The Buying Process
Choose a broker
Always choose an authorized and registered broker who can find the right property for you and who can also give you guidelines during the exploratory talks with the owner.
Choose a lawyer
It is advisable to hire a lawyer in Spain who can advise and guide you from the start of the purchase process during the purchase. He will explain to you the necessary legal guarantees for the purchase of the property and check whether the conditions set by the Spanish law are met, for example, whether the property is free of loads, debts and rights and whether all taxes and service costs have been paid to the homeowners' association.
The investigation of the property
The examination of the property depends on the choice you have made (a new building or existing house/house and/or plot of land etc.) If you choose a lawyer in your own country this can considerably slow down the purchase process and increase the costs of lawyers.
After finding a suitable object, the broker will complete a reservation form with you. By means of this form, the property is reserved for you and the price is fixed. A deposit of € 3.000 to € 15.000 must be paid. Therefore, before you come to Spain, you must prepare and have this amount available. We advise you to pay this amount by credit card. It is not advisable to pay via a check issued by a foreign bank because the processing takes about 14 days. Such a delay can still cause the sale to fail. Signing the private purchase contract Approximately 14 days after the signing of the reservation contract, the next step in the purchase process is signing the private purchase contract between the buyer and the seller (or their legal representatives). Your lawyer has terminated his audit and investigation of the property at that time and will have arranged the procedure for settling any outstanding debts with the owner. When you sign the private purchase contract, you pay 10% of the purchase price of the property. You must transfer this amount to your own Spanish bank account. The opening of a Spanish bank account can be arranged by your lawyer. We have been able to stipulate favorable conditions for our customers from a number of Spanish banks. You also have the option to transfer this amount to your lawyer's account.
Signing the private purchase contract
Approximately 14 days after the signing of the reservation contract, the next step in the purchase process is signing the private purchase contract between the buyer and the seller (or their legal representatives). Your lawyer has terminated his audit and investigation of the property at that time and will have arranged the procedure for settling any outstanding debts with the owner. When you sign the private purchase contract, you pay 10% of the purchase price of the property. You must transfer this amount to your own Spanish bank account. The opening of a Spanish bank account can be arranged by your lawyer. We have been able to stipulate favorable conditions for our customers from a number of Spanish banks. You also have the option to transfer this amount to your lawyer's account.
The notarial purchase contract
In Spain, a purchase was officially completed after signing the notarial deed of ownership at a notary, paying the agreed price and transferring ownership to the buying party. In the case of buying a new building, it can take up to 18 months for the signing to take place. Normally you must make interim payments every 2 to 4 months by means of bills of exchange, transfers or checks.
After the deed of ownership has been signed, the notary will send a copy to the regional land registry. Your lawyer will also pay the transfer taxes in your name and register the title deed. Registration of the deed in the property register can take several months. Your lawyer can also have the contracts and accounts for facilities of the local utilities such as water and electricity put on your name.
If you buy a new home, the developer is obliged to issue a bank guarantee for every payment.
Some project developers offer free bank guarantees, while others charge for this. A bank guarantee protects your payments. In the event that the project developer does not complete the construction, goes bankrupt, or does not deliver the project within the agreed time, and you do not want to wait, all payments will be refunded.
In Spain, the new building will be delivered without water and electricity connections. These provisions can also be arranged by your lawyer. After completion, this process can take four weeks in Spain.
We therefore advise you not to make plans to use your home during this period. The law provides for a 10-year guarantee against contamination errors.
There are three types of fees and two taxes involved in buying property in Spain.
As a rule of thumb, you can assume that the costs are about 11% to 14% of the purchase price.
If you take out a mortgage in Spain, there will be about 3% extra costs.
Fee for the lawyer: amounts to 1% of the purchase price, with a minimum wage of +/- 1500 € plus VAT Notarial costs: depending on the purchase price Registration costs: normally 60% to 80% of the notarial costs
When purchasing an existing building, you only pay the transfer tax. This tax amounts to 8% up to a purchase price of 400,000 euros. From 400,000 euros to 700,000 euros 9% and over the increased amount you pay 10% tax.
The purchase price is 450,000 euros, you pay 8,000 euros over 400,000 euros and 9% for the remaining 50,000 euros. Transfer tax is paid to the signing of the notarial purchase deed.
For new buildings, you currently pay 10% VAT plus 1.5% stamp tax.
Plus Valia: this tax concerns the appreciation of the land and must be paid according to the law by the seller. The charge may vary depending on the municipality and the area of the plot.
Any other costs include:
- Testaments Costs
- For the provision of water and electricity
- Putting the accounts for utility services in your name and having them pay via an automatic payment order
- Representation in owners association
- Fiscal Representation
- NIE number (Spanish Sofi number)
- Bank account
- Notarial proxies
- Annual costs and taxes associated with your property
- Municipal real estate tax
- Income tax on the property for non-resident owners
- Utility bills
- Insurances Service
- Community fees
Spanish banks are happy to provide a mortgage to non-residents who buy real estate in Spain.
The term of the mortgage depends on the age of the mortgagee, but can often be 20 years.
The amount of the mortgage can be up to 70% of the appraisal value of the property, depending on your income and assets.
Most banks apply the rule that your monthly income should be about three times the monthly payment amount.
The bank needs the following documents to take out a mortgage:
- a copy of your last tax return
- salary slips from the last three consecutive months.
- Self-employed persons must be able to submit
- an audit certificate from the last financial year, certified by the accountant a bank reference with address, telephone, fax, name of the manager and your bank account number
If you are employed:
- a letter from the company where you work (duration of appointment and nature of the contract)
- a list of assets, current debts, such as loans, personal loans etc
- bank statements from the last three months.
In any case, it is advisable to have a Spanish will made in Spain that relates exclusively to your Spanish assets. By not compiling a will, your heirs can become involved in time-consuming and expensive legal proceedings. As a foreigner, it is usually the case that the Spanish authorities do not oblige you to follow Spanish succession law. You can leave your property to the person of your choice for as long as the law in your country allows it.
Selling real estate
- Capital gains tax: a non-resident of Spain transfers 19% to the Spanish tax authorities on the sales profit.
- If the seller is non-resident when selling real estate the buyer's lawyer will withhold 3% of the sales price and pay it directly to the tax authorities as a withholding tax on the possible obligation to pay the capital gains tax. Your lawyer will be happy to inform you about exceptions.
- Plus Valia: tax on the appreciation of the land Honorary for the lawyer Commission of the broker.
- If you have a mortgage on your property, you also have to pay the costs of the resolution of the mortgage to the bank as well as the resulting registration and notary fees.