Buying Guide Spain

The following information is intended as a guideline for persons wishing to purchase property in Spain, and is not meant to replace professional advice.

We strongly advise prospective purchasers to seek independent legal advice prior to signing any documentation.

We are the first steps?

By the time you have found a property you wish to buy you should ideally already have decided on the building society or bank you will be using, and the amount and type of mortgage you will be having. Lastly, but by no means least you should also have obtained quotations from a few solicitors and decided on which one you will be instructing in regards to the purchase.

Should I pay a deposit?

The majority of modern property developments in Spain have a management company, which manages the upkeep of the property development as a whole. The persons who own units within the property development own the Management Company and contribute to the running costs of the property development by way of service charges.

Do I need a Survey?

When you buy a Spain or Gibraltar property, the legal principle of “caveat emptor” (let the buyer beware) applies. To protect yourself, you need professional advice from a surveyor.

Before your bank or building society agrees to lend any money, they will insist on a survey of the property. In reality it will consist of little more than a valuation for mortgage purposes, unless you ask and pay for a more extensive survey.

Please contact us if you would like a quote from one of our panel of surveyors.

Which solicitor should I appoint?

Choosing a solicitor is not necessarily an easy matter. Although cost is an important factor, above all else you will want someone who will do a good job for you. Speed is vital because a delay at any stage could result in you losing the property you want. Hence the importance of your chosen solicitor keeping in contact with you on a regular basis.

House sales can fall through for many reasons, and it s advisable to ask your solicitor in advance what he would do regarding charging you in the event that the sale fell through for no fault of your own. If for example, you find an alternative property, many solicitors will not charge other than a nominal amount, but the point is well worth checking.

Please contact us if you would like a quote from one of our panel of lawyers.

What are the approximate purchase costs?

As a guide, the average total official costs involved in purchasing property are 10% of the purchase price, comprised as follows:

Transfer Tax on Residential Resale Property (I.T.P.)

Purchase price up to €400,000 = 8%
Purchase price over €400,000 up to €700,000 = 9%
Purchase price over €700,000 = 10%

Tax on New Residential Property

10% I.V.A.  (VAT) and 1.5% stamp duty is applied to the sales price of properties owned and being sold by developers, instead of the Transfer Tax stated above.

Tax on land & Commercial Premises

21% I.V.A. (VAT) and 1.5% stamp duty

Notary & Property Registry Fees

Notary Fees - By law, the first copy of the title deed is payable by vendor. The cost (no more than 0.5%) increases according to the number of pages and complexity of the title deed and the Property’s value.

Registry Fees - By law, this is payable by the buyer. These are calculated on the same basis as the notary fees explained above and are at most 0.5%.

Legal Fees: These are normally based on 1% of the purchase price, but be prepared to shop around and you should be able to get competitive quotes.

Plus Valia Tax - (Capital Gains Tax): This tax is based upon the increase in value per square metre of the land from the prior (vendor’s) purchase to the present day, according to the Town Hall Index value. In principle this tax corresponds to the vendor, but it is common practice along the Coast for the purchaser to pay it, because in the event of non payment by the vendor, the authorities will look to the current owner of the property for settlement.

As there are several variables used in calculating this tax, the amount payable can vary substantially and it is advisable to verify the amount payable before proceeding with the purchase.

Is there a Wthholding?

The present level of capital gains tax is set at 21%. In the case of non-residents, the purchaser is obliged by law to retain 3% of the sales price and pay it directly to the Spanish tax authority as credit for any pending tax. In the event that the 3% is greater than the actual capital gains tax payable, the vendor can reclaim the balance.