Guide to Buying
AIPP Guide to Buying Property Overseas
Being members of the Association of International Property Professionals allows Vincent Real Estate to offer a link to the AIPP buyers guide. Please click on the link below to download the guide giving detailed information regarding purchasing property overseas
Purchasing Costs in Spain
In addition to the purchase price of a property, the following costs must also be budgeted;
- Legal Fees – Circa 1000€+ IVA
- Property purchase tax (Resale property)
- Currently 10% - Resales in
- Currently 8% - Resales in
- IVA (New Build property)
- Currently 10%
- Stamp duty (New Build Property) – 1.5%
- Notary Fees – dependant on Notary and value of property (average 1500€)
- Additional costs including utility transfer, SUMA registration, Catastral registration, community registration etc. – average 450€
- If Spanish finance is required we recommend budgeting an additional minimum 5.000€ to cover finance set up fees from the bank.
A general rule of thumb is to add 13% to the price of the property. However, with property under the value of 100.000€ the cost percentage will increase.
This is the first document you will sign reserving a property and acting as a signed receipt for any monies paid with respect to that contract. This document is generally referred to as a 'Formulario Reserva' and confirms your commitment to purchase the property. Always ensure that this document includes the clause 'Subject to Legal checks' as his will ensure that your deposit that has been paid will be refundable if there are issues or debts on the property that cannot be resolved.
Legal Issues when buying a property in Spain
The Lawyer will take care and assist you in all the different steps involved in the transaction. There are many excellent English speaking Lawyers in Spain. Choosing the right Lawyer is your guarantee that Spanish legal requirements are met, the property is registered in the vendor's name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. Clear everything with your Lawyer. They will negotiate and discuss the purchase terms with the seller's solicitor. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date, the form of payment, etc.
Public official appointed by the Spanish government to witness the signing of all legal public documents. They put on the public record the fact that the title deed recording the sale/purchase has been signed in their presence and understood by the parties concerned. When the Escritura (Deeds) is signed in front of the notary either the purchase price is handed over to the person selling the house or the seller confirms that the money has already been handed over. The original signed document is retained by the notary who will apply for a formal change in the land registry. The Notary also ensures that the work of both the buyer and seller's lawyer has been carried out correctly prior to the title deed changes.
Urbanisation and Community Fees
Controlled by the committee of owners and covering the running and maintenance costs of shared facilities which can include private roads, drains, lighting, private water supplies, gardens, swimming pools etc. This can be as little as 60 euros per year or as high as 2000 euros, dependent on the facilities within the urbanisation your property is located. There are also properties that do not belong to an urbanisation, in which case the community fees do not exist.
Local Rates – Patrimonia
All non-residents have to pay wealth tax, 'Patrimonia', based on the amount on the Escritura Publica or the Valor Catastral, which ever is the highest value. Vary. 0.2% is typical.
Property Taxes in Spain
The local town hall charge IBI on owned Property (tax Impuesto sobre Bienes Inmuebles), which is an annual real estate tax. This local tax varies and is based on the Catastral value of the property.
Fire insurance is compulsory by law when taking out a mortgage. Comprehensive household insurance is available to protect your home and contents. Life insurance can be taken out to guarantee payment of the loan in the case of death.
There are many different companies offering landline and mobile telephone systems in Spain. The major company being Telefonica. However, many people now rely on mobile networks and Wifi which are available in pay as you go and contract options.
Water and Electricity
Utilities have a standing charge and the charges for consumption are in addition to this. These will generally be set up on standing order when you purchase the property.
Tax on Rental Income
Britain and Ireland have a double taxation treaty with Spain. Tax is paid on the declared income from the property and your rental income must also be declared to the inspector of taxes in Britain or Ireland.
Numero de Identificacion Extrajenero (NIE)
Foreigner's Identification Number. All non-residents require a NIE. You need to obtain this in person at the foreigners department at the National Police headquarters. Your agent will assist you with the procedure. This number is required before the purchase of any property in Spain.
A local tax, usually paid by the vendor, calculated as a percentage of the difference in the increased (ratable) value of a property since it was last sold.