Buying a property in Spain

By Welex, your multilingual lawyer in Marbella and accountant in Spain, professional and multidisciplinary team under one roof!

Within the European Union (EU), Spain remains one of the economies with an attractive economic growth, while consolidating itself as one of the favourite destinations for real estate investments, both for individuals and legal entities, residents and non-residents; either to carry out a professional activity or for use as a residence.

A few days ago, the Council of Notaries in Spain stated that «the gross return on investment in housing remains positive between 4% and 7.5%» in all capitals of the Spanish territory.

«Used housing is the main driver of the Spanish real estate market. However, new construction continues to make headway; according to the latest data from the National Institute of Statistics (INE), between January and June, the sale of newly built houses grew by 7.4 percent», the notary body points out. 

The Association of Registrars adds other statistics on the dynamics of the real estate sector in Spain: «So far this year, the number of homes purchased by foreigners rose by 7% mainly attracted by the Iberian coast«.

While in cities like Madrid the luxury real estate market is expanding in areas like the Barrio de Salamanca with acquisitions by both nationals and foreigners, outside of this area the coasts are the preferred destinations.

In such a scenario, the Costa del Sol shines magnificently. Precisely, in the province of Malaga there is a demand for apartments in urbanisations, as well as houses, villas, premises and properties in general.

Estepona and Marbella are the municipalities chosen as references for urban management and represent an area of influence of notable interest.

From outside Spain, Marbella, San Pedro Alcantara and Estepona are being valued on the rise, with their warm climate and experiencing a revival of the hotel sector.

More than 25 years of experience you will find in Welex, your law firm in Marbella, your economist in Spain. Contact us now.

Having said that, to buy a property in Spain whether for living, renting or as investment it is necessary to have the best advice in order to avoid future problems and unnecessary headaches.

Choosing a property in Spain is one of the most important decisions a person makes throughout his or her life, says a lawyer from Welex who specialises in sales matters. 

At Welex, your multilingual law firm specialised in Spanish real estate law, you will find the security to carry out your purchase counting on «the best advice» of quality and professionalism, always with the objective of protecting your interests.

«I can tell you that here at Welex, there is a thorough specialisation to give the customer the best advice on their investment in Spain; WeLex is a professional law firm in Spain here to advice our customers from the moment they make a purchase or sale decision until it has materialised and even many of our services go beyond the post-sale or post purchase«, says this professional at Welex.

Exclusively, the lawyer in Marbella, Costa del Sol refers that there are things that are essential to inform a client – whether resident or not for tax purposes in Spain – who intends to acquire a property for first or second residence.

Welex is the result of the joint effort of many professionals to achieve the satisfaction of our customers. A multidisciplinary office based in Marbella that speaks your language. Don’t hesitate to contact us now.

«We take into account whether the seller or the buyer is a resident or non-resident for tax purposes in Spain; there are a series of requirements to be fulfilled depending on the private contract signed by the client and also stated in the public deed signed before a notary; and we must take into account the payment of taxes, the investment in Spain, where the resources come from… we analyse both the legal and the fiscal aspects of the operation and we take into account the country of tax residence of our clients«, the specialist points out.

With reference to the purchase it is fundamental to know the legal situation of the property «it is not only a question of our client knowing the physical characteristics of what he shows interest in buying» it is necessary to obtain relevant information for a safe purchase, and to speed up the procedures. To know who owns the property; whether or not there are liens or encumbrances on the property, whether it is the result of an inheritance or whether the buyer is going to acquire it with financing by means of a loan with a mortgage guarantee.

In other words, a real estate purchase operation in Spain may or may not be complicated, depending on having all the relevant information as well as fulfilling all the obligations inherent in the purchase process to be carried out.

«First of all, finding a home in Spain is something that the client does for himself, for this he goes to the services of a real estate agency and we must bear in mind that their work is the intermediation – between the seller and the buyer – but a real estate agency does not provide the necessary services in the legal and fiscal aspects that the client needs, which are essential and fundamental in the purchase«, he underlines with conviction.

Once the property has been chosen, the Welex lawyer outlines the reasons for taking advice on a tailor-made service such as that offered by Welex: «We check carefully to see if the seller is up to date with the corresponding taxes, IBI, waste collection charges, community fees or if there is any kind of incident that could affect or prevent the sale and transfer».

«Our goal is to satisfy the customer from the beginning to the end, that is, we provide quality in our services this is possible thanks to the knowledge and ability, we have many years of experience; and we provide a quick response, individualised attention», he says.

Welex lawyers in Marbella and accountants in Spain, professionalism and total confidence when hiring your legal advisor in Spain!

Contact our leading Costa del Sol law firm now! We have a solid network of collaboration with other foreign law firms, both in Germany, the Netherlands, Belgium, Luxembourg, France, and the United Kingdom, Ireland, Portugal, etc.

The process of buying a property in Spain

When paying taxes, several aspects must be taken into account: the purchase price, as the tax is based on the purchase price, and the characteristics of the operation, if we are dealing with a new home sold directly by a developer, under construction or already finished, or if it is a used home belonging to an individual owner.

 «In the first case, when the seller is a developer, the buyer will have to pay Spanish VAT and must also settle the Stamp Duty in Spain; the VAT in Spain is currently 10% and the Stamp Duty depends on the autonomous community, in Andalusia is 1.5% on the purchase price, when the house you want to buy in Andalusia is a second transmission will have to pay the stamp duty rates are 8%, 9% and 10% depending on the value of the purchase«, explains the Welex lawyer in Marbella

In the voice of this professional it is necessary to point out to the client that not all the operations of purchase and sale are equal, the characteristics of each one are taken care of, the situation of the salesman and of course, the one of the buyer.

When a person decides to buy, it is essential to have law firms in Spain like Welex. Ask for your tailor-made quotation! At Welex we advise individuals and companies. We are lawyers and accountants, multidisciplinary. Contact now your reference law firm in Marbella. 

-Yes, of course, you must assume that there are differences, not all transactions are the same, it is essential that the client has clear and complete information about the entire transaction… and the expenses in the operation; we, from the first moment, provide a breakdown of expenses, including taxes to be paid and all expenses such as notary, registration, tax settlement and processing.

Regarding how a purchase for a price of 500,000 euros is taxed in Spain, «In this case, an investment for this amount, and in the case of a second transfer, the first 400,000 euros would be taxed at 8%, and the rest, 100,000 euros at 9%, and then you have to pay the notary and the Land Registry … everything would be quantified at approximately 10% of the purchase price,» said the specialist.

Welex, your lawyer specialised in real estate law in Spain comments that «the people who come to the office» looking for fiscal and legal advice regarding the operation they are going to carry out, arrive when they have already chosen the property they are going to buy, therefore they need to know «how to proceed with the purchase from this moment on».

«That is what we do at Welex, we deliver a written report to the customer, we inform them about who the owner is, we clear up any doubts as to whether the person selling has the capacity to sell, including a full description of the property to be purchased, and we analyse any existing charges or liens, mortgages or embargoes that may have been registered on the property…«, he says.

Buying in Spain with firm steps

Not all transactions are successful, some lead to litigation, often due to a lack of proper advice from the outset. Sometimes it happens, the specialist adds, that debts, seizures, unpaid mortgages or even problems arising from an inheritance are involved: «Inheritances are usually a complex issue because they can have several effects«.

What can be found?

-A mortgage on the property in Spain, a debt either because the IBI or the waste collection fees have not been paid; a seizure on the property due to a collection procedure initiated by the Tax Office Board, and it can also happen that the seller does not pay the taxes that he should have paid at the time of purchase, even finding a tax condition for an inheritance… 

«Of course our client must know how much is going to pay for water, electricity, gas, maintenance expenses in general to avoid surprises, such as the IBI or the payment of rubbish; in our report we include the situation of the property in the cadastre, specifying its cadastral reference which is an alphanumeric code with 20 characters assigned individually to each property, so that we can identify it on the plans«, indicates.

And what if there’s an extraordinary expense from the community?

-It is necessary to see each specific case, who is going to enjoy it, the service it covers, that is, which owner is going to benefit from it, for example if it is an extraordinary expense from an elevator that was agreed months ago and it is a continuous extraordinary expense over time, or it is a single payment to cover a service that has not yet been installed, therefore, it will be necessary to see the use and enjoyment of the service covered with the payment of that extraordinary expense.

We can find ourselves before the purchase of a new home in a promotion or on the contrary already used, either as an investment or for use as a first or second home. Anyway, it is essential to seek advice.

Likewise, in the case of the purchase of a land for its construction, «We advise you on how to obtain the building permit, we are in contact with your quantity surveyor, your architect and we make sure that it complies with all the legal requirements described by the Law on Building Regulations. We assist you in the purchase of the land, in the declaration of new work under construction and in all the documentation included in the General Law for the Defence of Consumers; of course, we advise you in the signing of the contracts with each of the construction agents, in short, in all the planning of the work«, points out the Welex professional.

What if it’s a piece of land that’s being bought? 

-It will be necessary to analyse if the transaction is subject to VAT of 21% plus 1.5% of legal acts that marks the Junta de Andalucía … or alternatively determine if it can be subject to the payment of the Tax on Property Transfers and Documented Legal Acts.

What if the person wants to buy their home with a mortgage in Spain?

-Once the client has chosen the property, we coordinate with the bank the gathering of the documentation, both of the property and the client’s personal and economic capacity documentation and we assist the client in the signing of both the purchase Title Deed in Spain and the loan Title Deed with mortgage guarantee. 

«Once we have carried out the study of the property and delivered the report to the client, the time has come to proceed with the private contract of sale; the client must always seek advice before signing because once signed by the parties, the buyer cannot claim for his failure to comply that he is no longer interested in or suited to what was signed«, points out the specialist.

In case the owner does not sign but one person on behalf of the other, Welex verifies the identity of all parties and that they have the capacity to sign.

Then there is the post-purchase process, because buying a property in Spain does not end with the payment of it: «Our office guides the client in the signing of the private contract and the subsequent signing of the deed of sale before a notary. We have to take into account that the private contract is not sufficient for the registration of the property in the name of the buyer, so it will be necessary to sign the public deed and the buyer has the right to choose the notary».

When it is a question of buying a house under construction, the analysis of the documentation is more complex, because other aspects must be evaluated: the building permit to carry out the construction, the review of the plans of the house; the location of the house and what will be the use of the common areas.

And determine whether the seller has complied…

-Yes, of course, when a client hires us we verify that the promoter is registered in the corresponding Commercial Registry, we also obtain information about the property in the Property Registry; and we are aware that the promoter enters these funds in a special account that can only be used for construction; we verify that he offers the buyer a guarantee or insurance that guarantees the return of the amount paid including VAT, plus interest, if there is a delay in the project or if the work is not carried out.

When is a delay worrying?

-In general, we would say that a period beyond six months…; we would have to see the technical causes; usually the contracts include a grace period of three or six months. 

Once the building is completed in Spain, adds the professional, the developer must proceed with the registration of the new work in the Land Registry so that it can be sold in accordance with the description of the contract as well as the plans; and the developer must have damage insurance which is obligatory and included in the Law on Building Regulations.

«These insurances must cover the compensation of damages that affect finishing elements or finishes during one year; another insurance of three years for defects that affect constructive elements or installations that can cause a breach of the habitability of the house and a ten year insurance for defects in the foundation, beams, load-bearing walls; that is, structural elements that affect the resistance and stability of the building. At Welex we take care of checking that all these legal procedures have been fulfilled, only then does the time come to sign the deed before a notary«, says the consultant from his office in Marbella.

Are you looking for a law firm in Marbella? Welex, lawyers and economists, is a firm specialised in all types of legal proceedings in civil, criminal and administrative matters, as well as in advising on sales in Spain.

Knowing the Tax liabilities in Spain

At all times, the person interested in buying a home in Spain must bear in mind that other expenses of the operation derived from the purchase process will be added and that must not be ignored.

«For example, the seller pays the capital gain and the notary and property registry fees and the agency fees are generally paid by the buyer, but when we are dealing with a case of a first home of a developer, the law provides that in any case the municipal capital gain, the costs of declaring new construction, horizontal division and cancellation of a mortgage, if any on the property, must be paid by the seller and cannot be assigned that payment to the buyer», he said.

A majority of these operations are carried out by foreigners who do not speak the Spanish language, in Marbella many are British, French, German, Dutch, Danish buyers.

In this respect, the specialist adds that: «At Welex we assist and advice the customer, we assist them in the firm to give them all the legal advice they need and we also see the need for a translator to translate the writing into the customer’s mother tongue in a professional and independent way, although we explain the content and all the clauses included».

The signature before a notary in Spain and the subsequent registration of the deed before the Land Registry are two essential operations, Welex is in charge of preparing the documentation and appearing before a notary accompanying its client.

«In the first part of the document, the deed contains the place of signature and date, and the identification of the notary; then the notary identifies all the parties including their name, their marital status which is important in the case of sellers so that they know who must appear according to their marital economic regime; the address and identity documents and this is essential, because if one person appears on behalf of another, the notary will confirm that the person appearing has sufficient capacity to represent another and sign the deed; the deed also includes a description of the property with its registration data, its cadastral reference, its situation with regard to payment of property tax and community of owners’ fees, this is important because if there are any debts they could be the responsibility of the new buyer», he points out.

According to Welex, your law firm in Marbella is attached to the Spanish sale Title Deed, the certificate of energy efficiency and evidence of what have been the means of payment, if by check or transfer.

After the signing of the deed, the process of tax liquidation and registration in the Property Registry begins: «At Welex we also carry out actions subsequent to the purchase, such as the presentation of taxes to be paid by the buyer and this is done within 30 working days or one month, from the signing of the deed; when all the taxes on the operation have been paid, the authorised copy of the deed is presented in the Property Registry. Once the deed has been registered in the Land Registry, we hand over the original documentation to the buyer, his deed and all the payments made; we also give the client a certificate confirming that he has his title registered in the Land Registry», he says.

There is also a detailed after-sales service: «We help with the direct debiting of the services of your home, we assist with the opening of an account if the client requires it and we take care of the direct debiting of the IBI, the payments of garbage, electricity, water as well as the community expenses».

Our objective, the Welex professional says optimistically, is to protect the interests of our clients «of their investment in Spain» whose regulations and practices are usually unknown to them.

Please do not hesitate to contact our law firm in Marbella, for any tax, accounting and legal queries.

Our multilingual lawyers in Spain are specialists and cover practically all areas of law, both for individuals and companies.

Welex, lawyers in Spain and accountants in Marbella, do not only provide services in Marbella, heart of the Costa del Sol, but also in the rest of Spain.

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