ARRANGE YOUR FINANCE:
BE PREPARED !!! Before starting your property search or even making an offer, it is imperative to arrange your finances to cover the estimated costs of buying your new home in Spain.
APPOINT A LAWYER:
Although the buying process is quite straightforward in Spain, it will differ from your own country. We recommend that you appoint an independent lawyer (Abogado) who specialises in Spanish land law, fluent in your own language and who will safeguard your interests throughout the buying process.
MAKE AN OFFER/RESERVATION FEE:
When you have found the property you want to buy, show the seller that you are a serious bidder and make a realistic offer through your agent, preferably in writing and subject to contract. When the offer is accepted and in order to secure the property, it is normal to make an initial reservation deposit of between 6,000-10,000 euros, depending on the type of property. (The deposit is refundable if the negotiations come to an end).
When the reservation deposit is paid, your lawyer will check with the Land Registry that the documents are in order, ensuring that there are no outstanding embargoes or debts associated with the property, that any relevant planning permissions are valid and that the person selling the property is the legal owner. This process should take 10-14 days to complete.
SIGNING THE PRIVATE CONTRACT:
When your lawyer is satisfied that everything is in correct order, the next step involves the signing of the Private Purchase Contract (Compraventa). This is legally binding and specifies the payment schedule. Also at this stage a 10% deposit is paid to the vendor (less the original reservation deposit).
This contract includes the fiscal details of the buyer and seller along with the agreed sale price, a mutually agreed date for the final transfer of the property, any other conditions like items of fixtures and fittings to be included in the price and that all appliances and installations such as air-conditioning units are in good working order. (Afterwards, if the buyer decides to withdraw from the purchase they will forfeit their deposit and if the seller withdraws they will be obliged to repay double the deposit amount to the buyer, unless otherwise agreed).
SIGNING THE TITLE DEED:
Completion takes place in front of the Public Notary when the buyer pays the remainder of the purchase price due and the new Title Deed (Escritura) is signed. When the deed has been signed your lawyer will register the property with the Tax and Land Registry Offices. The buyer can then take possession and move into the property.
THE COSTS OF BUYING:
Comprising of the following:
1. For Resale Properties: Transfer Tax on a sliding scale of 8% tax for amounts up to €400,000, 9% for amounts between €400,000 to €700,000 and 10% for higher amounts.
2. Or for New Properties: 10% VAT if it is a property in a new development.
3. 1% Legal Fees (approximation, depending on the lawyer)
4. 0.5% Notary Fees
5. 0.5% Land Registry fees
1. IBI & BASURA TOWN HALL TAX: This is a tax set by the Town Hall based on the Catastral Valor of the house, which is normally lower than the market value. Covering rubbish collection, street lighting etc.
2. ANNUAL WEALTH TAX: This is a tax for non-residents which varies whether the property is rented or not. If the property is not rented, you pay 24% of 2% of the Catastral Valor. If you plan to rent the property and receive an income, you are obliged to declare the income in your tax returns. In many cases non-residents simply pay a flat rate of 24% of the net rent and deduction of expenses.
3. COMMUNITY FEES: These are set by the community and can vary considerably in different urbanizations. The fees cover the maintenance of installations, swimming pools, gardens, lifts, lighting and communal areas etc.
4. BUILDING AND CONTENTS INSURANCE: Cover in Spain is generally combined into one policy.
5. UTILITIES: Payment of electricity, gas, water, telephone services.
The information in this guide is approximate and is not intended to replace professional legal advice.