It is difficult and exciting at the same time to choose a property to have your home in Spain. However, choosing the perfect place is not the end: you have to fulfil some formalities until title of your new home is obtained.
Always look for the guidance of a Lawyer qualified in Spanish Law. Using a lawyer is the biggest guarantee to avoid unexpected surprises. Your lawyer will make a “search”of the property to be purchased and will also get you the most advantageous deal possible when dealing with developers or any other vendors. He will keep you updated on the progress of the purchase and will provide you with full details on all the financial transactions and the legal side.
Contract and deposit
Once you have found the property you have been looking for through your lawyer or an estate agency, the first step is to make an offer on the house through your lawyer or estate agent. If accepted, you will have to pay a reservation fee to take it off the market and to secure the property whilst negotiations between the parties’ legal advisors are held. If your offer is accepted, a private agreement will be drawn up between your lawyer and the seller, in which the terms and conditions of the sale are stated such as a completion date and the conditions of the transactions, which should usually contain an assurance by the sellers that the property is sold free of charges, tenants and mortgages. Please note that properties in Spain are free hold, not lease hold as in the UK.
Completing the purchase
Our law firm will prepare the documentation required for the transfer of ownership. On the appointed day buyer and seller, and/or their legal representatives, meet at the notary’s office to sign the official transfer of Title Deed from the Seller to the Buyer .The witnessing of the accompanying documentation by the notary acts as your legal safeguard. The change of ownership will be recorded in the official registry and completes the process, leaving you safe in the knowledge that your property purchase is official and free of encumbrances.
All properties in Spain should be registered with the land registry where you can obtain the exact details of the owner, the size of the property and details of any mortgages, debts or judgments against the property. Only the people or company named on the title deed have the right to sell the property.
For anything that involves paying tax like owning a property or a car, or to work in Spain you need and NIE number. This number is necessary for all non-residents. Your lawyer will be very pleased to assist you with this matter and solve any other query that you may have regarding purchasing in Spain.
We recommend that you make a Spanish Will to dispose of your assets in Spain to avoid expensive and complex legal procedures. Spanish laws protect family heirs in that they restrict the testators freedom to dispose of their estate to anybody they choose.
Cost of purchase
Generally speaking, you have to budget for costs of approximately 11% on top of your Spanish property purchase price. This will cover solicitor’s costs, notary public fee, land registry, stamp duty and VAT. A breakdown of all the costs involved is provided below.
Which of these two taxes is levied will depend on the type of property you are purchasing; the property transfer tax is levied on resale properties and is charged at 7 % of the new title deeds value. But if you purchase a newly built property from developer you will pay a different tax called IVA (VAT) which is charged at 7% of the selling price – plus 1 % stamp duty.
Distressed Spanish Property
Most people know that property in spain has been having a hard time recently and that there are some great deals for investment property around if you look hard enough. But you do have to be aware of the distressed property in spain which is being over valued and then discounted by the estate agent. This is not a true discount and buyers looking for a good investment need to be sure they are getting a discount from the true price of the property.
Who Pays What?
The buyer is responsible for:
- Transfer Tax (or IVA plus stamp duty when buying from a developer)
- Property Registration Fees
- Notary Charges
- Lawyer’s Fees
The seller is responsible for:
- His own Capital Gains Tax on any increase in title deeds value
- Plusvalia Tax
- Selling Agent Fees
The normal custom is for the seller to pay the Plusvalia, if however the buyer agrees to pay this tax, please remember that it is registered against the land and you will have to pay if the vendor fails to do so. This tax is often not demanded until some time after completion.
Information supplied by Anderson & Asociados Abogados – Property specialist lawyers in Spain.