you would like to get an estimate of the expenses related to the procedures described above, you can request one in advance from the notary and the Property Registry office.

Variable expenses when purchasing a home

  • Appraisal. This is requested if you apply for a mortgage loan. The price for this will vary depending upon the number of square meters and other characteristics of the home.
  • Management. The involvement of a management firm may be necessary if you apply for a mortgage loan, and the cost for this will vary depending upon which procedures you need to have performed.
  • Registry verification.
  • Opening fee or subrogation fee.

Specific expenses when purchasing a new home

  • VAT. Purchase of a new home is subject to payment of Value Added Tax (VAT), which for transactions of this type is 10% of the total amount of the sale price paid. For certain types of low-income or government-subsidized housing offered by developers, the VAT is 4%.
Central banner Central banner
We have the mortgage that is best for you
Discover BBVA mortgages and find the right one for you.

Specific expenses when purchasing a pre-owned home

  • Asset Transfer Tax (ITP in Spanish). This tax varies from one region of Spain to another, but the average rate for ITP is 8% on the net asset value of the property.

As you can see, the main difference between buying a new home and a pre-owned home is found in the type of tax that must be paid. This means that at first it may seem more economical to buy a pre-owned home, since in most regions of Spain the tax will be less than the 10% VAT that is charged for buying a new home.

However, if you decide to purchase a pre-owned home you also need to take into account the expenses for renovation, which will increase the final amount you will pay for the home.

CTA Study CTA Study
Mortgages - You might also be interested in Mortgages - You might also be interested in

You might also be interested in

  • Do you know why the Euribor varies? We'll explain what this rate consists of and why it varies on a daily basis.
  • Do you know what a mortgage credit facility is? At BBVA, we'll explain what it is and how it differs from a mortgage loan
  • Regardless of a property's appraisal value, all real estate has an official cadastral value registered for tax purposes.