As soon as you’ve found your property, you need to follow various steps to register it under your name:
- Signature of the reservation contract along with the payment of the deposit for starting the diligence process
- After due diligence checks, if you are buying off-plan, you will sign the private purchase contract, and pay 25% to 40% from the purchase price. Payments and terms depend on the agreement.
- New properties are paid according to a payment plan based on the construction stages, full settlement being made before its completion must be guaranteed by a bank or an insurance company. Bank guarantees are mandatory and should not have expiration date as per law 57/68.
- Ownership contract signature done at the Notary Public with full payment of the remaining balance of the property.
As a buyer of a property in Spain, there are some costs and taxes that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property.
New build from developer or bank
VAT & Stamp-duty (IVA & Actos Juridicos Documentados – AJD)
At the moment, VAT (known as IVA in Spain) is 10% of the purchase price of residential properties and 21% of the price of commercial properties, plots and lands except in the Canary Islands. Both VAT and Stamp Duty (1.5%) are paid by the buyer.
Resale from a private individual
Transfer tax (Impuesto sobre Transmisiones Patrimoniales -ITP)
The transfer tax rate is assigned to the autonomous regions, who can choose to apply the general rate or their own one. The rate in Andalucia is as followed:
8% – if the final price of the property is under 400.000€
9% – if the final price of the property is between 400.000€ and 700.000€
10% – if the final price of the property is over 700.000€
Other cost at the time of purchase
1% – Public notary and land registration
Additional public notary and land registration fee in case of purchase with a Spanish mortgage 1%.
1% – Lawyer’s fee + VAT
Fees will vary depending on the size of gardens, facilities, number of lifts, if there is private security, etc…
These include electricity, water and gas and vary depending on your personal consumption.
Electricity – is normally paid each month
Water – paid once a month
The building will be insured by the community. Your property insurance will be for contents and damage by fire and water etc. The insurance is mandatory for owners having a property in a shared residence.
Town hall tax (IBI)
This is a local tax applied to the owners of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the cadactral value (an administrative value that is usually lower than the market value), set by the town hall, the tax rate goes from 0.4% – 1.1% of the cadastral value depending on the Spanish region. The payment is made once a year.
1- Which are the requirements for buying a property in Spain?
There are no restrictions and in general, any physical person or any legally created company can buy a property in Spain. However, some countries and their authorities can themselves restrict investors from exporting money abroad in order to prevent money laundering and fight against tax havens.
2- What is the NIE and how can I obtain it?
The NIE is simply an Identification Number of a foreigner in Spain and has nothing to see with the residence.
All the buyers that don’t have the Spanish nationality will have to obtain it, European or non European; physical people as well as companies. The physical people can obtain the NIE in 3 different ways:
- Through the consulate of Spain of his country of origin.
- Through the municipality where is located the property (in some places, like Barcelona, it is necessary to ask a previous appointment).
- Through power of Attorney given to the lawyer or representative
The foreign companies can obtain the NIE/NIF in the tax authorities (Hacienda).
3- Have buyers to be present in the different stages of the purchase?
The buyers can sign a power of Attorney in Spain (the easiest solution) or in the Spanish authorities of the country of origin or residence.
4- Do I need a bank account in Spain?
Yes. The most comfortable way to pay the final purchase price of the property is to write a pay cheque certified by a Spanish bank. A cheque issued abroad will not be accepted and it is not recommended to do a direct transfer to the seller before having obtained the ownership. Besides, the payment requests of all the supplies, quotas of community, taxes, etc … will be assigned to an account registered only in Spain.
5- Which documentation do I need to open the bank account and received the founds?
If the buyers are European or originally from ‘trustable” western countries ” such as USA, Canada, Switzerland,…, the bank accounts can be easily open with the passport and the NIE is not necessary.
For the other buyers, they will need to present different documents that will be translated in Spanish and legalized by the Spanish Authorities: tax statement, account extracts, work contract, etc … The procedure depends on the country of origin of the client and its bank, knowing that the same back can have have different criterias regarding the required documents to present. Furthermore, the banks have the legal duty to meet physically their clients that cannot ask for a power of Attoney for this purpose.
6. Can I obtain a loan in Spain?
Yes. The requirements may vary depending on the bank and on the country of origin of the customers, but generally the non residents can obtain a loan of roughly 50% of the value (or price of purchase if it is lower that the valuation), with a maximum of 25 years, whenever the monthly quota do not exceed 30% of his total revenues.
7. Is it better to buy under my name or should I create a company?
It depends on several factors:
- Country of origin and pre-existing situation of the customer
- Value of the investment
- Age and other characteristics of the customer
- Use of the property
- Type of property (local / house – new / to renew)
- If you buy a property for personal use or even for renting, usually, it does not worth to create a company but it is better to buy under your proper name. If your objective is to do true businesses with properties, or if the value of the investment is very high, it can be better to create a company or use any other formula of investment.
8. Which expenses do I have at the moment of the purchase?
The expenses at the moment of the purchase are the same for foreign buyers than for national buyers, and altogether are between 10% and 15%.