The real cost of buying an apartment in Madrid
The real cost of buying an apartment in Madrid.
Many people are now looking to buy properties in European capitals and cities. One of the most sought-after areas is Madrid, Spain, because of its location to many other European capitals and above-average standard of living. Madrid apartments for rent are plentiful, but is Madrid expensive?
If you are a foreigner looking to buy an apartment in Madrid, you will need to go through some red tape before you can do so. The Spanish property market is full of quirks, so let Moving2Madrid help you purchasing Madrid apartments. Knowing what to expect when purchasing property in Spain will help you avoid the dangers of establishing a life abroad. High capital gains tax and swings in the Spanish real estate market are factors to consider when purchasing Spanish property. In most cases, it is best to use a professional relocation company to help with the move.
One of the most notable things about Madrid is the diversity of the different suburbs that make up the city. These range from being extremely high-end such as Salamanca and Malasaña to much more affordable areas like Hortaleza and Ciudad Lineal. With plenty of Madrid apartments in between these two social areas, there is usually something for everyone.
Property for sale Madrid is usually quoted in terms of the cost per square metre (M2), so it is easy to gain some kind of comparison between apartments for rent in Madrid spain. By this method, you will see properties in some highly desirable areas being advertised for something like 6,000 € per M2. More affordable properties may be advertised for a price of 1,800 € per M2. That makes quite a substantial difference to the overall purchase price of Madrid apartments.
Moving2Madrid offers the best in apartment in Madrid, and they can help you find something to fit your budget and lifestyle from the comfort of your chair.
Legal requirements.
When buying a property in Spain as a foreigner, you only need an NIE – the Number de Identificación del Extranjero. This identifier number, which is unique to each person, is required to complete any transaction in Spain. You must have it before signing the deed because it must appear on any documents that you sign or are issued in Spain. The NIE is not difficult to obtain, but it does take time and is essential for your property for sale in Madrid. Moving2Madrid will make the procedure as simple as possible for you to receive the NIE.
Furthermore, while not required, having a bank account in Spain will make all of the requirements easier by speeding up payments and possibly saving you some commissions. Also, if you own a property in Spain and are not a Spanish resident, you must select a tax agent to act for you in all tax affairs. Moving2Madrid also helps you with this procedures.
Financial requirements.
Taxes. These will figure heavily in any property for sale in Madrid and will typically end up being between 6% and 10% of the total purchase price. The majority of these taxes are VAT or its equivalent. If you buy a new built property, you must pay 10% IVA (Spanish VAT). When purchasing a used flat in Madrid, you must pay a 6% property transfer tax (ITP). This is Spain’s lowest ITP rating. Other regions, such as Valencia and Barcelona, have rates ranging from 7% to 11%.
When purchasing a property for sale in Madrid, you will have to pay a stamp duty (also known as IAJD, or Impuestos de Actos Juridicos Documentados). This covers the legal work required by the local authority to register the property with the land registry. These range between 0.3% and 0.7% of the purchase price of the property for sale Madrid.
Administrative and legal requirements.
Property for sale or apartments for rent in Madrid spain will always require a number of officials to carry out the legal and administrative functions. These will include:
A lawyer. Your lawyer will cover all of the legal aspects of the sale and will charge around 1% of the purchase price of the Madrid property for sale.
An architect. While optional, you should have your potential property examines by an architect. The cost will depend on the size of the property, but expect 600 € to 900 € for this service.
A Gestoría. This is an expert in the Spanish bureaucratic system and can help you navigate it. Spanish administration can be very complex, so it its worth spending the 1,000 € to 1,800 € on a good Gestoría, and make your Madrid property for sale much easier.
A Notary. In many Mediterranean countries, notaries are used as a go-between for the buyer and the seller. They make sure that both parties understand what they are signing up for. Sounds like a Gestoría? Well, kinda, but one working for the common good. You’ll pay around 1,000 € to 1,800 € for your Gestoría services.
All of these aspects can mount up, so it is worth keeping an eye on the finances as you proceed. Buying property in Spain isn’t usually a problem for foreign nationals, but there are some surprising aspects, such as the downpayment being held in escrow, who could be the notary.
There are plenty of Madrid apartments for rent, but because the city is fast becoming a go-to place for the hip and trendy, they are being sold quickly. As with any property purchase, prior to making a property acquisition, basic research and analysis work must be completed. It is critical to ensure that the property is in good condition and that the contracts of purchase and sale, as well as the mortgage loan, will not cause complications.
Of course, the problems with property for sale in Madrid can be eased if you use a professional relocation company such as Moving2Madrid. They can assist with all the problems that you might find in buying Madrid real estate
Do all of these things, and you’ll have wonderful Madrid real estate to love.
Posted on 14 December, 2019 by Admin in Costs, New? Start Here
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For a 300k€ apartment, our rule of thumb is to budget 15% more. So plan for 345k€. As for getting your money back . . . our strategy is to buy a property in need of renovation (which is easy to find in Madrid because the apartment stock isn’t up to the quality seen in other cities. In our experience, our clients find that every 1€ spent on renovation yields a 1.5€ return. You also need to take into account overall market pricing trends. For example . . . that same apartment purchased in 2016 would yield an additional 40% return (more or less) in today’s market- pre renovation.
Add 15% more to the final purchase price
Thank you, really nice article. But I would like to understand this. If I’m planning to buy a property in Madrid and let’s say that the list price is 300.000€. To that price I should add all those cost meaning that I would end up paying somewhere around 330.000€? But then after buying if I would put the same property to the market again, the real market price for the property would be still 300.000€. So as an investor, the price / market should go up at least 10% that I would actually get back what I paid originally?
So what is the real cost?
[…] article, the purchase price numbers we give are “all-in.” Meaning, they include all closing costs and refurbishment costs. For Moving2Madrid clients, closing costs typically amount to 10.5-11.5% of […]