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Legal guide to buying property in Spain
Selection of the right property
The first step is of course to find the right property. After agreeing the terms of the purchase with the seller, the reservation fee must be paid. The standard fee is EUR 6,000 or, in some cases, 10% of the property value. The reservation fee is almost always paid in cash or by credit card, so before traveling to Spain, make sure that there is a sufficient and easily available amount within its range. Only after paying the reservation fees the property is off the market and you can with a calm mind take next steps.
Choosing a lawyer
Our motto is to guarantee a possible stress-free transaction to you that is why we always recommend using legal services.
The lawyers we work with are professionals with extensive experience, they will ensure that all Spanish laws are taken into account.
- Before the transaction they will apply for a NIE number for you,
- They will check the legal status of the property (make sure there is not a liability, pledge or debt) and make sure all local taxes and fees have been paid.
- They will prepare a private purchase agreement containing the terms of purchase negotiated by you, and then organize the signing of a notarial deed in a notary.
- After the completion they will sign on your behalf contracts with the media supplier (water, electricity, gas, telephone, Internet, etc.).
Opening a bank account
To set up an account with a Spanish bank, you need a passport or ID card and a NIE number. Opening an account takes a while and is free. An account is required to purchase the property and then to pay current fees for water, electricity, gas, telephone, Internet, etc.
Regardless of whether you are a resident of Spain (no residente), you can get a mortgage for real estate investments from any bank. Spanish banks grant customers not residents in Spain loans up to approx. 50% of the property value. To determine your credit standing your bank may request copies of the following documents:
- Passport / ID / NIE
- Contract of employment
- Certificate of income for the last 6 months
- Last income tax return
- Private contract with the seller
- Confirmation that the seller has paid real estate tax (IBI)
- Information about other loans concluded by you
- Notarial deeds confirming the ownership of other real estate, in Spain and abroad
- Employment certificate
- Bank account statements for the last 6 months
- Statement of Assets
- Prenuptial agreements (if any)
- Non-residents: certificate of non-resident status (form obtained from a bank)
- If you have your own business, balance sheet and confirmation of payment of VAT for the last tax period.
Private purchase contract
After the seller accepted your offer, it is time to sign the purchase contract. This usually happens after thirty days. You can sign the contract earlier, but when setting the date, it should be taken into account that your lawyer needs time to check the legal status of the property in Spain and any obligations incumbent on it. The purchase contract should contain all the terms of sale agreed by the parties, it can also set a date completion of the transaction at the notary public. Usually, when signing a private contract, the buyer pays 10% of the purchase price. This payment is not refundable if the buyer withdraws from the transaction.
Completion and signing of a title deed
In Spain, the sale is officially completed when both parties sign a public property title deed at the notary (escritura). You will pay the full purchase price (using own funds or mortgage) and receive the ownership of the property.
Costs related to the purchase of real estate
The purchase of real estate in Spain implies the payment of the following fees and taxes:
- Transfer tax (impuesto de transmisiones patrimoniales) in the amount of 8 to 10% depending on the value of the property.
- In the case of purchase from a developer, VAT of 10% or 21%. The 21% VAT rate applies when purchasing plots of land, commercial areas or garages.
- Tax on legal documents (impuesto de actos jurídicos documentados) of 1.5%.
- Plusvalia tax: usually paid by the seller. It is a tax on the increase in value of urban areas.
- Legal fees: 1% of the purchase price.
- Notary fee: the scale of fees is determined by law and is calculated according to the value of the property.
- Fee for entry into the Land and Mortgage Registers: an approximate rule should be 60% of the notary's fee.
After signing the notarial deed, the notary is required to provide information about the change of the ownership of the property to local land and mortgage registers. You have 30 days to pay all applicable transfer taxes related to the purchase and to complete the formalities related to the registration of your title. Usually your lawyer will deal with all these matters. The final registration of the document may take up to two months.