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Buying Property in Spain

Buying property in Spain is still very popular with northern Europeans.

The country has a pleasant, healthy climate and in recent years the local authorities have made great efforts to increase the number foreign tourists and residents.

Spain now derives more of its foreign income from tourism than any other country in Europe. Due to low European interest rates, now is a good time to buy property in Spain.

PURCHASE PROCESS

Below is the standard buying process in Spain and issues that may affect your property purchase:

• In order to buy property in Spain, a Numero de Identificación de Extranjero (NIE) is required. The NIE number is a unique identification number required to open a bank account or purchase a property in Spain. The simplest method to obtain an NIE is to employ the services of your solicitor who will make all the applications and ensure all forms are correct on your behalf.
• An initial reservation deposit of between €3,000 and €6,000 is normally required, although this may vary depending on the purchase price.
• Once the seller has accepted your offer and you have agreed to go ahead with the purchase of the Spanish property, the agreement needs to be put into writing. A private ‘option to purchase’ contract, or a sales contract, is prepared, along with the terms of purchase. These will be received and checked by your lawyer then they can be signed and exchanged.
• At this stage a deposit of 10% of the property purchase price is required to be paid. This is non-refundable if you do not proceed with the purchase. Should the vendor decide not to proceed, it is normal for them to refund double the deposit.
• Finally, the deeds of purchase are signed before a notary in order to make the contract public and legal. The final
  payment is then made and the sale is complete.

The cost of a standard property purchase in Spain includes the following:

• All percentages are of the purchase price.
• Property Transfer Tax (Impuesto de Transferencia de Propiedad) – Purchasers of re-sale property (as opposed to new/off plan property) are required to pay between 6% and 7%, depending on the region.
• Value Added Tax (VAT) (Impuesto sobre el Valor Anadido or IVT) - Purchasers of new property must pay 7% VAT, plus
  an extra 0.5% to 1.0% stamp duty.
• Notary and Registry Fees – These fees are fixed by law and are based on a sliding scale. They are approximately
  0.5% to 2%, depending on the value.
• Title Deed Tax – Is 0.5% of the declared value of the property and is charged for the transfer of property title.
• Legal Fees – Either a fixed fee per hour (€100 to €250) or a percentage of the purchase price (1% to 1.5%), although legal fees are generally negotiable. VAT of 16% is added to all legal fees.
• Agent’s Commission - Spanish Real estate agent’s commission is now generally around 2.5% to 3%.

The Absolute Guide to buying a property in Spain offers first-hand advice on Spanish property investment, economic indicators, due diligence, legal advice and solicitors, mortgages in spain, dealing with estate agents and builders and the types of properties available. Download the free guide to buying investment property in Spain.

Buying a Property in Spain: An Insider Guide to Finding a Home in the Sun

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