Thinking of buying a property In Spain?
You need to be well informed about the process to avoid potential pitfalls. Here you will find description of 8 important steps of the legal process which are essentail while buying property in Spain.
You should also consider off-plan or a resale property option. However, buying a resale property can be safer as there are no surprises. The property will have a history and any problems are likely to have been resolved already.
There are many things to consider when selecting a property. Here are just a few of them:
Proximity to local amenities/schools/hospitals Proximity to public transport Possible noise pollution – higher in the summer months when close to tourist areas/hotels Beach access Road access New property or resale Local taxes This is by no means a conclusive list but it does give you an idea of things to bear in mind. Don’t forget, what you need now may be different in a few years’ time. You may not have children today, but are you planning to have them soon? This is likely to be one of the biggest investments you ever make. Be sure it’s the right one!
Check legal status of the property Explain the process and any associated costs Be available anytime to answer questions and offer advice Ensure that the property is free of debts and charges Ensure the utilities are paid up to date Check the usage status of the property Ensure there is sufficient planning permission in place if you intend to extend or modify the property
Usually, you will have to pay a reservation deposit at this point and sign an offer and deposit contract. This is to remove the property from the market and allow you or your lawyer the time to do the required checks without the risk of someone else buying it. This deposit is usually around 6,000€ and is refundable.
Once you have got approval from the solicitor that everything is ok for you to proceed with the purchase you will need to sign a private contract. Although this contract is not logged with any official registry, it is considered binding and you must be sure to read through it completely before you sign it.
At the point of signing, you will be required to pay a deposit, usually 10% of the purchase price but it can be more. If you subsequently pull out of the deal you are likely to lose that deposit so be sure before you sign. If the seller pulls out after the deposit is paid then you are entitled to claim double the amount of the deposit in compensation, unless otherwise stated in the contract.
The NIE (Número de Identificación de Extranjeros) means that you are registered with the Spanish authorities. It is required for you to purchase property in Spain. Obtaining an NIE is a relatively simple process that usually requires only one visit to the Oficina de Extranjeros. With the DNI number, you will be able to open a spanish bank account in any bank here. To make it easier with bank transfer and pay for your property deal.
Signing the title deed must be done in front of a notary at the notary office. At this stage, you will also pay the balance and receive the keys to your new home. You will receive a copy of the document at this stage, known as the Copia Simple. If you have taken a mortgage on the property, then the bank will retain the original document until such time as the loan is cleared.
Once the title deed is signed your details will be registered at the Land Registry. At this point, the utility companies should be informed of the change of name.
For the buyer: transfer tax (transmisiones patrimoniales) and stamp tax (impuesto de actos jurídicos documentados). If the seller is an individual, the buyer pays a transfer tax. This tax varies between 6% and 10% of the purchase price, depending on the region of Spain. Some regions like Andalucía have a progressive transfer tax, where the percent increases based on the price. If it's a storefront (local comercial) or parking space sold by itself, the transfer tax will be higher than 10%. If the seller is a real estate developer and the building or land to be built on represents a first-time transfer, then the buyer pays VAT tax instead, meaning 10% for housing, 21% otherwise impuesto.
For homes, you also pay a stamp tax. The stamp tax also varies depending on the region - between 0.75% and 1.5%.
You will need to pay your legal fees at this point. These are often included in the quoted price for the property but you should ask for a detailed receipt so you are aware of exactly what you are paying and what for. You should be given original invoices for the notary fees, and the taxes you have paid. Keep all these documents, invoices, and receipts.
It is important to make arrangements for your property taxes to be paid. How much you pay will depend on many factors, one being whether you are a Spanish resident. Both residents and non-residents are liable for IBI (council tax). However, non-residents must also pay imputed income tax in Spain. This is usually 2% of the cat