PURCHASE PROCEDURE, MORTGAGES AND OBLIGATIONS OF THE BUYER 

1)                Purchase Procedure in Spain

2)                Additional Expenses

3)                Obligations of the Buyer in Spain

 
PURCHASE PROCEDURE IN SPAIN

 Once you find the home you want to purchase, the following steps are taken to secure the purchase: 

1)  Reservation is made, paying a small deposit.  The amount of the deposit varies depending on the property but it’s normally 3,000 euros.  The payment of this deposit freezes the price and takes the property off the market. 

2)  Shortly after, usually within 30 days, the contract of sale is drawn up in which the method of payment and delivery date are agreed.  At this stage, the first payment is made (usually between 25% and 50% of the total price). We recommend to make all the payments through the account of a lawyer. 

3)  During construction you will be kept informed of the building work process, allowing you to maintain peace of mind during the term of construction. 

4)  On completion, the last payment is made (or you initiate payment of the mortgage).  At this stage the official Deed of Sale (Escritura Pública de Compra-venta) will be prepared by a Spanish Public Notary (notario) and signed by both Purchaser and Vendor.

5)   Once signed, you receive a temporary copy of the Escritura (known as a “Copia Simple”) and the original is sent to the Land Registry for registration.  It is then returned to the Notary who will hand  it to you some weeks later.  Meanwhile the Copia Simple is your official notarised Title Deed to the property.

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ADDITIONAL EXPENSES

 When purchasing a property in Spain there are some additional costs over and above the basic purchase price in the form of taxes and fees related to the title deed.  The total amount of these expenses will be approximately 11% of the purchase price.

The additional expenses that one will incur when purchasing a new home are the following:-            

• VAT and Transfer Tax 

• Stamp Duty

• Notary 

• Land Registry 

• Municipal Property Gains Tax 

• Other Yearly Taxes: Ground Tax and Wealth Tax

 We can calculate the costs incurred in the purchase of your property.  Just fill in the application form in the “Contact” section with your personal information together with details of the property, and we will send you a full cost report.
If you need any other tax calculation, we can help you with that. Fill out the contact application.  

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OBLIGATIONS OF THE BUYER IN SPAIN 

Obtaining a Fiscal Identification Number, NIE 

As an owner of property you are now obliged to register your existence, or that of your offshore company, with the tax authorities by obtaining either a Tax Number (N.I.E.) or a Company tax number (N.I.F.).  This is accomplished by completing a simple form and going to the local police station 

Fiscal Representation in Spain 

Non-resident individuals and corporate bodies having an economic interest (property, assets, etc) must appoint a Fiscal Representative to assist in the administration of the non-resident’s tax affairs, especially receiving notifications and presenting tax declarations

 Wealth Tax for Individuals (Impuesto sobre el Patrimonio) 

This is calculated on a sliding scale starting at 0.2% of the value of the property, value being the greater of the Rateable Value (Valor Catastral), the acquisition price or a value decided previously and unilaterally by the tax authorities (Hacienda) for other taxes, such as death duties. 

 Income Tax (Impuestos Sobre la Renta)

 A non-resident owning property in Spain has always been obliged to declare 2% of the Rateable Value (Valor Catastral) in his annual income tax return as deemed income, upon which a rate of 25% is currently payable.  

 For those owners who only have one property in Spain, for personal use only, a simplified declaration has been authorised (Model 214) in which both taxes (Income and Wealth) are declared together.  This form must be filled out and presented at the tax office along with payment.

 Urban Rates and Refuse Collection (Impuesto de Bienes Inmuebles y Tasa de Basuras)

 This tax is levied by the local authorities (Town Hall) on the rateable value of the property, and the non-payment of this tax may be the cause of embargo against your property.  The amounts are approximately 300 euros per annum.

 Capital Gains Tax

 This tax is payable on the realised profit of the sale, when the property is subsequently resold.  There is a progressive scale of exemptions on the amount of the taxable scale of profit for an individual selling over a 20 year period, after which no gains tax is payable.

 To protect the tax authorities position in this respect, if the property is sold by a non-resident individual, or a non-resident company, the purchaser is obliged to retain from the amount paid to the seller, an amount of 5% of the sales price, and pay this over to the tax authorities using form 211.  Failure to do so, can lead to the purchaser being liable for the full amount of any capital gains accruing against the seller in respect of the property.

 The other tax accruing on the subsequent resale of the property is a municipal tax on the “Increase in value of Real Estate” often called Plusvalía.  This tax is payable by the vendor, although it is customary for the Buyer to be asked to bear this tax.

For more info, please send an email to info@casainternational.eu.

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