Tue. Jun 18th, 2024

Before the decision to buy a home, a series of questions arise that are linked to different factors that intervene in the process. In previous posts, from Oi Realtor we have detailed the different steps that the operation entails, the documents that must be available, the duties and obligations of the interested parties, etc. In this opportunity, we will try to answer one of the most common questions that a person asks when starting the acquisition of their next home. What should be bought, a new or used home?

In this sense, throughout the post you will be able to find the advantages and disadvantages of both options, what tax each of them is taxed and some important factors that you should consider when choosing the type of home, you will buy. We at nphp are here to help. Keep reading!

Is it better to buy a new or used home?

When deciding to buy a home, a person must invest money, time and effort. Therefore, finding the right house involves a number of factors, both technical and personal. The environment and a good location become essential and in turn, the following aspects are of utmost importance:

  • How the house is distributed
  • What is the quality of the construction and the materials used
  • What is your energy efficiency

If we refer to the personalization of the home, that is, in the possibility of choosing the design, the materials and, in many cases, how to distribute the spaces, this factor becomes one of the strengths of the new home over the used. This is because, the buyer will be in charge of the assembly and project design of their next home. Therefore, the level of satisfaction and loyalty with the new home is higher.

Next, we will describe the main points to consider to evaluate which is the home that best suits the needs of each buyer.

Pay attention to possible surprises

When choosing to buy a new or used home, it is essential to keep in mind some aspects that may arise unexpectedly. Therefore, the main recommendation to avoid future problems is to stop that the home meets each of the necessary conditions of habitability. In other words, it has a good electrical and gas installation, pipes in good condition, working taps, etc.

Also, it is very important that you plan if the home will need reforms or concrete fixes, for example, humidity. At this point, if it is a second-hand property, you should pay much more attention. This is because the building has already been inhabited and therefore its facilities have been used. Therefore, one more point to consider is the age of the property. The roof is an area that many people forget to maintain and they do have a finite lifespan. However, you can get repairs and replacements with companies like Acorn Roofing, so if there are problems, it’s not necessarily a dealbreaker – you just need to make sure you get the right price for the house to compensate. 

With regard to first-hand properties, these types of surprises do not usually appear because there is a period established by law that guarantees the new owner of the same. In other words, the expense corresponding to the reforms will be in charge of the construction company.

Consider the price of a new or used home according to your financial resources

Price has always been a fundamental aspect to consider when choosing to buy a new or used home. Therefore, the factors that will depend on the choice will be diverse. The main factor to take into account when evaluating and comparing costs is the financial resources available to make the purchase. That is, consider whether the payment will be in cash or financed through a mortgage loan.

Therefore, the recommendation is that the price of the new or used home adapts to your personality as well as your pocket. In this way, you will avoid debt and enjoy a home to suit you.

In general, second-hand properties have a lower average price per square meter. On the contrary, and logically, a newly built property with brand new materials will demand a higher average price per square meter.

In this sense, the age of the property must be considered since the less years it is, the closer it will be to the price of a new one. On the contrary, the difference can increase the older the construction is. In these cases, it is of great importance to consider which reforms will have to be carried out. And, consequently, project an estimated extra expense so as not to run the risk of making the investment in the purchase more expensive. On the other hand, if the renovations are done by the seller, they will raise the selling price per square meter.

Then a new question arises that has to do with the total value that must be invested in the renovations. Would you rather spend on renovations or invest in a new apartment?

What are the taxes on a new or used home?

To the aforementioned factors, you must add the taxes that are taxed when buying a new or used home. We recommend paying great attention to this point since the Spanish tax system is rigorous and non-compliance can result in penalties.

In a first point, the Value Added Tax (VAT) and the Capital Transfer Tax (ITP) must be identified. The first is taxed on the new home and the second on the used one. Both taxes are probably familiar to you. Well, we have dedicated several articles to explain how your tax rate and period work. However, on this occasion both tributes acquire a decisive role.

VAT and IAJD in first-hand homes

The Value Added Tax is responsible for taxing the purchase and sale of new homes. That is, it must be paid when the property is transmitted or delivered for the first time after its construction is completed. The VAT tax rate governs according to the type of home that is for sale:

  • 10% for homes that are considered free.
  • 4% for officially protected dwellings.

This tax, in turn, is applied on the joint purchase of a garage or annexes as long as they do not exceed two units.

VAT is a national tax, therefore, it applies in the same way throughout the Spanish territory and for all types of buyers. This is because it taxes the consumption of goods and services by society in general.

The Tax on Documented Legal Acts is another of the taxes levied on new homes. It is a tax that is assigned to the autonomous communities, therefore, its value varies from one to another. Its tax rate is between 0.5% and 1.5% on the total sale value of the home.

As it is compatible with VAT, this tax is in charge of tax on the administrative departure and on the notary documents of the purchase and sale process. We refer to the realization of the public deed, the notarial testimonies and minutes, the registration in the Property Registry.

ITP in used homes

The Asset Transfer Tax, as its name indicates, taxes the transfer of properties that have already been awarded by some type of owner previously. That is, about used homes. It is a tribute that, like the ADJ, which is assigned to the communities, therefore, its tax rate will also vary.

For example, in the Madrid community the ITP tax rate is 6%. In the community of Castillo La Mancha it rises to 9% and in others to 10%. These are communities such as Valencia, Galicia or Catalonia. It is important to consider that, in some communities, there are exceptions when paying the tax according to the conditions of each buyer.

Financing the purchase of a new or used home

If the purchase of a new or used home is made through the award of a mortgage loan, the mortgage will pay the IAJD in both cases, as well as the notarial expenses, the public deed, etc.

What differences are there in the energy efficiency of a new or used home?

The European Union has established requirements to preserve environmental care by reducing gases, saving electricity consumption and constantly promoting the use of renewable energy. These conditions are intended to minimize energy consumption. Consequently, several years ago a project was approved that establishes a procedure that certifies the energy rating of buildings. The document includes the amount of CO2 emission and energy consumption.

With the passage of time and the increase in awareness of environmental care, the certificate has acquired a fundamental role when promoting new homes within the real estate market. This has also influenced the decision of buyers since they have begun to take this variable into account.

As a result, when it comes to first-build properties, there is a tendency to find promotions that focus on high energy efficiency. This means that, in the day-to-day life of those who inhabit the property, the energy demand will be lower.

For its part, at this point, used homes tend to represent a higher energy consumption and, therefore, on a day-to-day basis, it will demand a greater amount of essential services, such as electricity, gas, water, etc.

How long does it take to access the house?

At this point it is essential to consider the needs of each particular buyer. That is, how long does the new owner need the home to be able to inhabit it? Depending on the urgency of each situation, a new or used home will be better.

Buying a second-hand property will allow almost immediate access to it. This situation will be possible as long as the property does not need remodeling or major renovations due to the age of its construction. Which is why ehsaas emergency cash program nadra is offering such accesses.

On the other hand, access to first-hand homes will not be immediate unless when the purchase is made it is already completed. However, this type of property admits greater facilities when it comes to financing your payment. This is because they can begin to be paid from the beginning of the building and conclude with the delivery of the keys.

Pros and cons of used housing

  • Age of the house: A semi-new home may not be the best option since its cost will not differ much compared to a newly built home. On the contrary, a house with an age of 15 or more years, can cost up to 30% less compared to new homes.
  • Size and modernityused properties tend to be larger. However, they tend to be less modern when it comes to the type of materials with which it is built.
  • Remodeling: with good planning, in case the home needs some type of reconstruction, it is possible to decipher if more will be spent than on the purchase of a new home.

Pros and cons of new housing

  • In relation to a used home located in the same geographical area, the price of a new home can be 30% higher.
  • The new homes tend to be distributed with small spaces, but used efficiently.
  • If the first-hand property is part of a modern complex it will cause an increase in the value of essential services, surveillance and security.
  • During the first years they hardly need continuous maintenance. However, it may be that in the first months they may present hidden defects. These imperfections in new homes are guaranteed by the construction company.

We hope that each of the points that we have presented throughout the article has been useful to you and that you have more tools to choose from when buying your home. If you have any questions, you can leave us your comment at the end of the note.

And if you are looking to buy a new or used property and need help with the operation you can contact us. The real estate agents at naya pakistan housing scheme loan process have 10 years of experience in the luxury real estate sector and we can accompany you from the beginning to the end of the process so you don’t have to worry about anything. Write to us!