Buying in Spain
Purchasing a Property in Spain
If you are considering purchasing a property in Spain, it is essential that you take professional advice from:
1. An established estate agent with experience of the market.
2. A lawyer who is familiar with Spanish law.
Estate Agents
Once you have decided to make a purchase the first step is to choose an estate agent who has knowledge of the appropriate property market in Spain and experience within the area of your choice.
When the property is established (i.e. second home, investment property or permanent home), the agent will be able to guide you to the correct choice for your budget, quality, area and purpose.
An experienced and professional estate agency in Spain will match you with an agent who has expert knowledge of your chosen areas, speaks the same language and who is able to recommend tried and tested supplementary services, such as lawyers, financial advice and currency exchange.
An experienced estate agent will also be able to supply you with details of the extra costs involved of purchasing property in Spain . It is expected that taxes and charges will be liable, however, they may be different from your current local and national taxes and it important to be aware of the projected annual costs, such as; Community Fees, Property Income and Wealth Tax, Annual Real Estate Tax (IBI) and utility bills etc. It is advisable to seek legal advice to ensure that all of the charges are apparent.
Legal Advice
Choosing the right lawyer is essential in order avoid any unnecessary problems and is your guarantee that the correct Spanish legal procedure is adhered to. If you do not have your own lawyer, there are many excellent English speaking lawyers in Spain, who will be able to assist you and protect your interests throughout every step of the buying process.
The lawyer will make sure that the property is registered in the vendor's name; it is free from charges, debts or other liabilities (as any debt on the property will be passed on to the new owner).
Although, your estate agent is instrumental in organizing the fine details of your property purchase, it is your lawyer who will liaise with the vendor to negotiate the completion date, form of payment etc. and will ensure that the timetable of events is adhered to.
After you have put down your initial reservation fee, this is the stage that your lawyer will take over the procedure. The lawyers will draw up a private purchase contract and it is customary to pay a 10 per cent deposit on the total cost of the property which is non refundable if the purchaser decides against the transaction. However, should the vendor fail to fulfil their obligations, the deposit is refundable and the contract will be void and damages could be liable. Before the exchange of contracts, the lawyer will complete the necessary searches on the property.
On the completion date the lawyer will go to the Notary Public and sign the deed and pay the final payment of the purchase price. At this stage the property will belong to the purchaser and the keys will be handed over, completing the transaction.
The Notary Public will forward details of the title deed to the land registry to inform them of the new owner and to prevent the property being sold twice and at this stage taxes will be payable.
Taxes Payable
Re-sale properties - transfer tax (ITP) at 7%
New properties - VAT (IVA) at 7% and stamp duty of 1% (VAT (or IVA in Spain ) increases to 16% if purchasing plots of land, commercial premises or garage spaces).
Plusvalía - tax levied by local the town hall is based on:
- Area where the property is located
- Surface area of the land
- Date of the previous title deed
Lawyers fees - between 1 % & 2% of the purchase price plus VAT (IVA) at 16%
Fees Payable
Notary Public - charges calculated on a fixed scale ranging from:
€340 for a property price of € 120.202
€601 for a property price of € 601.012
Land Registry - approximately 40% of notary charges