Official stuff

If you have fallen in love with Spain and you’re ready to buy your dream home, there are several steps that you need to take in order to get the ball rolling.

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Lovespain.com can help you through the legal and administrative aspects but in the interim, here is a quick summary of what you’ll need to do

Glossary of terms

VALOR CATASTRAL

The cadastral value of the property as decided by local tax authority

CONTRATO DE OPCIÓN DE COMPRA

Private purchase contract

ESCRITURA PÚBLICA DE COMPRAVENTA

Title deeds

ESCRITURA

Ownership deed

HIPOTECA

Mortage

IMPUESTO SOBRE EL VALOR AÑADIDO (IVA)

VAT

IMPUESTO SOBRE BIENES INMUEBLES (IBI)

Annual property tax

NOTARIO

A Notary who records the sale and purchase of land or property

NOTA SIMPLE

Property Registry certificate

NÚMERO DE IDENTIFICACIÓN DE EXTRANJEROS (NIE)

Fiscal identity number for number residents

BUYING PROCESSdollarhouse-icon

Like any other country, when you find the perfect property in Spain you will need to agree the price with the vendor.

 

  • Reserve your property

In order to secure the property (at the agreed price) and take it off the market you’ll need to pay a small deposit of between 3,000€ to 6,000€ and sign the Private Purchase Contract (PPC). We can recommend a Spanish lawyer who speaks your language and has bags of experience and together, as your agent, we would handle of this for you.As soon as you have signed the PPC, your lawyer will carry out legal searches to check that the Title Deeds are in order and there aren’t any charges, debts, sitting tenants or occupants and that all taxes and utilities are up to date. If not, then you can allow for these charges when making the final payment.

 

  • Option to Purchase Contract

Approximately, 2 or 3 weeks after you reserve the property, once the searches have been carried out, you will need to formalise the purchase by signing the Option to Purchase Contract and paying 10% of the full purchase price. At the same time you sign this contract, the date of the Purchase and when the Sale Title Deed will be signed will be agreed. At this stage the vendor must sell the property to you and cannot change their mind or sell to another party.

 

  • Purchase and Sale Title Deed

You will sign the Purchase and Sale Title Deeds before a Notary, who will legally identify you as the purchaser and vendor, ensuring that all legal requirements have been met and bills have been paid etc. If you prefer, rather than attend the Notary, you can give your lawyer Power of Attorney so they can deal with it on your behalf. Of course, at this stage you will need to make the final payment, less any taxes and disbursements. Once you have signed and paid the balance, you will become the legal owner of the property, you’ll receive the keys from the seller and you can crack open the champagne to celebrate. The last step is to register you as the official owner with the Land Registry.

BUYING COSTSpiggy-icon

You’ll need to allow an additional 10% to 12% of the purchase price to cover all fees and taxes, including the Notary, lawyer and of course your agents, lovespain.com. Here is a breakdown of what to expect:

 

  • Notary’s fees

The majority of the property purchase costs are calculated on a sliding scale according to the value of the property. The Notary is slightly different; the price will also depend upon the length of the contract and the number of purchasers.

 

  • Land Registry fees

Immediately after signing the Deeds and getting the keys, you’ll need to be registered at the Land Registry as the new owner. How much you pay in Land Registry fees will depend on the complexity of the document and the process can take up to 8 weeks.

 

  • Transfer Tax

The amount of transfer tax payable will depend upon the ‘declared’ value of the property, in other words the value listed on the Title Deed. For example, tax on a property valued under 400,000€ is 7 per cent and if valued above 400,000€ the tax will be 8 per cent of the purchase price.

 

  • Lawyer’s fees

Your lawyer will usually charge around 1 per cent of the purchase price + IVA.

NON – RESIDENT FISCAL IDENTIFICATION NUMBER – NIEhousehead-icon

Firstly, as a non-resident, before you buy a property you’ll need to register for an NIE number at the local police station. This will be your unique fiscal identification number. It’s compulsory and must be produced when you carry out any financial activities, opening a bank account, applying for credit etc. But don’t worry you don’t have to do this yourself, we can arrange for someone to take care of this for you.

COST OF OWNING PROPERTY IN SPAINkey-icon

Once you have purchased your little part of Spanish paradise, you will need to budget for a number of running costs, some universal such as taxes, utilities and others like community fees which are peculiar to Spain.

 

  • Utilities (water and electricity – gas is not generally mains supplied)

Most electricity companies operate a similar system of monthly bills, which include a small fixed rate for rental of the equipment and usage, plus a charge for consumption based on the amount of kilowatts used. Water is generally billed on a monthly basis according to consumption, water meters or included in community fees.

 

  • Community fees

Unless you live in a stand-alone property on your own land, your property will most likely be part of a community, in which case you will be liable for community fees. The fees cover all aspects of running the community including gardening, maintenance and electricity (communal areas) administration and sometimes water supply is included. The rate is set according to the running costs and is divided amongst all of the owners.

 

  • Income tax (non-resident)

As a resident and a non-resident you are liable to pay tax on any assets you own in Spain, such as property. The tax will be calculated on a sliding scale according to the ‘catastral’ (i.e. the tax value as decided by the regional tax authority, not the market value) and should be paid annually.

 

  • IBI (real estate tax, local rates and council tax)

This charge is also based on the ‘catastral’ value of your property as set by the local tax authority and is payable annually.

 

  • Basura (Rubbish collection)

The sum is set by the local authority and is payable annually.

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