Enjoying a second residence is something highly desired by many people. However, before embarking on the search for a new home, it is very important to calculate the purchase costs of that second home and also what its maintenance will imply from an economic point of view.
In fact, the first thing you should keep in mind is that mortgages for second homes do not offer such advantageous conditions as when they are intended for the purchase of a habitual residence. Generally, the amount loaned by the financial institution does not usually exceed 60% of the appraised value of the property. On the other hand, the conditions imposed by the entity are also usually harsher (due to the greater risk of default). So if you wantTo buy a second home you should have more savings and a better credit profile .
What expenses does the purchase of a second home have?
In general terms, the costs of buying a second home are the same as those of a habitual residence . As we already told you in our article on the costs of buying a new home , these can be more or less high depending on the type of property (size, price, etc.) and whether the purchase is made with or without mortgage . However, roughly speaking, calculate that you will need around 10-15% of the appraised value to pay for the purchase costs of that second home.
Expenses for buying a second home without a mortgage
Logically, if the sale is made without the need for a mortgage loan, everything will be simpler and cheaper . In this case, these are the main costs that you will have to face:
- Notary . Notary fees are governed by tariffs established by the Government , so they are the same everywhere (at most, you can benefit from a 10% discount). Its cost depends on the appraisal value of the home and the number of copies of the deed. The granting of the public deed of sale of a property is around 600-900 euros approximately.
- Property Registry . Once signed, the public deed must be registered in the corresponding Property Registry. This cost of buying a second home is also regulated by law, and again depends on the value of the property purchased (although it cannot exceed 1% of the property price). Calculate a disbursement around 500 euros on average.
- Management (optional) . If the buyer entrusts the procedures to an agency, he must add an extra cost to the operation of between 300 and 400 euros .
Expenses for buying a second home with a mortgage
First of all, it is important that you know that since the arrival of the last mortgage law , the mortgage expenses paid by the buyer have been reduced (for example, the Tax on Documented Legal Acts of the loan is now paid by the bank).
However, if the operation is carried out with the help of a mortgage, the following expenses must be added to the previous expenses for the purchase of a second home :
- Home appraisal . It can only be carried out by firms approved by the Bank of Spain. The price of the appraisal depends on the size of the home, but is usually between 300 and 600 euros . It is valid for six months and sometimes its cost is assumed by the bank in which the mortgage loan is contracted.
- Mortgage opening commission . It is the only one that the financial institution can currently charge (although sometimes it does not do so either) and its amount is usually between 0.5% and 1% of the borrowed capital .
- Copies of the deed of the house . Notary fees for signing the loan are assumed by the financial institution. Not so the copies of that deed, which must be paid for by the buyer if he wishes them. Its cost is reduced .
- Home insurance . Although this expense for buying a second home is not directly attributable to the operation, it is unavoidable, since signing a mortgage also requires taking out insurance to protect the home. Its cost depends on the coverage chosen, but an indicative price is from 200 euros .
Taxes for the purchase of a second home
Taxes also represent an important item in the purchase of a second home. Except for a tax aspect that we will discuss a little further down, the taxes for the purchase of a second home are also the same as when you acquire your usual home .
These are the taxes that are present in the purchase of a second residence:
- VAT . Without a doubt, it is the most important tax if you are going to buy new construction. VAT on a new home is 10% and 4% if it is officially protected housing (VPO), special regime or public promotion.
- ITP . Second-hand properties pay ITP instead of VAT. The amount of the Property Transfer Tax depends on each autonomous community (it is usually between 6 and 10% ). On the other hand, this tax usually includes discounts for large families or with people with disabilities, young people, VPO…
- AJD . The Tax on Documented Legal Acts corresponding to the home (that of the mortgage is paid by the bank) is specific to the new work and is levied on the signing and registration of the deeds in the Property Registry. Again, it is the autonomous communities that determine their tax rate, but it is usually between 0.5 and 1.5% of the price of the home.
- IRPF . Here is the big difference when analyzing the purchase costs of a second home, because it is taxed in the income statement. Specifically, the equivalent of 2% of the cadastral value of the property must be declared (1.1% if that cadastral value was revised after January 1, 1994). This declaration only needs to be made if the house is not rented and is for personal use. In the event that the property is leased, its taxation is different.
- Reliefs . The second residence does not have deductions unless it is dedicated to renting . If so, the lessor can be deducted for the amortization of the property and its maintenance (for 3% of the construction value), as well as for the expenses associated with the operation, administration and conservation, according to María del Carmen Martín, tax expert at Matritense de Asesoría. These include the IBI, garbage collection, community expenses and maintenance of the farm or home, those associated with the formalization of the rental contract and what is paid annually for home insurance.
Maintenance expenses of a second home
Making a calculation above, the maintenance costs of a second home are around 2,000 euros per year . However, this indicative figure depends on the characteristics of the property and the urbanization, its market value, etc.
Basically, a house bears expenses for taxes and fixed or maintenance expenses .
- Tax expenses : the taxation in the IRPF mentioned above (2% of the cadastral value of the property) and the Real Estate Tax or IBI (it varies a lot depending on the property, but the average is around 500 euros per year).
- Fixed and maintenance expenses : this item can include aspects such as community expenses (approximately between 1,000-2,000 euros), the rubbish fee , home insurance (from 200 euros, although if you have contracted a mortgage you already have one to which you can add more coverage), the payment of supplies (minimum fee plus the consumption of electricity, water, etc.); and alarm -if there is one- (about 300-400 euros per year).
As you have seen, buying a second home entails additional expenses that you must take into account. Although the total amount depends on many factors (whether there is a mortgage or not, the size and price of the home, its location, etc.), these expenses can be around 2,000 euros per year (not including the consumption of electricity, water, gas and electricity).