The Real Costs of Owning and Renting Out a Second Home in Spain

Purchase Costs

Before you can enjoy your property in Spain, you need to consider the upfront purchase costs. These are often underestimated but can add up significantly. The primary purchase expenses in Spain include:

• Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP): Typically 6% to 10% of the purchase price, depending on the region.
• Notary Fees: Approximately 0.5% to 1% of the purchase price.
• Registration Fees: Around 1% of the purchase price.
• Legal Fees: Hiring a local lawyer is highly recommended and usually costs between €1,500 and €3,000.
• Obtaining an NIE Number: Around €100 to €150.

Total Purchase Costs: Between 10% and 12% of the purchase price.

Annual Maintenance Costs

Once you own the property, you’ll need to account for the annual costs of maintaining it. These can vary greatly depending on the location, property type, and available amenities.

• Community Fees (Comunidad de Propietarios): For apartments or properties in shared developments, monthly fees cover maintenance of communal areas like pools, gardens, and lifts. These range from €50 to €300 per month.
• Property Tax (Impuesto sobre Bienes Inmuebles, IBI): Similar to property tax in the Netherlands, this is usually 0.4% to 1.1% of the property’s value, depending on the municipality. For a €200,000 property, IBI typically ranges between €400 and €1,000 annually.
• Insurance: Home insurance costs range between €200 and €500 per year, depending on the property’s value and location.
• Maintenance and Repairs: Expect at least €500 to €1,000 annually for general upkeep and unexpected repairs.

Total Annual Maintenance Costs: Between €1,200 and €4,000, depending on the property type and location.

Rental Costs

If you plan to rent out your property, additional costs will arise, which should be factored into your rental income projections. Key rental expenses include:

• Platform and Commission Fees: If you use platforms like Airbnb, fees range from 3% to 15% of the rental income, depending on the platform’s policies.
• Property Management: A local property management company can handle tenant relations, maintenance, and cleaning, typically charging around 20% of the rental income.
• Tourist Tax: In many regions of Spain, you must pay a tourist tax of €0.50 to €2 per person per night.

Total Rental Costs: Approximately 25% to 30% of the rental income.

Example Calculation

Let’s calculate the costs for a property in Spain with the following details:

• Purchase Price: €200,000
• Community Fees: €150/month
• IBI: €600/year
• Rental Income: €1,200/month
• Platform Fees: 12%

Purchase Costs

• Purchase Price: €200,000
• Purchase Costs (10%): €20,000

Annual Maintenance Costs

• Community Fees: €150 x 12 = €1,800
• IBI: €600
• Insurance: €300
• Maintenance: €500
  Total Annual Maintenance Costs: €3,200

Rental Income

• Annual Rental Income: €1,200 x 12 = €14,400
• Platform Fees (12%): €1,728
• Management Fees (20%): €2,880
  Total Rental Costs: €4,608

Net Annual Rental Income

• Rental Income: €14,400
• Minus Rental Costs (€4,608)
• Minus Annual Maintenance Costs (€3,200)

Total Net Rental Income: €6,592

Conclusion

The real costs of owning and renting out a second home in Spain can be substantial, but the benefits of investing in the Spanish property market can make it worthwhile. It’s essential to consider not only the purchase price but also the ongoing costs and rental expenses to ensure your investment remains profitable.

By planning carefully and gaining a realistic understanding of the expenses, you can enjoy the advantages of a second home in Spain while maintaining financial stability.

If you need assistance in finding the perfect property in Spain or want to learn more about the costs of ownership and rental, contact us at Alicante Sun Realty. We’re here to guide you every step of the way.

Schedule a free consultation today!