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The Buying Process
 As a property buyer in Spain, you must have a valid NIE number in place before you can complete the purchase. This is simply a Numero de Identidad de
Extranjeros – an ‘Identity Number for Foreigners’ and registers you into the Spanish system. Your lawyer used to be able to obtain this for you but new
legislation has made it necessary for you now to obtain it in person by visiting your nearest Policia Nacional station and completing the necessary
documentation. That said, at this stage you should retain the services of a good lawyer who speaks both Spanish and English.
Off-plan Purchase
You will normally be asked to sign a reservation contract and pay a small fee (normally around €3000 but this can vary depending upon the purchase
price). This process means that the property can then be taken off the market for a short time (normally 30 days) allowing time for all the legal checks
to be made and a contract of sale to be drawn up. At the end of this period you are usually required to pay the first of the agreed series of payments.
This is usually 10% of the purchase price and you should be sure of your commitment, as this first payment is non-refundable.
Resale Purchase
Things are slightly different when purchasing a resale property in that once your offer has been accepted, you will pay a small deposit (normally 10%),
which means your lawyer can progress with the legal checks. Once completed you are then required to sign the contract of sale, which lists everything
pertaining to the purchase, i.e. the price and what’s included, the deposit, when you will pay the full amount and the date the sale will be completed.
If, at any time throughout the buying process you fail to complete, then you will sacrifice your deposit whereas if the seller decides to back out of the
sale, then they must pay twice the value of the deposit back to you.
In both of the above cases, once the purchase is completed there will be various fees and taxes that need to be paid. Once paid, your lawyer will then
register your property with the Spanish Land Registry in your name.
These taxes are broken down as follows:
- New property purchase tax: Newly built houses attract IVA (Spanish VAT) and this must be paid whether the house is actually completed or is in the
process of being built. The current rate is 7% on top of which 0.5 - 1% stamp duty must be paid too. If your purchase is one of land or commercial
premises, then the IVA rises to 16%
- The re-sale purchase tax: Resale property buyers are required to pay the Impuesto de Transferencia de Propiedad (or transfer tax) which, at the
moment is 7%. Stamp duty of between 6 – 7% also must be paid on resale properties.
- Plusvalia tax: This is set by the local authority and varies widely depending upon where the property is located and is calculated on rateable
value.
Extra Costs to Consider
Once you’ve agreed your purchase price and paid the taxes which are due, then you will need to consider all the other charges you will face when
buying a property in Spain.
The buyer is also liable to pay:
- Legal fees (usually between 1 and 2 per cent plus 16% IVA).
- Notary and property registration fees of about 1%.
- If your lawyer does not speak English then you are advised to use the services of a translator who is used to the documentation involved in
property purchases – shop around as translators’ fees vary and not always are the most expensive the best.
- If the property is sited on a complex (or community) there will usually be annual maintenance charges to pay, which covers such things as swimming
pool maintenance and upkeep of the communal garden areas.
All in all, you should really allow for around 10 – 12% on top of any agreed purchase price for all the various fees you will need to pay.
A Few Final Thoughts …
When considering purchasing a property in Spain you are embarking on a major, life-changing experience. Some things to consider are listed below:
1. Think very carefully about why you are doing this. It is amazing how many people do not have the support of their families and end up regretting
their purchase very soon after completion.
2. Research, research and more research. Take at least two holidays in the area you are interested in to get a feel of what’s there, not just the
holiday type of things, but shops, doctors, banks and other amenities you may need.
3. Do not be tempted into buying the first property you see and rushing into a decision, as almost always you will see better ones, or more suited
to you, later in your search.
4. Once you have settled on your preferred area and found your perfect property, you will need to consider things such as the costs of moving your
possessions to Spain, schools for the children and all the other aspect of life you currently take for granted.
5. If you are a pensioner, you must make sure that you can have your pension paid into a Spanish bank. This is not normally a problem but you should
check all the same. Also, don’t forget to make a will.
6. Above ALL else, you should keep in mind (especially if moving to Spain) that if things go wrong or your circumstances change, you have sufficient
funds to move back to your home country if you need to.
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