Buying Process

Here is some up to date information which will help you to understand the property buying process in Spain. If you have any questions please do not hesitate to contact us. We will also be happy to recommend a reputable Spanish Lawyer who will be able to talk with you in fluent English.

As soon as you have found the property that you wish to purchase, the first step is to agree the offer with the seller through the agent. As soon as the price is finally agreed, it is common practice for the purchaser to proceed with a payment of 3,000 Euros – 6,000 Euros in order to reserve the purchase of the property and with the finality of taking the property off the market.

Once the reservation contract also known as a PPC (Private Purchase Contract) is signed, your lawyer will immediately request from the seller’s lawyer all the relevant documentation that will enable your lawyer to carry out all the legal searches on the development and on the property you are intending to purchase. It is very important that your lawyer checks that the property you are purchasing is completely free from charges, encumbrances, liens, debts, tenants or occupants as well as ensuring that the seller has clean and good Title.

Your lawyer will also have to check that the seller is in the up to date of payments of all rates, garbage collection bills, community fees, electricity and water bills and any other expenses inherent to the property. In the event that there were any unpaid receipts, the purchaser will withhold from the price the necessary amounts to cover the outstanding receipts.

1) Option to Purchase Contract

If everything proceeds as expected after carrying out the correspondent legal searches, the common and standard procedure is to formalize an Option to purchase contract and upon the signing of that contract the purchaser normally proceeds with a 10% purchase price payment. The Option to Purchase contract is normally signed in a period of time of 15-30 days since the signing of the reservation agreement.

In the Option to Purchase contract the date when the Purchase and Sale Title Deed has to be signed will have to be specified and the seller will be obliged to sell the property to you and not being able to sign any other agreement with any other party, between the date of the signing of the contract and date of the signing of the Purchase and Sale Title Deed.

2) Purchase and Sale Title Deed

The property purchase procedure is always completed / finalised before a Notary Public and both the buyer and seller as well as the Notary Public will proceed to sign the correspondent Purchase and Sale Title Deed. The Notary will identify both the purchaser and seller ensuring that all legal requirements have been met, and that the amount due to be paid has been settled.

In the event you cannot attend to the signing in front of the Notary Public, you can always grant a Power of Attorney in favour of your lawyer in order for him/her to sign the document on your behalf.

Once the Title Deed of Purchase and Sale is granted in your favour, you will legally acquire the possession of the property and you will obtain the freehold ownership and it is at that moment in time when you will receive the keys from the seller in front of the Notary Public.

3) Taxes and Disbursements

It is also at this stage when you will have to proceed with the payment of the following taxes and disbursements:

Transfer Tax: Rated at 7% of the declared value on the Title Deed if the value is 400,000 Euros or less. If the value of the property is 400,000 Euros or higher, it is rated at 7% up to 400,000 Euros and onwards it is rated at 8%. It is at this stage when the registration in your names takes place at the Land Registry office.

Notary's fees: Based on the number of pages of the document, the identity of the purchasing and vending parties and the number of purchasers.

Land Registry fees: Immediately after the exchange of Deeds we will register the property in your name at the Land Registry office. This fee is based on the Register’s scale of fees, based principally on the complexity of the document.

Lawyer's fee: The lawyer’s fee normally amounts to1% of the purchase price + 18% VAT. Our fees include:

As a general idea, you will have to take into account that all the costs implied in the purchasewill amount to approximately 10% of the purchase price.

4) Obtaining a "NIE" Number

It is also compulsory for all non- residents in Spain to obtain from the Police Office an NIE number in the event of a property purchase. This number is an identification number which will enable you to duly fulfil with your tax obligations in Spain. VEGA will assist in obtaining all the necessary documentation that is required for a non-resident to purchase here in Spain including opening a bank account etc.

5) Costs After Purchasing the Property

Once the property is duly registered in your name you will be subject to pay the following taxes and disbursements:

Income Tax for non-residents: As non-resident you will have to pay taxes for any asset or good you own in Spain. The tax due depends on the cadastral value (value according to the Tax authorities, not the market value.) of the property and it is paid once every year.

IBI (Municipal real estate tax/Local rates/ Council tax) + Garbage collection: The local rates are also based on the cadastral value and also on the location of the property and it is paid once every year as well as the Garbage collection tax.

Community fee: In the event the property is integrated in a Community of owners, you will be liable to contribute with the costs of maintenance of the communal areas.

Utilities ( water & electricity): The utilities bills are normally paid every 2 months and the amounts to be paid to the electricity and water companies will always depend on a small fixed rate depending on the amount of kilowatts contracted plus the consumption.

6) Registration of your Ownership at the Land Registry Office

The property registration in your name will take place after all the taxes applicable to the property have been paid and all legal formalities have been fulfilled.The registration procedure could take approximately 8 weeks, depending on the Land Registry, and your lawyer must take care of the procedure and ensure that the property will be registered correctly in your name.

This is, in general terms, the main legal and tax implications to be taken into account during the procedure of a property purchase in Spain.

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