Advice to Buy
A Property in Spain
Purchasing property in Spain is relatively simple and doesn’t present any significant problems- provided that you take note and follow the steps that we recommend! Equally, our real estate team will be delighted to guide you through the process of the purchase. If you don´t have a lawyer, it is recommendable to seek assistance of some sort in the sense of self-guarding your own interests. Stand Real Estate doesn’t work with a law firm as such, but rest assured, we have worked over the years with many competent and multilingual professionals, those of whom it would be our pleasure to recommend to you.
Once you have decided on the property that you wish to buy, the normal procedure in Spain is to put down a deposit. This could range between the sum of 3,000€ and 10,000€, dependent on the value of the purchase. This deposit accompanies a reservation contract in which states the names and supporting documents of both the buyer and seller, the agreed sale price and any condition that has been agreed regarding the indicated purchase. The deposit is usually paid to the real estate agent or your lawyer establishing an element of trust.
CHECKING THE PROPERTY
At this point, your lawyer or Stand Real Estate will ask for a simple note in the Land Registry of Property to ensure that all of the property documents are in the correct order, moreover, that there are no liens or debts related to the property and the person selling the property is really the owner.
Once the lawyer is satisfied and everything is in perfect order, the buyer and seller will then be asked to sign a private purchase contract. The buyer will then pay a 10% deposit (minus the reservation deposit paid). In this contract, the identities and details of both buyer and seller are established and the sale price and date for the final transfer of ownership of the property is agreed. Should the buyer decide to withdraw from the deal at this point, the deposit will be lost. If however, it is the seller who withdraws their property from the sale, they will be forced to reimburse the buyer with the deposit and that amount over, unless something else is agreed.
It is during this final stage when the outstanding amount of the purchase is paid and scripture is signed before a Public Notary is made. After the deed is signed, the lawyer representing the buyer will register the property on their behalf at the local office of the Land Registry.
There have been significant changes in the taxes surrounding the purchase of properties in Spain since the 1st January 2012. The following summary outlines the taxes that the buyer must pay from that said date.
The first charge is related to when the purchase is made directly to the developer: new homes.
VAT applies to all new properties (properties that have been newly constructed and acquired by the first owner at a rate of 10% of the purchase price.)
The second charge applies to when the purchase is made to another owner.
As of 1st January 2012 the transfer tax has risen as specified in the table below.
PRICE OF PURCHASE RATE OF TAX
0 – 400.000€ 8%
400.000€ – 700.000€ 9%
ADDITIONAL DOCUMENTATION REQUIRED FOR HOME PURCHASES
Spanish nationals are only asked for their identification number (those people whose names are going to appear on the scripture.)
If you are a non-resident, the Spanish Interior Ministry obliges you to obtain a certificate of non-residence which will determine your tax number, a necessary document for you to be able to sign the deal. It will also be required in the long run with regards to tax payments. This document is known as an NIE number. As of the 1st January 2012, local police stations do not accept NIE applications by power of attorney. As such, non-residents must apply for their NIE number directly and in person at a Spanish police station, consulate or embassy.
We highly recommend you to open a Spanish bank account from the moment that you begin the steps towards a property purchase, not only for necessity but it makes the payment of electricity bills, water bills and phone and internet bills easier.
It is also recommendable for you to create a Spanish will. It should be noted that it will only be related to assets obtained in Spain and will not influence or affect the assets obtained in your country of residence. Indeed, this will simplify the process of succession in the unfortunate case of death of the owner, also reducing the cost and duration of the process.