With over 30 years’ experience in the property market here in Spain and having all purchased property here ourselves, we are very aware of how overwhelming purchasing a property in a foreign country may appear. In fact, once you have found the right property for you, the purchase process in Spain is a very simple one and here is our guide to prove it really is as simple as 1,2,3…
With over 30 years’ experience in the property market here in Spain and having all purchased property here ourselves, we are very aware of how overwhelming purchasing a property in a foreign country may appear. In fact, once you have found the right property for you, the purchase process in Spain is a very simple one and here is our guide to prove it really is as simple as 1,2,3…
Signing a Reservation Contract effectively removes a property from the sales market and secures it for a prescribed period of time – usually 30 days.
This document, signed by you (or your representative) and the seller, confirms the agreed sales price. It is essential that, when traveling to Spain to view properties, you have funds available to pay the Reservation Deposit. This is usually €6000 and can be paid by credit card or bank transfer.
This is the point at which a sale becomes legally binding and we firmly recommend a local, independent lawyer is used at this stage. In Spain it is customary that the lawyer representing the seller will draw up the terms and conditions of the contract. Your lawyer will check these conditions on your behalf.
The contract should include payment terms and an estimated completion date. Your lawyer will also conduct a full conveyance of the property and will outline the total costs of the sale, having calculated fees and taxes.
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. This is the day the agreed balances are paid and you take ownership of the new property.
Final registration of the title deeds is likely to take between 2 to 3 months from the time the Land Registry receives all the paperwork.
There are essentially two areas regarding costs that purchasers must be aware of, the initial purchase costs and also running costs, essentially the costs of owning a property in Spain.
There are essentially two areas regarding costs that purchasers must be aware of, the initial purchase costs and also running costs, essentially the costs of owning a property in Spain.
The initial average cost is usually somewhere between 10-11% of the agreed sales price. These are normally paid on the day of the sale.
The costs of purchasing a property are broken down as follows:
If buying with a Spanish mortgage, be aware that these costs will increase to on average 14-15% of the agreed sales price.
Complimentary Tax* Purchasing a resale property in Spain currently incurs a Property Purchase Tax of 7%. The Tax Authorities may, at 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 8% of the difference between the declared purchase price and their own market value, where applicable.The possibility of receiving a Complimentary Tax demand should not put you off purchasing a cheap property, however it is important to be aware that this tax exists. Castles can calculate the tax before a purchase so it can be included in the purchase costs and budgeted for accordingly.It is also important to note that you do have a month in which this complimentary tax demand can be appealed. Given the amount of money that can be saved and the very high success rate when appealing, this is becoming an increasingly popular route to take.
We strongly recommend as a purchaser that you use the services of a lawyer to guide you through all legal procedures. They will ensure the property will be legally registered and transferred into your name and that it is free of all charges. It is our opinion that arranging Power of attorney, whilst still in Spain is the best way forward. This allows the lawyer to arrange your NIE number, arrange relevant taxes to be paid and ensure that the property is registered with the Land Registry, arrange for you to be registered with the local Town Hall for payment of local taxes and also arrange for connection or change of name with all utility companies. The lawyer can also represent you in the notary, freeing you form travelling to Spain for the completion of the sale.
We are fortunate to have a sister company Castles Asesoria, this helps us to help you all the more, throughout and beyond the purchase of your property; from transferring cars, insurances, none resident taxes and Spanish wills. Castles provide an in-house service, making it much easier for you, by taking care of all kinds of transactions and paperwork. We have over 30 years of experience negotiating the Spanish systems which can remove the frustration of dealing with different (and occasionally inconsistent) procedures.
Once you have completed your purchase there will be ongoing costs associated with ownership of your new property. Outlined below are the ongoing costs you can expect.
Community fees. There is often an annual fee to be paid to the community of owners for the up keep of the urbanization and its facilities. This includes swimming pools, gardens, lifts, painting and general maintenance, etc.
Fees vary according to the amenities available and discounts may be offered for early payment.
Council Tax/ Town Hall Rates (IBI and Basura – Rubbish). This is an annual local tax paid to the Town Hall, regardless of residential status. The figure varies depending on the type of property, size and location. Again, Castles will supply these details.
Property Owners Wealth Tax. As a property owner you may be liable to make a tax declaration in Spain. There are a number of exemptions and we recommend a consultation with our own advisers to guide you through the Tax System.
If you are considering renting out your property, you will be liable to pay tax and again we can have somebody advise you accordingly.
Electricity/Water/Gas/Phone – as per usage.
