A SUMMARY GUIDE TO PURCHASING PROPERTY IN SPAIN

Choosing a property

When making a journey to Spain with the intention of purchasing, it is advisable to ensure that sufficient funds are available to cover the reservation deposit.

Normally this is 10% of the purchase price when buying from resale, or around 6,000€ in case of an off-plan purchase. A cheque from a foreign bank account can take up to 10 days to cash so it is advisable to make a credit card available.

Choosing a Lawyer

Always use an independent lawyer who can provide documentation in a language convenient to the purchaser. It is worth remembering that prior to any contract being signed, the lawyer will check upon the terms and conditions established by the other party, whether an individual or a developer (in case of an off-plan purchase). M&C International Corporate Lawyers is able to guide you in this process in English, French, Italian and Hungarian. A lawyer will obtain information from the Land Registry that the property is in the ownership of the new owner and is free of charges and embargoes and is up to date with payments of local contributions and community charges etc. It is advisable to open a Spanish Bank Account as soon as possible. Obtaining an NIE certificate (fiscal number for foreigners is now compulsory. We will also help you with the application process.

Exchange of Private Contracts

Upon acceptance of the offer by the owner, the next step in the sales process is to exchange private contracts of sale or to sign an option to purchase. This normally takes place within two weeks following formal acceptance of the offer. The appointed lawyer will have completed his searches and investigations of the property and will have arranged with the owner the procedure for the cancellation of any outstanding debts. The private contract of sale (or option to purchase) will reflect all the agreed terms of the offer and impending sale and set out the date for final completion at the Notary. It is customary practice at this stage to pay 10% of the purchase price.In the case of an off-plan purchase, the appointed lawyer will deal with the developer’s sales and/or legal staff in order to check the expressed terms and conditions are correct for the purchaser, the building licence is in place and the payments are made on time according to the agreed schedule. It is also normal that developers will establish a payment schedule with 20 to 30% at this stage.

Financing

When financing is required to purchase the property, it is advisable to seek for all possibilities. Mortgages in Spain for non-residents are normally up to 70% of the valuation price. M&C ICL can recommend you expert mortgage brokers for the whole European market. A mortgage will normally increase the costs around 3% (opening commission for the bank, mortgage broker’s fees, stamp duty and notary and registry fees). Final

Completion at the Notary

A sale is formally completed in Spain when the public title deeds of purchase are signed before a Notary, the final payment made and possession given to the buyer.

Registration

Once signed, the Title Deeds will need to be taken for registration to the local Land Registry (which may take up to two months). When a retention has been done because the vendor is a non-resident, we will take care of paying that amount to the Tax Authority.

Taxes and Other costs involved

• IVA (VAT): When buying off-plan or directly from a developer, at current rate of 7%.
• Stamp duty: In this case, there is an additional 1% of Deed purchase price to be paid as stamp duty.
• Transfer Tax: 7% of purchase price, when buying in all other cases. There is no stamp duty on purchase in this case.
• Lawyers’ Fees: Usually between 1% and 2% (depending on work to be done and its length) of the purchase price + 16% IVA. Our firm is proud to offer the best service at international standards and more affordable prices. Please contact us for free advice and a quotation for your particular case.
• Notary and Registry Fees: They normally amount for another 1% or 2% of the purchase price.
• Plusvalía: 200-1000 euros. Municipal tax based on assessed increase in property value. This tax should be usually paid by the seller.