The Spanish property buying process is very straightforward and transparent. The buyer makes an offer through the real estate agent. If the offer is accepted, the buyer has to pay a deposit to take the property off the market. The amount usually varies between EUR 3,000 and EUR 10,000, depending on the value of the property. If the lawyer finds a legal issue, this deposit will be returned to the buyer. If there aren’t any legal issues and the buyer changes his mind, the buyer will lose the deposit.

Once your lawyer has completed the due diligence, (usually around 2 to 3 weeks after your reservation), both parties will sign the preliminary contract (contrato privado de compraventa) and the buyer will pay the full deposit of 10% (minus the deposit). This contract is legally binding to both parties.

Both parties will set a date for final completion by a public notary, usually 3 to 4 weeks after having signed the Private Purchase Contract.

The buyer then arranges any mortgage they require, although they should have already discussed their needs with the mortgage provider. The contract of sale (escritura de compravento) is usually signed in front of a notary, at which point the full sales price, taxes and other costs become due.

The buyer is responsible for registering the property. The notary may provide this service for a fee, and/or may notify the registry office that the sale has taken place, without completing full registration.

The Spanish government currently offers a 'Golden Visa' programme for property owners. This is a form of investor's visa. If you invest over EUR 500,000, by investing in one or more properties, you will automatically be eligible for a residency visa. This is not a work permit, but it will allow you to live in the country. It's primarily aimed at people that want to retire and holiday home buyers.

Taxes and Fees to pay when purchasing a property in Spain

Costs are primarily paid by the buyer, and vary from region to region. Many are negotiable - there are no fixed fees for lawyers. Costs paid by the buyer are typically around 8-14% of the property value and include:

  • Property transfer tax 5–10 percent (existing properties);
  • VAT (or IVA) at 10 percent (new properties);
  • Notary fees, title deed tax and land registration fee 1–2.5%;
  • legal fees 1–2 percent (including VAT).

The estate agent's fee is usually paid by the seller.

The yearly property taxes are very low in Spain compared to the rest of Europe. The rate depends on the region. We will inform you about The Municipal Real Estate Tax (IBI – Impuesto sobre Bienes Inmuebles) for the property you wish to purchase.

Capital Gains on the Sale of a Property

When calculating the gain, in addition to the cost of acquisition, expenditure on improving or enhancing the property is allowable as a deduction when calculating the net gain and there is an "indexation co-efficient" that increases the allowable costs for inflation, based on how long the property has been owned.

Sale of a Property by Non-residents

When a property is sold by a non-resident of Spain, purchasers must withhold 3% of the purchase price (not the gain) and pay it to the Spanish tax authorities as an advance payment of capital gains tax on behalf of the vendor. If this is not paid, the purchaser can be fined and the unpaid tax becomes a charge over the property itself. If this 3% exceeds the tax due on the gain, a repayment will be made of the excess; however, if the tax due is more than the retained amount, further tax will be due in Spain. The vendor must file a Spanish tax return on the transaction within three months of the sale before any repayment can be made.

If a person is not resident in Spain, tax may also be due in the country where they are resident, subject to any Double Taxation Treaty Relief.

Any statements concerning fees and taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarized; an individual must take personalized advice.

Financing

Should you require a mortgage in Spain we can help you arrange financing using our panel of independent financial advisers either in Spain or your home country. Spanish lenders provide mortgage facilities for non-Spanish residents based on straightforward ‘ability to pay’ criteria.

Our financial advisers will be able to give you all the information and advice you need. Should you wish to consult an advisor before viewing a property merely click on the link to contact our recommended advisors.

If you are interested in properties with up to 100% finance then you may want to consider one of our Spanish bank repossession properties, which offer great financing options and represent very attractive investment opportunities.

Please see our list of recommended mortgage brokers and law firms below:

www.imsmortgages.com | www.thefinancebureau.com

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