PROCEDURE AND DOCUMENTATION FOR PURCHASING A PROPERTY IN SPAIN

In all instances we recommend that the Purchaser utilises the service of an Abogado (Spanish lawyer), a member of the Spanish Bar Association, the Colegio de Abogados. The Abogado will deal all matters relative to the purchase and associated matters including the transfer contracts for Water, Electric, Gas and Telephone., if applicable plus preparation and submission of an application for Pucharser´s N.I.F (fiscal) number. The Abogado will also ensure that all domestic accounts, in the form on IBI charges (Rates), Basura (rubbish), Community charges, if applicable, Water, Electric and Telephone, if applicable are paid or a pro-rata allowance agreed, calculated to the date of completion.
Spanish law authorises ownership by foreigners with relatively few restrictions and the transfer of property is generally less complicated than the UK.

THE PROCEDURE IS AS FOLLOWS

1). A reservation agreement is completed, containing details of the purchaser and the property, together with the agreed price and payment terms. A deposit is paid with this, preferably 10% or a lesser deposit followed quickly by the payment of the residue of the 10% deposit and vendor agrees to take the property off the market whilst the private agreement is drawn up.

2). A private agreement is drawn up by the Abogado. This contains full details of the price, form the payment and condition relating to the transfer of the property. This agreement will contain a clause requiring the vendor to convey to the purchaser a Public Title Deed (“Escritura Pública de Compraventa”) on receipt of the final payment of the property. In some instances these two documents are drawn up in the form of a single agreement.

3). The Public Deed is so called, because it must be prepared and signed before a Public Notary (“Notario”) who attests to the identity and signatures of the parties involved. The Public Deed will contain a clause stating that the property is being sold free form all debts, current in payment for all taxes and vacant possession is provided.

Upon signing the Deed, a simple copy (“Copia Simple”) is given to the purchaser- the original going to the Property Registry of the District in which property is situated for inscription in the name of the purchaser. Once the procedure is completed, the purchaser is completely secure against claims from 3rd parties against the previous owner.

EXPENSES INVOLVED IN A TRANSFER OF PROPERTY

A). Transfer tax. This tax must be paid by the purchaser before the transfer of the Title Deed into the owner’s name. It is calculated at 7% of the declared value of the property. For new construction an IVA (VAT) charge is raised at a similar rate of 6-7% (depending on the region of Spain) of the declared value plus a Transfer Tax charge of 1% on the declared value. The declared value is officially started purchase price recorded in the “Escritura de Compraventa” (title deeds).

B). Property Registry fees and Notarial fees (the amount charged by the Noratial for preparing the public Deed and presiding over its signing, plus fees paid registration), we recommend a provisional sum for 1500 to be allowed for these charges.

C). ”Plus Valia” tax. The best translation of this term into English is probably Capital Gains Tax. It is a tax on the increase in value of the actual lands rather than the building thereon and is in respect of the period since the previous transfer of title by Public Deed. In the case of a new property , this is normally a nominal fee, but in case of a resale property, which has not changed hands for a number of years, it can be substantial. This tax is the vendor’s liability and this will be so noted in the contract. We are also able to assist and advise purchasers regarding the acquisition of furniture, electrical equipment etc.. and if required the subsequent letting of their property.
Further information can be obtained from our consultant lawyers and accountants Messer’s Carretero International in London (Mr. Leon del Canto) 0845-0506261
E-Mail l.delcanto@carreteroabogados.com

PROPERTY PURCHASE EXPENSES

The following is an example (for l 70,000) breakdown of the expenses incurred when buying and owning a property in Spain. Note 1- All properties are freehold. For ease of understating all prices quoted here are given in Pounds Sterling whereas in the contract, figures will be in Euros.

ONE OFF PAYMENTS

Value of house only-example:70,000 £
I.V.A. (V.A.T.) or transfer Tax (on property) plus stamp duty 7% depending if it is a resale or new property as explained above: 4,900 £
Transfer Tax (on documents) 1% : 700 £
Notary Fees: 300 £ Registry Fees: 240 £
Solicitor’s Fees- 1% of property value or minimum: 700 £
Water and Electricity Contracts: 330 £

ESTIMATED TOTAL AND FINAL PRICE: 77,170 £