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Buy Your Property

    
                                        

                                                                        

                                                                                                                    


    


                                                                                                            

                                

                            

                                                

                    

                                                
                

            

        

	




    
    

                    
        

            

                                    


    
Each member of the Castles team have bought property in Spain, and we have personally experienced the process first hand.


We completely empathise with the challenges and our mission is to guide and support buyers from the start of the process, through to a completion of the purchase and beyond.


In Spain the process is quite simple, but the team will be on hand to provide both legal and practical advice to make the purchasing process as easy and stress free as possible.


Here are the steps to acquiring a property in Spain:




                            

        

            








    
    

                    
        

            

                                        
    
        
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    1.
    
            
    
            
    
                                    
    Reservation Contract
    
                                                    
    Signing a Reservation Contract (once a price and inclusions have been agreed with the seller) confirms the agreement of your purchase and in doing so removes the property you have chosen from the open marketing and advertising.  This is for a prescribed period – usually 30 days – to enable sellers and buyers to arrange legal representation and commence any applications for funding and other administration.
    

    This Reservation Contract document, signed by the buyers and the sellers, confirms the agreed sales price and an anticipated timescale for the completion which can be agreed to suit both parties.
    

    When traveling to Spain to view properties with an intention to buy, it is very important to have funds available to pay the Reservation Deposit. This is usually €6000 and can be paid by credit card or bank transfer.
    

    The terms and conditions of the deposit are explained within the Reservation Contract so that all parties are aware and clear on their responsibilities from this point.
    

    
                            
    
        
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    Private Purchase Contract
    
                                                    
    The Private Purchase Contract is the time at which a sale becomes legally binding and further financial commitment is paid towards the property by the buyer.
    

    The Castles Team strongly recommend a local, independent lawyer is appointed from Reservation so that the PPC is fully reviewed prior to being signed by the buyer.
    

    In Spain it is customary that the lawyer representing the seller will draw up the terms and conditions of the contract.
    

    The buyer´s lawyer will check these conditions on their behalf once both parties are satisfied with the contract terms, which will include payment terms and an estimated completion date it is signed by both parties and payment of 10% of the purchase price is then due. The buyer´s lawyer will also conduct a full conveyance of the property and will outline the total costs of the sale, having calculated fees and taxes.
    

    
                            
    
        
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    Completion
    
                                                    
    The formalities of a purchase are completed before a Public Notary, an independent “referee” who oversees the sale and ensures the parties have complied with legal requirements including payment of appropriate taxes.
    

    The Completion date is the day that the purchase funds are transferred via bank accounts and the buyer becomes the new owner of the property.
    

    Final registration of the Title Deeds (Escritura) is likely to take between 2 to 3 months from the time the Land Registry receives all the paperwork.
    

    
                            
    
        
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Buying A Property FAQ

    

    
    

    
    

                    
        

            

                                    

		

		

							

					

						
					

					
Purchase costs

				

				

					
The average amount to allow for covering costs to buy a property is approximately 10% of the agreed sales price.


The costs of purchasing a property are broken down as follows:


7% Property Purchase Tax (payable to the Spanish Government.)

1% +IVA (VAT currently 21%) Legal Fees

Public Notary Fees

Land Registry Fees


When using Spanish Mortgage in the buying process, the costs will increase to approximately 13% of the purchase price.  This allows for application fees, processing and provision of legal documentation and records of the mortgage loan, transfer of funds and other administrative costs in registering the Mortgagee´s (lender´s) Charge over the property which the Mortgagor (buyer) has used the mortgage (money) to buy.


				

								

					

						
					

					
Complimentary tax

				

				

					
Purchasing a “resale” (previously owned) property in Spain currently incurs a Property Purchase Tax of 7% of the purchase price (as listed above).


The Tax Authorities may, on a later date, consider the declared purchase price is not a correct valuation. Using their own market valuation, they may then issue a tax demand of 7% of the difference between the declared purchase price and their own market value.


The possibility of receiving a Complimentary Tax demand should not deter from purchasing a property, however it is important to be aware that this tax exists.


We can help buyers in calculating the tax before a purchase is agreed, then it can be budgeted for accordingly.  A Complimentary Tax Demand can be appealed within one month.


				

								

					

						
					

					
Legal fees

				

				

					
We strongly recommend the use of Property Law Services to guide the buyer through all legal procedures. A lawyer will ensure the property becomes legally registered into the new owner´s name and is unencumbered.


Arranging a Power of Attorney is also recommended. The Power of Attorney for Property Purchase can be arranged at the Public Notary office and enables the buyer´s chosen Lawyer to carry out various essential administrative processes required (only) in the property buying process on behalf of the buyer.  This includes:


Acquiring a SPANISH TAX number (required when purchasing any asset in Spain), called an NIE number which will remain an individual´s tax number in Spain for life.


Make payments to Tax Authorities as are mandatory.


Ensure that the property Title is registered with the Land Registry


Arrange registration the local Town Hall for payment of local taxes – there is an annual tax applicable to the property for public services provided.


Arrange for connection or change of contract name in conjunction with all property utility companies.


Representation of the buyer at the Public Notary Office enabling the purchase to proceed without you being physically present in Spain when the purchase completes.


				

								

					

						
					

					
Public notary fees

				

				

					
Relevant costs for the services provided by the PUBLIC NOTARY and the NOTARY OFFICE for property acquisition to be carried out and authorised.


				

								

					

						
					

					
Land registry fees

				

				

					
Relevant costs for the legal Transfer of Title of the property from the name of the seller´s ownership to the name of buyer´s ownership names.


				

								

					

						
					

					
Running Costs

				

				

					
Once the property purchase is completed, there are ongoing costs associated with the ownership of the property as follows:


Community fees


There is usually an annual fee to be paid to the community of owners for the maintenance and buildings insurance of the urbanization and its communal facilities. This includes swimming pools, security, gardens, lifts, painting and general maintenance.


Fees vary according to the amenities available, and discounts may be offered for early payment and/or direct debit payments.


IBI Tax (Council Tax/ Town Hall Rates for Public Services)


This is an annual local tax paid to the Town Hall in respect of the property.


The figure varies depending on the type of property, size and location.


Property owners’ wealth tax  


Property owners need to make an annual tax declaration in Spain.


There are several exemptions. We recommend a consultation with your Spanish lawyer/tax adviser to guide you through the Tax System and the property owner´s responsibilities and potential tax liabilities.


If a Property Owner rents out a property – short or long term – a licence to do so will need to be obtained.  There will be taxes due on any rent received and again we can have somebody advise you accordingly.


Utilities


There are various companies offering Water, Electricity, Gas, Internet contract facilities in Spain.  Costs vary depending on usage and contract type.


The utilities should be connected and in use when a property purchase is completed to eliminate expensive reconnection charges.  Suppliers can be changed as per personal preference.