Legal and Conveyancing Matters
What you will need to know when buying your property in Spain:
Once you have chosen the property you wish to purchase, a reservation agreement is drawn up which takes the property off the market and freezes the purchase price. A deposit usually of around 3,000 euros is paid at this point. Exchange of private contracts usually occurs within 28 days after signing the reservation agreement. Completion of the purchase takes place before a Notary in Spain, known as the signature of the “Escritura pública de compra venta”. The “Escritura” is then taken to the Inland Revenue office to pay the taxes and then registered with the Title Registry Office.
Taxes and Costs When Purchasing a Property in Spain:
In general, a good way to estimate the approximate total costs involved in buying a property in Spain is to apply 10% over the purchase price. This amount usually should cover transfer taxes, Notary fees and Land Registry fees although it may not in certain cases.
Costs are broken down as follows:
1. Legal fees
These vary from 0.5% to 2% of the purchase price and will vary from lawyer to lawyer.
2. Transfer taxes or VAT
On new constructions VAT is paid at the rate of 7% of the declared Purchase Price. In addition on new constructions a stamp duty of 1% is also applicable.
In the case of resale property, instead a transfer tax is paid at the rate of approximately 7% of the declared Purchase Price.
These taxes must be paid before registering the purchase at The Title Registry. Please note that in Spain there are still some vendors who do not want to declare the full purchase price on completion and you should be advised by your lawyer on this point.
3. Notary fees and Land Registry fees
These may vary depending on the area and the value of the property but combined are often around 1% of the value of the property.
4. Plusvalía Tax
The Plusvalía Tax is the tax on the increase of the value of the land. It should be paid by the Vendor but in many occasions vendors try to impose this tax into the purchaser. The tax is fixed by the Council taking in consideration the year when the property was acquired and the year when the property was sold.
5. Mortgage costs
If you use a Spanish mortgage this will increase the taxes, notary and registry fees. You will also almost certainly have to pay an arrangement fee, often around 1% of the value of the mortgage. In addition, the lending source will almost certainly require a valuation and the fees for this service are relatively inexpensive.
NIE NUMBER
Any non-resident foreigner who buys a property or car in Spain is obliged to obtain an NIE number (Número de Identidad de Extranjero). If it is a couple buying property, then both must obtain NIE numbers.
The NIE number is required when you go to see the Notary to sign the title deeds (escritura). Your lawyer shall help you with this and the application process can take some time (up to 2 months), so ensure you deal with this at the earliest possible opportunity so that it does not delay completion.
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