Andalucian Country Living

BUYING A PROPERTY IN SPAIN

Once you’ve chosen a suitable property, the price and terms will need to be agreed.  A reservation contract will be signed by both parties and an agreed reservation deposit paid (normally in the region of 5000 euros). If you haven’t already appointed a lawyer now would be a good time to do so.

What to expect from your Spanish lawyer
As well as giving legal advice at each stage of the process, your lawyer will check the property registry to investigate any encumbrances or debts registered against the property. If anything untoward is discovered he will advise on how best to deal with it and whether you should, in fact, proceed at all. When completion takes place your lawyer will lodge the title deed with the land registry and then take care of any remaining formalities such as opening accounts with local utility companies in your name and the payment of any transfer taxes

Exchange contracts
With the offer accepted and the reservation deposit paid, the next step is to exchange private contracts, ‘Contrato privado de compraventa’, which states the agreed price and what is to be included in the sale. This usually happens within two weeks from the offer being accepted and is where your lawyer really starts to earn his money by conducting property searches and making sure that there are no outstanding debts attached to the property, for which you may be liable. This is confirmed in a document called a Nota Simple. In most cases you will now be required to pay a non-refundable deposit of around 10%.

Final completion and registration of the title deed
Final completion takes place when the title deeds are signed before a notary and you pay the balance of the purchase price. The signed deed is lodged with the land registry and your lawyer will take care of the remaining formalities such as payment of the relevant transfer taxes.
In addition to the purchase price of your new property, you will also need to pay a stamp duty as well as a tax called an IVA, which is set at around 7% of the property price.

When you purchase a new property, you need to register the deeds in your name, which requires a small fee. For all miscellaneous charges (including the above), it is normally recommended that a buyer should budget to pay 10% on top of the value of the property.

Each year, owners of Real Estate must pay IBI, which is a tax issued by the local council for all owners of property. If you are purchasing a second hand property, ensure that you are given copies of previous receipts as proof of past payments.

The final tax to mention is a wealth tax, which is charged annually in connection with the value of the property you own.


Conclusion
It is important to prepare for the purchase as much as possible in advance, and choosing the right professionals to handle the sale is essential. Knowing all of the costs and taxes in advance for buying the property is particularly recommended in order to avoid unexpected costs after the purchase, especially in terms of Capital Gains Tax. The following is rough breakdown of the costs for the buyer:-

IVA & Stamp duty – approximately 7% of purchase price
Legal Fees – approximately 1% of the purchase price
Notary & Registration Fees – approximately 1% of purchase price
Municipal ´Plusvalia´ Tax Tax paid every time a property is transferred and based on the increase of the value of the land during the time that the seller has owned the property and calculated in accordance with the rateable values, it does not depend on the selling price. This payment is subject to negotiation between buyer and seller and should be stated in one of the clauses of the private contract as to who is responsible for this cost.



THIS IS A GUIDE ONLY AND NOT TO BE TAKEN AS READ PLEASE CONSULT A LAWYER