Buying a property in Spain

What do I have to do to buy a property in Spain?

What do I have to do to buy a property in Spain?

You have probably already chosen the appropriate property in Spain after having visited it and you already know its physical characteristics. The time has come, then, to have the services of a lawyer to find out its legal situation. 

At Welex we have a team of independent professionals, lawyers in Marbella and accountants in Spain, who will advise you on the purchase of a property in Spain before making a cash payment, carry out a study of your property, advise you on the signing of the private purchase contract, and assist you with the payment of taxes related to the transaction.

For your peace of mind, it is essential that you go to a law firm in Spain that will explain you the entire purchase procedure. At Welex, our goal is to satisfy customers from start to finish, i.e. providing quality service. This is possible thanks to the knowledge and continuous learning of our professionals and the years of experience of our team of lawyers in Marbella and accountants in Spain.

Individualised attention is essential to feel protected at all times during the purchase process.

What are the costs that I will have to pay when I buy a property in Spain?

You should be aware that buying a home in Spain entails the obligation to pay taxes. These taxes will be different depending on the location of the property, if it is a second transfer and a house is bought from its owner, or if it is the purchase of a new house directly from the developer.

The tax will be paid according to the purchase price, although the Tax Administration can check it and, if it is lower than the real value, it will issue a complementary settlement for the payment of the tax for the difference between the real value assigned and the value stated in the purchase deed. 

Purchase of a used home, second or subsequent transfer

In this case the tax to be paid will be the Tax on Property Transfer, which is paid to the Autonomous Community where the property being purchased is located.

In the case of Andalusia, the amount to be paid will be obtained by applying the rate resulting from the following tariff on the settlement basis:

Settlement basis up to euro Total fee euros Rest of the Settlement Base euros Applicable rate
0.00 0.00 400,000.00 8.00%
400.000,01 32,000.00 300,000.00 9.00%
700,000.01 59,000.00 from now on 10.0%

In the case of transfer of a garage space, except for garages attached to the dwelling, with a maximum of two, the type will be as follows:

Settlement basis up to euro Total fee euros Rest of the Settlement Base euros Applicable rate
0.00 0.00 30,000.00 8.00%
30,000.01 2,400.00 20,000.00 9.00%
50,000.01 4,200.00 from now on 10.0%

If you buy a furnished property in Spain, bear in mind that the rate on property transfers in the case of furniture will be 4% on the purchase price of said furniture and fittings.

Off-plan property purchase in Spain.

As a buyer of a new home in Spain, you will have to pay the developer the value added tax, which is required to be paid to the Inland Revenue. 

The VAT rate for a new home is 10 % of the purchase price.

The same rate applies to garage spaces (with a maximum of two units) and other annexes that are transferred (e.g. storage rooms). In all other cases (e.g. business premises), 21 % VAT is applied.

In addition to the aforementioned VAT, you will have to pay transfer tax and stamp duty at a rate of 1.5 % on the purchase price.

Other expenses associated with the purchase of a property in Spain:

Notary fees in Spain. The Spanish notary will charge his fees as established by the Notary Tariff. You, as the buyer, have the right to choose the notary.

Land Registry expenses in Spain. It will be necessary to pay the fees for the registration of the property right in your favour. The amount is fixed by the Property Registrars’ Tariff.

Processing fees. This is the service of tax settlement and presentation of your deed in the Land Registry. 

At Welex, your conveyancing lawyers in Spain, we will take care of the payment of all your taxes and expenses until the total inscription of your property right in the corresponding Registry. Don’t worry about the paperwork associated with your purchase, at Welex we will carry out all the steps until we obtain the property registered in your name for your complete peace of mind.

What are the costs that I will have to pay when I buy a property in Spain?

Signing of private contract for the purchase of a property in Spain

Signing of private contract for the purchase of a property in Spain

We advise you to go to your lawyer in Spain before signing any contract or handing over any money.

At Welex, your lawyer in Spain, we will provide you with a report containing a study carried out on the legal situation of the property, for your total peace of mind and easy understanding. This report will cover, inter alia, the following aspects:

Information on ownership of the property. Specifies the owner of the property, and depending on the circumstances, whether it is a natural or legal person, and the necessary documentation is obtained from the seller.

If there are any charges or encumbrances affecting the property in Spain, such as mortgages, seizures and tax conditions.

The complete formal description of the property in Spain is included in the report, that is, its built square metres, number of rooms, terraces, so that the client can verify that the characteristics or description of the property that has been provided or visited coincide with the description in the official documentation. 

Our report also includes information on the supplies of the house, so that the client has a good idea of what it will cost approximately to maintain it, including community fees, water, electricity, IBI, garbage.

Information on the dwelling in the Cadastre, including year of construction and constructed area for cadastral purposes. Likewise, it is confirmed if there is a debt of IBI in the Tax Office Board to which the house property.

Our office also holds a meeting with the technicians of the Town Hall’s urban planning department to find out the urban situation of the property, and to confirm whether or not it has a first occupation licence.

In addition to the above-mentioned legal aspects, it is important to analyse the taxes paid as a result of the purchase, which are based on the following data:

  • On the one hand, the purchase price of your home in Spain.
  • On the other hand, if the property is under construction or new and the seller is the developer, VAT and documented legal acts will be paid. If it is a second or subsequent transfer, transfer tax will be paid.
  • The fiscal value of housing in Spain. In the event that the tax value exceeds the purchase price, the buyer may receive a complementary settlement from the tax office claiming payment of the tax.

Types of private contracts for the purchase of a property in Spain

The usual practice is for the contract of purchase of a property in Spain to be formalised in a private document, with the intervention of the seller and buyer. Subsequently, the public deed of sale will be granted, authorised by the notary, upon delivery of the property and payment of the full purchase price.

We find very important to distinguish between the purchase option contract and the sales contract.

The private contract with an option to buy a property in Spain

By signing this contract, the owner grants the other party, the grantee, the power to purchase the property for a specific period of time and under the conditions agreed by the parties, which must include the object, the purchase price and the term.

The granting of the option may be free or onerous, and the premium paid may be deducted from the agreed purchase price if the option is exercised. The decision of the grantee is decisive for the effectiveness of the option and the conclusion of the sale at a later date.  

Non-compliance by the granting owner will result in the corresponding compensation for damages to the grantee, in addition to the return of the premium received. 

The private contract of sale of a property in Spain

By the contract of sale the seller is obliged to hand over the property to the buyer and the buyer is obliged to pay a certain price for the property. All the conditions of the operation are collected, among other things, the following:

  • Identity of the parties and their power to sign the contract.
  • The object, i.e. the property with its complete description, state of charges, participation quota in the community of owners, previous title and its rental situation.
  • The purchase price and its form of payment.
  • Who pays for the expenses in the purchase and sale?
  • The notary and date foreseen for the signing of the public deed of sale. 

At the time of signing, a quantity called a deposit is given, regulated by Article 1454 of the Civil Code, which states 

«If a deposit has been paid on the contract of purchase and sale, the contract may be terminated and the buyer may lose them or the seller may return them in duplicate”.

It is common practice to sign the private contract of sale agreeing on a penalty deposit. If the buyer does not comply with the agreement, he will lose the deposit and if, through the fault of the seller, the contract is not fulfilled, he will have to return it to the buyer in duplicate.

Types of private contracts for the purchase of a property in Spain

Signing of the purchase Title Deed in Spain

Signing of the purchase Title Deed in Spain

The purchase Title Deed of a property in Spain will be drawn up according to the will of the parties and its terms must be clear and precise, that is, not giving rise to any ambiguity or misunderstanding.

If you do not know the Spanish language, do not worry, a professional from our office will accompany you to the firm, as well as an official interpreter, who will translate the content of the deed into your language.

The law in Spain provides for the intervention of an interpreter, when the parties or one of them does not know the deed’s language. This interpreter, appointed by the party who does not know the language, will carry out the translation of the document and sign it, together with the other parties appearing at the notary’s office. 

The notary shall identify the grantors by means of an identity document containing their photograph and signature.  In the event that the parties do not appear in their own name but on behalf of another person, natural or legal, the deed shall contain the details of the document authorising such representation.

The notary will also check the ownership of the property you are buying. For this purpose, the notary will request and receive information from the Land Registry. The notary will incorporate into the deed the contents of the Registry information, indicating the day and time of receipt.

Regarding your home in Spain, the purchase Title Deed in Spain will include a description, according to the information contained in the previous title of acquisition and in the Land Registry, including registry data, the cadastral reference number, if there are charges registered on the property and the existence or not of tenants in the same.

In relation to the charges, we can find among others, a mortgage, an easement or a seizure.

The Cadastre is a registry under the Ministry of Finance and Public Function, which includes rustic, urban or special property. The deed of sale will include a descriptive and graphic cadastral certification accrediting the location and cadastral reference, the surface area, the use or destination, the cadastral value and the cadastral owner, with his/her tax identification number or, if applicable, foreigner’s identity number. 

Unless proved otherwise and without prejudice to the Land Registry, whose legal pronouncements will prevail, the data contained in the Real Estate Cadastre are presumed to be true.

You must know that the inscription of your house in the Cadastre is obligatory, as well as if an alteration of its characteristics takes place and a cadastral value will be assigned to it. 

“Cadastral value is determined objectively for each property from the data in the Real Estate Cadastre and shall be composed of the cadastral value of the land and the cadastral value of the buildings.»

Therefore, the cadastral reference allows the identification of the real estate and its location in the cadastral cartography. It is an alphanumeric code, composed of twenty characters, which is assigned by the Cadastre so that every property must have a single cadastral reference that allows it to be located unequivocally in the cadastral mapping.

In addition, the notary will check whether there are any outstanding IBI and Community of Owners’ payments. Real estate tax is a direct tax on the value of real estate, the taxable person is the person who owns the property, and the tax period begins on January 1 of each year.

Regarding the payment of the fees to the Community, the Horizontal Property Law establishes in its article 9 the obligation of each owner to contribute, according to the participation quota of each property, to the payment of the general expenses for the adequate maintenance of the property and its services.

In the purchase Title Deed in Spain, the parties will request the registration of the sale in the corresponding Spanish Property Registry, and it will be stated to which party the payment of taxes and expenses in relation to the granting of the deed corresponds.

The notary in Spain, at the request of the parties, will ask the Land Registry for the preventive annotation of the deed. This entry will expire if an authorised copy of the deed is not submitted to the Registry within ten working days.

Finally, the notary gives the serial number of the sheet where the deed begins and the sheet where the deed ends, and the document is signed by the parties and the notary.

The deed will be issued on stamped paper. At the end of the document, the notary will express the numbering of all the sheets or sheets used.

At Welex, your conveyancing lawyer in Spain, for your peace of mind and security, the professional in charge of your case will accompany you to the notary’s office to explain the content of your deed and clear up any doubts you may have.

What documents do I need to buy a property in Spain?

First of all you will need your ID card, passport or identity card.

In addition, you must obtain a tax identification number. For individuals who are not Spanish nationals, it will be necessary to obtain a Foreigner’s Identification Number (NIE, número de identidad de extranjero). 

This is a number that identifies all non-residents in Spain. It is a unique number and although it does not authorise or grant the right of residence in Spain, it is necessary for tax purposes.

It is important to note that the Spanish Tax Agency establishes that, unless there is proof to the contrary, an individual is presumed to be habitually resident in Spanish territory when, according to the general criteria, the spouse who is not legally separated and the minor children who depend on him/her are resident in Spain. Proof of tax residence in another country is provided by means of a certificate issued by the competent tax authority of the country concerned.

If the buyer is a legal entity, it must also have a Spanish Fiscal Identification number. Any natural or legal person who carries out tax operations in Spain must have this tax identification number.

Secondly, it will be necessary to register with the Census of Tax Payers, which is made up of all individuals and companies that must have a NIE for their tax relations. 

Thirdly, it is advisable to proceed with the opening of a current account in Spain in buyer’s head, for the payment of the purchase price and subsequent direct debiting of supplies.

At Welex, your conveyancing law firm in Spain, we will assist you to have all the necessary documentation both for the signing of the private contract and for the granting of your public deed of sale.

What documents do I need to buy a property in Spain?

Buying a property in Spain with a mortgage.

Buying a property in Spain with a mortgage.

If you are going to obtain a loan for the purchase of your home in Spain, in order to guarantee your obligations to the credit institution arising from the loan, you, as the borrower, must take out a real estate mortgage in favour of the Bank on the home you are buying at that time. In this way, you will sign two deeds, one for the purchase and one for the mortgage loan. This mortgage will be a charge that will be registered on the property in the Land Registry.

The mortgage Title Deed in Spain will include the following points:

– The terms of the loan, such as principal, purpose, repayment, interest, fees and loan account.

– The borrower is informed about the exercise of actions by the bank in case of default, as well as the possible extrajudicial sale of the property. 

– An address will also be established for notifications between the parties, generally the mortgaged property in Spain.

You must take into account that as a debtor you are responsible for the loan with all your assets, present and future, according to article 1911 of the Spanish Civil Code, so the obligation of the mortgage is not a limit to the amount to be paid to the bank.

The mortgage obligation is the maximum amount for which the property is liable, or subject to payment, in the event of a foreclosure due to non-payment of the secured loan.

In no case will the mortgage insure interest for a period longer than five years.

Mortgage liability is constituted by the sum of the following items:

– Amount of the loan principal.

– Ordinary interests.

– Interest on arrears.

– An amount for costs and expenses.

The total amount is a percentage that each entity freely establishes, although, as a general rule, it generally ranges between 30% and 50% of the loan capital.

Spanish legislation states that «The mortgage directly and immediately subjects the assets on which it is imposed, whatever their holder, to the fulfilment of the obligation for whose security it was constituted».

There are also other obligations that must be met by the borrower related to the home as collateral for the loan, as an example we indicate the following:

  1. To have the home insured (normally damages and fire), being the bank the insurance beneficiary.
  2. To have the property up to date in all its tax payments and expenses, especially Property Tax (IBI) and fees to the Community of owners to which the property belongs.  
  3. To keep the property in good condition, making the necessary repairs to preserve its value and inform the bank of any fact that may reduce the value or limit any right over it.

Hiring of supplies and other services

The contracting of supplies for a new building in Spain, necessary documentation, registration in the land registry, wills in Spain as well as the Income Tax for Non-residents in Spain.

Have you just bought a property in Spain? Supply contract service

Welex, your office of lawyers Spain and accountants in Marbella, informs you about the steps you need to take once you become the owner of a property in Spain.

 The supplies corresponding to your home such as electricity, water, community of owners, IBI, garbage etc. will have to be contracted in your name and it will be convenient to direct the payments to your account in Spain to avoid later surprises, related to the non-payment of any of them. 

Are you a non-resident in Spain? You will need to bear in mind that it is convenient to have a bank account here in Spain for direct debit payments, as not all companies accept direct debit payments to a bank account outside Spain.

When proceeding with changes of ownership of supply contracts, it must be taken into account whether you have purchased a home considered as a new or second transfer.

Contracting of supplies for a new construction in Spain

The promoter will have to give you the so-called «bulletins» (certificate of authorised electrician and plumber) in order to contract the electricity and water supplies. 

At Welex, your law and economics office in Marbella, we provide the «post purchase» service and take care of the changes of ownership and domiciliation of the usual supplies of a property in Spain.

Documentation required:

  • Newsletters
  • Deed of purchase of the property
  • License of first occupation of the house
  • NIE Certificate and
  • Passport or identity card 

For your convenience please contact Welex, lawyers in Spain and accountants in Marbella, we manage the changes of ownership of all the supplies of your newly acquired property in Spain.

 Registration in the Cadastral Management in Spain:

We will present the Model 900D to the Cadastre offices for the change of ownership of the Spanish Property Tax (I.B.I. Impuesto sobre Bienes Inmuebles) and the future payments of the Garbage Tax in Spain. 

Please note that it can take approximately one year for the corresponding IBI and garbage receipts to be registered in your name. 

Please note that the direct debit of the IBI and garbage tax will be automatically cancelled if the bank account does not have sufficient funds for the payment.

The receipts for IBI and garbage in Spain that have not been paid on a voluntary basis will be collected and increased with a surcharge. Normally, the Tax Office Board or the corresponding Town Hall informs you of the debt by a letter, but please note that failure to receive the letter does not exempt the owner from responsibility for payment on the due date and late payments will be sanctioned; you will also be charged interest for late payment.

Electricity and water supply in Spain

The administrative managers of our Lawyers and Economists office in Marbella will request the change of ownership or new registration in the corresponding companies. If it is only a change of ownership, this can be done on the spot but, in the case of a new registration, this would take approximately 10 days minimum. For homes that are more than 20 years old, a bulletin must be requested from a licensed plumber or electrician.

Change of ownership and direct debit of bills for the Community of Owners in Spain.

We will provide the community of owners with all the documentation and information necessary to register them in their database.

We can manage any other supply such as telephone, ADSL, alarm, gas etc.

You have just bought your home in Spain and would like to import a vehicle for your use during your stay in Spain?

Please note that if you are a Fiscal Resident in Spain you will not be able to drive a vehicle with a foreign registration in Spain. European Union citizens not resident in Spain may be authorised to drive a vehicle with foreign plates for a maximum of 180 days. 

For this, please contact the administrative managers of our firm in Marbella now! We will be happy to arrange for the import of your vehicle into Spain. We will explain the necessary requirements to carry out the import and we will provide you with an estimate before starting the process so that you know the steps to be taken and the cost.

Have you thought about granting a Will in Spain?

Welex advises you on the execution of your Will in Spain. You will only need to provide us with the name of your heirs, the law you wish to govern your succession (the law of your nationality or the law of your last habitual residence) and the way you wish to distribute your assets, provided you comply with the rules of your nationality. Our law and economics firm in Marbella will provide you with a draft of your will written in two columns: Spanish and the language of your nationality. 

Do you want to rent your property in Spain for short periods? 

At Welex, your law and economics office in Marbella, we can manage the registration of tourist rentals with the Junta de Andalusia. This requires a first-occupancy licence. Do not hesitate to contact Welex and we will advise you of the requirements necessary to register your property in Tourist Rentals.

Hiring of supplies and other services

Non-resident income tax

When you own a property in Spain as a non-resident you should be aware of the annual Spanish tax obligations to which you will be subject after purchase.

Office of lawyers and economists in Marbella

Do not hesitate to contact our office of lawyers and economists in Marbella; we will advise you on how to proceed when owning a property in Spain as a non-resident.

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