Legal and Fiscal Information
BB REAL ESTATE relies on the collaboration of prestigious law firms and tax consultants based in the Costa del Sol who will be able to provide you the best legal and fiscal advice.
However please see below some notes, courtesy of our company, since it is important to know in advance the peculiarities of the Spanish legislation and the fiscal regulations when buying or selling a property.
Summary of the Sale Procedure in Spain.
Election of the property and documentation: Once you have decided which property you want to buy, either yourself or your lawyer must ask for all the relevant information: urban situation in the “Plan General de Ordenación Urbana (PGOU)”, if it has a mortgage, amount of the community fees and if the property is up to date with payments, last receipt of IBI (Impuesto sobre Bienes Inmuebles), etc.
Drafting of the private contract of sale (= Contrato de arras penitenciales) between the seller and the buyer, reflecting the particular circumstances of the sale: the deposit paid, the expiry date by which the sale has to be completed as well as the quantities agreed when signing the Title Deed at the Notary (= Escritura de Compraventa).
The buyer anticipates the seller, as deposit, a percentage of the price agreed. The amount can vary in each case, but is usually 10%.
This document is a private contract, it is not necessary to sign it at the Notary, but has legal force and binds on both parties to carry out the sale; if the buyer fails to comply with the terms of the contract he looses the deposit, whereas if it is the seller who does not meet the terms of the contract, he will be forced to return the double of the deposit.
Title Deed at the Notary (= Escritura de Compraventa): Keep in mind that the outstanding amount must be paid before or at the time of signing the deed. At this time also notary fees must be paid.
Taxes: you have to pay the taxes arising from the transaction of sale at the local Tax Office, otherwise the Title Deed can not be submitted in the corresponding Land Registry (= Registro de la Propiedad). Once the property has been registered and after paying the Registry fees also, the Land Registry Office delivers to the buyer the official Title Deed.
Before deciding to buy a house, you should clearly know the amount you really need to complete the operation. Besides the net cost of the property, there are fixed costs which are generally calculated depending on the type of property and its price.
Let us analyse them step by step.
Appraisal of the Property (in case you need a bank loan)
After finalising the purchase contract and to complete it the bank, where you apply for the mortgage, will require you to make the appraisal of the property to know that the price paid is adjusted to its market value, which, in any case is also good for you to know.
The cost of the expert’s survey report depends on the type of property (apartment, townhouse, villa, etc.) and square meters and it usually costs between 250 and 350 euros (indicative amount since their fees are not regulated by law and may vary depending on the appraisal entity)
Notary
Notary’s fees are regulated by the government and depend on the price of the property, although the fee charged can vary, for example, depending on whether there are guarantors, the number of copies of the deed to be issued or even its length. You pay for two deeds: deed of purchase and deed of loan (if any). The latter would not take place if you take over an existing mortgage. As a guiding, notary fees are regulated by law and for the sale of a house priced €250,000 they would be around €400 euros; if the bank loan is €175,000, the deed of mortgage would be about €300. In total, approximately €700 euros.
Land Registry
Continuing with the example above, you have to add to the cost of the operation about €350 to register the title deeds at the Land Registry (=Registro de la Propiedad). As above, it is an indicative amount regulated by law.
Taxes
- New houses: 10% VAT. This tax is payable to the builder only when the house is new. If the value of the transaction is €250,000, the tax is equal to €25,000 euros.
- Resale properties: you have to pay the tax for “transferring the assets” (= Impuesto de Transmisión de Patrimonio), which is between 5% and 8% of the purchase price (between 12,500 and 20,000 euros for the previous example).
The difference depends on the rules of each region and the personal circumstances of the buyer (large family, youngers, first home purchase, etc.). The tax only applies to resale properties that do not pay VAT.
Whether for new houses or resales you must add another tax, the Stamp Duty (=Actos Juridicos Documentados), which varies between 0.1% and 1,5%, that is, you have to pay 0.1-1,5% of the purchase price and another 0.1-1,5% of the the amount of the mortgage. The percentage is regulated differently in each autonomous community.
Agency
In case you need a mortgage the cost of the bank agency – dealing with all paperworks – is around €250-300 euros per deed. Again it is approximate since it is not regulated by law. You can reduce costs by performing the steps on your own.
Legal advice
The advice of a lawyer is always advisable when buying a home, especially if it is an investment in a foreign country.
The lawyer can help you to investigate the legal status of the property you want to buy (habitability, licenses, existence of a lease in force, if it is up to date with the payment of community service charges and IBI-rubbish taxes, etc.), he will draft the purchase agreement, will apply for your tax identification number (NIE for foreigners in Spain), will accompany you to the notary, in addition to paying the corresponding taxes and will also register utilities contracts on your behalf.
The lawyer’s fee is usually equal to 1% of the cost of the operation.