Buy a property process in Spain. Learn everything related to buying a spanish property to renovate in Spain.

Important legal and tax information related to buy a property in Spain.

Important legal and tax information related to buying a property in Spain

Legal Advice and Assistance
As a non-Spanish citizen and as you don’t know us yet, we recommend you choose a local lawyer to advise and assist you if you need it. We always recommend a local gestoria like most Spanish people and businesses use because they are administrators, accountants and lawyers at the same time so they can deal with everything related with the purchase of your property for a small fee. Also they are very familiar with the processes and transactions related with properties and have a good relationship with local public administration offices including the public notary.

Prevention is always better than cure. The gestoria will take care and assist you in all the different steps involved in all transactions. Choosing the right gestoria is your guarantee that Spanish legal requirements are met, that the property is registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. In Spain it is not necessary that a lawyer does the purchasing paperwork because it is the public notary’s job but you can be assisted by the gestoria in all the process and transaction.

If the information on this page is not sufficiently clear enough, we recommend that you appoint a chosen law firm or gestoria and they will explain the procedure involved in buying a property in Spain and the associated costs.

Information related with charges and taxes
The purchase of the property will involve the following expenses:
1. The Notary charges according to a fixed scale, for example, € 340 for a property price of € 120,202.
2. Land Registry, as a rule of thumb, is 40%-65% of what the notary charges.
3. The Spanish taxes:

3.1 If you are buying a re-sale property you are obliged to pay Transfer Tax (ITP) at 7%.

3.2 If you are buying a new property or a property in the course of construction from a promoter, developer or habitual trader, then you should pay VAT (IVA) at 7% plus Stamp Duty at 1%.

3.3 The VAT (IVA) rate increases to 16% if you are purchasing plots of land, commercial premises or garage spaces.

3.4 Plusvalía is a tax levied by the local Town Hall based on the particular area where the property is located, on the surface area of the land, on the catastral value and on the date of the previous title deed. This tax may range from a few hundred euros to as much as several thousand euros on larger properties with a lot of land. By law the vendor is obliged to pay this tax but it is common practice for the parties to negotiate on who is to assume this liability.

3.5 Finally, bear in mind that your gestoria will charge fees for his professional services normally between 1% and 2% of the price plus VAT (currently at 16%).

When considering buying a property in Spain you should be aware that additional legal and tax costs can add around 10-12% to the price and budget accordingly.
Buyers would usually be expected to pay:

• Transfer Tax on resale property in Spain at 7% of the new title deeds value; or
• IVA (VAT) at 7% plus 1% stamp duty on new property in Spain

Sellers would usually be expected to pay:

• Capital Gains Tax on any increase in title deeds value
• Plus Valia - a tax which is charged on the transfer of property in Spain

All these charges are based on a property ready to move into. Renovation projects are very different in many ways so please contact us for more details about this.

More about Spanish Taxes
90% of all properties related to debts in Spain are owed by non-residents! In Spain, tax can be levied by three tiers of government:

• Central Government
• Regional Government and
• Local Municipalities

In addition, the system is very much based on self assessment, especially for the non-resident, which effectively means they are required to: Obtain the right tax form, calculate the tax due, complete the form, submit to the Spanish tax office, pay the tax!

Many non-resident property owners remain completely ignorant of their tax obligations – until they come to sell their properties. This then prompts the authorities into action often leading to some nasty surprises!

You should ask for details of the outgoing costs payable every year to maintain the property, namely the Annual Real Estate Tax (IBI), the community fees, the charges for rubbish collection, the water rates, the electricity charges and the Property Income and Wealth Tax, in respect of the property you wish to buy.

We recommend you discuss this with a Spanish Gestoria to be sure about all matters related with your Spanish taxes. We will introduce you a local gestoria to deal with this and other issues related with your property.

Also you can contact a specialist UK adviser in Spanish Tax Administration as Numero Logical but this service will be much more expensive that a Spanish gestoria.