Buying property in Spain
Are you interested in buying a property in Spain?
Below you will find information about taxes, laws, fees, financing and recommendations to facilitate the buy a property process and properties in Spain.
We at CALAOCOSTA HOME IN SPAIN help you buy a property, before and after the purchase. Feel free to contact us here if you have any questions.
The buying process
If you are about to buy a property in Spain, we are primarily advised to hire a lawyer to assist you with all the formal details. (For further information about the important role that a lawyer holds, please refer to section 4.) Your attorney helps you to check to buy a property if there are any debts on the property, such as mortgages and other loans, and confirm that the seller is the legal owner of the property.
If everything is in order, you then write an agreement and pay a deposit, usually 10% of the purchase price. In the agreement you will find the price of the accommodation, the amount of the payment, the date of signing the agreement and what is included in the price (eg furniture). You enter an agreement to reserve the property while completing other legal and financial warrants. Since a property can be sold through several real estate agents, it is very important to reserve the property when buyers and sellers agree on the price. If you decide not to complete your purchase after the option agreement has been signed, you will lose the paid deposit. If the seller changes their mind after the option agreement has been signed, they must pay back the deposit and often also a penalty fee, sometimes up to double the payment depending on what is stated in the agreement.
When it’s time for the purchase, your lawyer prepares the purchase letter (Escritura de Compraventa). It is then signed by you and the seller, in the presence of a Spanish notary. Both the seller and the buyer can of course be represented by someone who has been authorized. At this time, the rest of the payment will also be paid.
The notary then sends the document of purchase to the local property register to register the buyer as the owner. After about three months, the buyer returns the document (Escritura ), and is then registered as the new owner of the residence.
Fees and taxes
Allow 10-13% of the purchase price for taxes and taxes. Cost of purchase is as follows:
VAT (IVA): Buyers in Spain are required to pay 10% VAT for second-hand properties. The VAT payable for newly built properties is 10%. However, if you buy land, commercial premises or parking spaces in garages in Spain, VAT rises to 21%.
Plusvalía: A municipal land valuation tax based on the value increase on the property since the last purchase. It is based on a) where the property is located, b) empty space, c) the value of the property designation, d) and the time of the previous lag. According to law, this tax is payable by the seller, but some sellers still want it to be paid by the buyer.
Notary fees: The notary takes both a fixed and a variable fee, related to the property’s valuation value. When the notary sends the purchase letter for registration to the local property register, a stamp tax will be charged. Expect to pay approximately 1% of the cost of notarial and stamp duty to the property register.
Legal fees: Explain about 1% of the purchase value to legal fees.
Mortgages: If the buyer needs a home loan, there may be certain starting fees.
Property owners in Spain must pay tax annually. We recommend that you use a tax adviser (so-called “gestoria”) to handle tax and taxation. This will save work and any fines for late payment. We can recommend some good tax advisors.
The main annual tax is property tax (IBI).
The tax is calculated on the taxable value. The tax rate varies between 0.4% and 1.1% depending on the area where the residence is located. The annual tax is then between 200 € and 2000 € per year depending on the property value.
The lawyer in Spain
It’s not a must, but it’s important to get expert advice from a lawyer for everything to be right. Your lawyer takes care of the formal side, and discusses with local authorities, for example, that no night club will be built just next to your dream home. The lawyer writes the purchase contract, applies for the NIE number (Spanish ID number), handles the payment of the property and accompanies you to the notary for the final purchase of the accommodation. You will receive tax information both during and after your purchase. In particular, the lawyer will ensure that you get a home that is truly yours by law and everything is in order. The lawyer can also establish a testament for your property. Basically, the lawyer is there to answer any questions about the buying process and ownership of your property. The cost of a lawyer is approximately 1% of the purchase price.
We can recommend several reputable lawyers.
There are no simple answers to this question. Usually, the cost of additional 10-13% of the purchase price is for different fees and taxes. These 10-13% include fees for lawyer and notary, transaction costs and / or value added tax. If you need financing for your property, you can get help from a Spanish bank. Spanish banks are generally uncomplicated and fast when it comes to mortgage loans. Here in Mallorca banks are used to managing mortgage loans for foreign customers.
We have contact with several banks in Scandinavia and with all banks and brokerage companies in Mallorca. Based on your needs, we can recommend you the right bank (s) for your loan application. We have extensive experience in financing and always strive to find the best solutions for our customers.