Purchase expenses in the Valencian Community: taxes and notary fees with examples

When buying a home in the Valencian Community, the advertised price is just the starting point. Specific taxes must be added to that amount, depending on whether it's a new build or a resale property, as well as notary, registration, and administrative fees, and, if applicable, mortgage-related expenses. Failing to factor these in can throw off your budget and complicate the transaction right at the signing.

This article clearly outlines the applicable taxes in each case, how the most common tax breaks work, and the approximate costs of buying and selling a property and paying a mortgage. We provide illustrative examples so you can plan ahead and know exactly how much you'll end up paying for your future home in the Valencian Community.

Taxes in the Valencian Community

There are various taxes payable when buying a home that ultimately affect the final price. Furthermore, each type of property has its own specific tax treatment, so it's important to understand the differences between them.

New construction: VAT + Stamp Duty (Documented Legal Acts)

New homes always come with some extras that are applied automatically, so the total cost is higher from the start:

• The 10% VAT , which is added directly to the purchase price for new homes

• The Documented Legal Acts , which in the Valencian Community is 1.5% and is paid when signing the deed.

For example, a new apartment in Alicante costing €150,000 generates €15,000 in VAT and €2,250 in Stamp Duty, so the final cost amounts to €167,250.

Second-hand: ITP (Property Transfer Tax)

Purchases of second-hand homes in the Valencian Community are subject to a 10% Property Transfer Tax. This tax is calculated based on the price stated in the deed. Furthermore, buyers who are not residents of Spain must have an active NIE (Foreigner Identification Number) to pay the tax without any issues.

Discounts and special cases (large family, disability, subsidized housing)

The Generalitat reduces the ITP by 6% on these special occasions:

• When a buyer under 35 years of age acquires their first primary residence.

• People with a disability equal to or greater than 65%

• Large or single-parent families

Primary residence vs. second residence

Unlike primary residences, which can access reduced rates, second homes and investment properties do not have any discounts.

Notary and registry fees

A buyer should bear in mind from the outset that notary and registration fees for the purchase will increase the final cost:

Notary fees: what determines them

The deed of sale must be signed before a notary, the cost of which is entirely borne by the buyer, and the notary's fees are regulated by the state. Each case is different, and the amount depends on the property's price; for example, it typically ranges between €600 and €1,000 for properties priced between €150,000 and €250,000.

Registration in the Property Registry

Registering a property in the Valencian Community incurs an additional cost ranging from 400 to 700 euros, depending on the property's value. However, it is worthwhile, as registration guarantees legal protection for the buyer and is always recommended.

Administrative fees: when and for what

If a bank is involved, it typically handles the paperwork through a third-party agency. Following the 2019 mortgage reform, the bank covers most of the costs, although the buyer can pay between €300 and €600 if they choose an external agency.

If you buy with a mortgage

When a purchase is financed with a loan, specific expenses arise that must be managed in conjunction with the lender. In many cases, a management company is involved to coordinate the paperwork, and their fee is usually between 300 and 500 euros.

Appraisal and related products (home/life insurance)

The appraisal is a mandatory procedure and its usual price ranges between 250 and 500 euros.

Often, the bank may require home insurance with fire coverage and in some cases offer linked but not mandatory life insurance.

Expenses assumed by bank vs. buyer

Since the 2019 Mortgage Law, the bank pays for the administrative fees, notary fees, land registry fees, and stamp duty on mortgage loans. The buyer only pays for the appraisal and, if desired, additional insurance.

Opening and amortization fee

Under contract:

• Some mortgages apply an opening fee of up to 1% of the loan.

• They may include costs for amortization ahead of schedule.

Other costs to consider

In addition to taxes and closing costs, the purchase may include some additional expenses that should be reviewed before finalizing the transaction. These amounts are not always mandatory, but they are common in many sales.

Certificates and verifications (property tax, community fees, utilities)

The buyer should verify that the seller is up-to-date on property tax (IBI), community fees, and utility bills. In fact, it is recommended to request proof of payment.

Professional fees (lawyer, real estate advisor)

Since the entire bureaucratic process can be confusing, many buyers turn to a lawyer or real estate advisor to review the contract and avoid mistakes. Their fees usually depend on the complexity of the case and can improve the security of the transaction.

Common mistakes and how to avoid them

In a real estate transaction, it's common to overlook certain details that increase the cost. Knowing the common mistakes will make it easier to plan expenses and avoid surprises after signing:

Not anticipating taxes according to type

Many buyers calculate the final cost without distinguishing between new and resale properties. This confusion can distort the budget, as VAT, Stamp Duty, and Transfer Tax have very different amounts.

Forget about post-writing expenses

Even after signing the purchase agreement, there are still outstanding payments. Many customers are surprised by procedures such as registering the property or updating utility accounts.

Miscalculating the provision of funds

It's common for the funds allocated to cover procedures and settlements to fall short. Therefore, it's advisable to review each item in advance to avoid later adjustments and unnecessary delays.

In short, when buying a home in the Valencian Community, it's essential to look beyond the sale price and calculate the impact of taxes, notary and registration fees, potential administrative costs, and mortgage-related expenses. Properly distinguishing between new builds and resale properties, considering whether it's your primary residence or a second home, and checking if you qualify for any reduced interest rates will make a significant difference in the final cost.

Planning all these aspects in advance will help you avoid surprises, better manage your budget, and compare options more effectively. In processes as important as buying a home, having a specialized team like Larrosa & Co makes things much easier: they guide you through reviewing the numbers, understanding which taxes apply to your situation, and anticipating all the expenses associated with the transaction. This way, you can make your purchase decision with complete confidence and a realistic view of how much you'll actually pay for your future home.

Frequently Asked Questions

In a purchase, common questions arise that directly affect the final price. These answers help clarify any important points before proceeding with the purchase:

Who pays the municipal capital gains tax?

The municipal capital gains tax is usually paid by the seller, although you can agree otherwise if you both agree. Also, it's worth knowing that if the property has lost value since it was purchased, it's possible to request a reduction or even be exempt from the tax.

Can taxes and expenses be financed?

Banks do not usually finance taxes such as VAT, ITP or AJD, but some entities allow you to cover part of the expenses if the appraisal value is higher than the purchase price.

How do expenses vary by province/municipality?

Notary and registry fees are the same throughout the Valencian Community, while municipal fees such as capital gains tax or certain certificates may vary.

What happens to the municipal capital gains tax if the property is sold at a profit?

When a property is sold for a higher price than it was purchased for, there is usually an increase in the land's value, thus triggering the obligation to pay municipal capital gains tax. This tax is calculated on the increase in value, and the local council applies its own tax tables and rates.

How much income tax do I have to pay if I sell a home at a profit?

When you sell a property for more than you paid for it, the difference generates a capital gain that is subject to income tax. This gain is not added to your general income tax rate; instead, it is taxed at specific rates depending on your income bracket. The higher the gain, the higher the applicable tax rate.

Generally, the tax authorities apply increasing tax rates to the gain (for example, one percentage for the first bracket, a slightly higher one for the next, and so on). Furthermore, in some cases it is possible to reduce or even avoid taxation: for example, if you reinvest the proceeds in your primary residence within the legal time limits or if you meet the exemption requirements based on age or personal circumstances.

Since regulations and percentages can change, it is best to review each case with a tax advisor or the Tax Agency itself before closing the deal, to know in advance what part of the profit will be allocated to Personal Income Tax.

Share