Purchasing a property here in Spain need not be as daunting as you may think, but we have set out some guidelines to help you.
We recommend that you always use a qualified lawyer. Somebody that speaks your language (if not, use yourself an interpreter) and one that knows the laws in the town that you are purchasing, so that they can liaise with the local registry office, notary, town hall etc. Bluewater Villas work with several certified, professional lawyers but our clients can chose one of their choice, if they wish.
We have broken down the purchasing process for you into 5 steps:
- View the property either by yourself or through an agent.
- Apply for your NIE if you dont have one, open a Bank Account & arrange your Mortgage Application if needed.
- Make an offer and pay a holding deposit
- Approx 2/3 weeks later – pay 10% deposit and signing of private contract
- Signing of title deeds at the Notary
Who is the Notary?
The only person able to sign the official deeds of a property is the Public Notary. A private reservation contract will be drawn up with the Estate Agency and a lawyer, but the actual exchange of deeds is signed and witnessed by the Notary.
How much is a normal deposit?
A normal deposit is 10% of the agreed purchase price although this is something that can be agreed between the two parties. The higher the deposit the better, as this prevents gazumping. Spanish law states that if a vendor decides to accept a better offer, once a deposit has been accepted, he must return double this amount in order to break the contract.
Can I loose my deposit?
A buyer can loose their deposit if they decide to pull out of the agreement once these monies have been paid. It is stated in the sales contract that this amount is non refundable if the buyer changes their mind.
Can a vendor break the contract?
A Vendor can pull out of the agreement but only if they are prepared to return any deposit received in duplicate as compensation to the buyer.
How long does it take for completion?
Completion can be as quick or a slow as both parties wish. Under normal circumstances, most completions are based on two months although this very much depends on the situation of each individual sale. For example, some properties are unable to complete due to summer rental agreements in which case a signing may take as long as six months. However, in a situation of property being empty and no mortgage being required, completion can be as quick as a couple of weeks.
PROPERTY PURCHASE COSTS:
Transfer Tax (I.T.P.) scaled at 8%, 9% & 10% – Payable by the buyer for the purchase of any real estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties.
If the “minimum fiscal value” of the property, as per the Regional Government, is greater than the price, then the minimum fiscal valuation applies: 8% is applicable up to the amount of 400,000€ or 30,000€ in the case of garages except those belonging to the dwelling and with a maximum of two; 9% is applicable to the amount between 400,000€ and 700,000€ or between 30,000€ and 50,000€ for garages; 10% is applicable to the amount exceeding 700,000€ or 50,000€ for garages.
|For a property of 1,250,000€|
|Up to 400,000€ – 8% =||32,000€|
|On 300,000€ (400,000€ to 700,000€) – 9% =||27,000€|
|Excess 550,000€ (700,000€ to 1,250,000€) – 10% =||55,000€|
VAT at 10% and STAMP DUTY at 1.5% – For any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader for BRAND NEW PROPERTIES.
VAT at 21% and STAMP DUTY at 1.5% – for PARCELS OF LAND, COMMERCIAL PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories.
Notary fees and property registry inscription fees
Notary fees can cost up to approximately €1.750 although the cost increases according to the number of pages or complexity of the title deed (e.g. transcription of statutes, payment in stages, property partially finished, etc.). As an example, an apartment costing €300,000 will cost around €546 in notary fees, whilst a property costing €600,000 will cost around €678 in notary fees. Any higher than this amount, the fees go up marginally. The property registry inscription fees also depend on the complexity of the transaction. For example, fees for an apartment costing €600.000 to be registered in the name of one person and purchased without a mortgage loan, will cost around €300. For an apartment with the same sales price to be registered in the name of 2 persons and purchased with a mortgage loan, will cost around €800.
Municipal Added Value Tax (PlusValía)
This is an “added value” tax based upon the increase of the Town Hall index value of the land only, from the prior (vendor’s) purchase to the present sale. It is usually not a significant amount with respect to apartments or townhouses – less than €1000 for the most part for an apartment or townhouse which last changed hands five or six years ago – but can be more in the case of villas with a large tract of land.
This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated. As there are several variable factors used in calculating this tax, especially the length of time of ownership of the property, the amount payable can vary substantially and should be verified before proceeding with the purchase.
The total official costs involved in purchasing a constructed residential property should be around 9-10% for resale properties or around 12% for new properties if VAT is paid on the purchase price, plus lawyer’s fees.