Buying a House in Spain

The following guide is intended as a brief introduction to some of the terminology in Spain and we hope it gives you a good basic idea of Spanish legal procedures for buying property.

It is a good idea to take time to explore the region before deciding to buy. Take a couple of weeks holiday and try and get to know what it’s like out of season when the tourists have left. In July and August the beaches are full and so are the car parks, it’s wall-to-wall people, hustle and bustle, and usually quite hot. Try visiting in the winter, autumn or spring time and discover what life in Spain is about.  Do you want to be in the town, just on the edge of town or away from it all in the countryside?

A good source of information for buying property in Spain is http://www.spanishpropertyinsight.com. 

We highly recommend that you consult with an independent solicitor before purchasing a property.

NIE Number

If you intend to buy a property in Spain you need an NIE number, which is simply a unique indentification number for taxation purposes. This number is needed before a property can be purchased and before a bank account can be opened.  This application requires the completion of application forms, written in Spanish, so the safest way to ensure that this is done correctly is to give power of attorney to a solicitor in Spain.

Once you have decided on the property that you want to buy, the process is this.

Nota simple informativa

With this document from the Property Registry (Registro de la Propiedad), you’ll find out if the property is free of debt, the owner of the property and if the description of the property matches what the buyer has been told (to avoid surprises about missing square meters).

The pre-agreement

Before signing at the notary and completing on the property it is normal to sign a contract with the seller and the buyer. It’s a simple document in which the seller expresses their intent to sell the property to the buyer, and the buyer expresses their intent to buy at the price and conditions agreed.  At the same time, the buyer gives to the seller a percentage of the agreed sales price usually 10%. The agreement in Spain (called contrato de arras) is if the buyer backs out of buying the property after signing the contract and paying the deposit, they lose the deposit; if the seller backs out, they have to pay the buyer double the deposit. Both parties may of course choose another type of agreement as they prefer.

Certifying the transfer of property

The property transfer must be certified by a notary. The deed of purchase will be given to the buyer after the notary reads it and the parties present agree to the contents of the document. The following must be presented: proof of identity (passport, dni, nie or power of attorney) of both parties, the seller’s title of property (a form that reports the investment to the Central Register), and the buyer’s payment. The buyer and seller sign the contract; beneath their signature, the notary signs and the deed is ready for taxes.

Taxes

For the buyer: transfer tax (impuesto de transmisiones patrimoniales) and stamp tax (impuesto de actos jurídicos documentados)

If the seller is an individual, the buyer pays a tax of 8%  of the price specified in the title deeds. 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 7% for housing, 21% otherwise. If for housing, you have to add a stamp tax.

For the seller: a local tax called the plusvalia

With a copy of the title deeds, the seller has to visit the town hall (or wherever local taxes are paid) so the plusvalia can be calculated. After submitting the relevant forms, the seller will receive in the post a letter telling them how much they have to pay for the plusvalia. This amount is calculated based on the number of years they have owned the property and on the valor catastral. Please note that each town council has a different way of paying and calculating the plusvalia.  It is best to consult your solicitor or the notary’s office.

Property Registry

If you want to be sure that your rights to the property are fully protected by law, you have to register your title deed at the local office. Take a look at the original deed of the seller to find out which is your local office.  For example for property sales in Vejer our nearest Registro de la Propiedad is in Barbate.  You will be charged a fee by the office for registering the title.

For more information click here

 

Further Costs to Consider

Apart from the 8% transfer tax you should also take into consideration the following:

  • Solicitors fees
  • Land Registry and Notary fees
  • Agency commission of 2.5% of sales price
  • Architect/Surveyor fees