Laws and regulations are subject to change, and so are personal circumstances of each individual. The contents of this guide are for general information purposes; therefore we strongly recommend qualified professional advice from an expert lawyer and/or tax consultant. mci will be pleased to recommend you qualified professionals in both fields. The information provided in this guide is intended for informational purposes only and does not substitute legal advice. The contents herein may be subject to errors, omissions and amendments. Accuracy is not guaranteed.
Once the property is selected and the terms agreed on, the property must then be secured. This can be done through a private contract between the two parties. It is customary that 10% of the purchase price is paid at this time. On completion, a deed of conveyance, the “escritura pública”, must be signed by both parties at the office of a Spanish Public Notary.
The notary certifies the deed of conveyance as a registered public document. Notary’s fees are paid as stated by law: 80% by the vendor and 20% by the purchaser unless otherwise agreed. The fees are fixed by law on the basis of a sliding scale. It is advisable to appoint a local lawyer, who speaks the purchaser’s language; the lawyer will carry out a title search, and advise the purchaser on all aspects of the investment. Lawyer’s fees are around 1% of the purchase price of the property.
Estate Agent’s fees vary depending on the state or region and also on the type of property. On the Costa del Sol, it is customary for the commission to be paid by the seller. The commission is usually a percentage of the selling price (although a fixed fee may be agreed between the seller and the agent) and this may vary depending on the price of the property. A buyer can also appoint a real estate agent to search for a property that meets his/her requirements and negotiate the purchase; in that case, the purchaser would pay the agent’s commission.
On new residential buildings, direct from the developer or builder, there is VAT (“IVA”) charged at 10% of the value, plus 1,5% Stamp Duty, and these are paid by the purchaser. However, on commercial premises and garages (not annexed to a home) purchased directly from a developer or builder, VAT is 21% plus 1,5% Stamp Duty.
On resales properties there is a Property Transfer Tax (I.T.P) according to a sliding scale, as follows:
|Tax rate||All resale properties||Garages not annexed to properties (2 max.)|
|8%||Up to € 400.000||Up to € 30.000|
|9%||€ 400.001 – € 700.000||€ 30.001 – 50.000|
|10%||From € 700.001||From € 50.001|
However, there are certain exceptions for which you should consult your lawyer.
This inscription of the title deed (“escritura pública”) at the Land Register office is the final step in assuring your legal title to the property.
Notary and Registry fees are set by law and according to a sliding scale. Both fees together amount to approximately 1,5% of the purchase price..
Overall, taxes, legal fees and expenses directly related to the purchase of a property amount to approximately 10% of the purchase price. If the purchaser applies for a mortgage on the property, there will be approximately 3% additional expenses.
Apart from individual ownership, a property can be owned by a company. Owning companies can be Spanish companies or foreign companies.
It is not necessary to get a Resident Permit unless you are planning to live in Spain for more than 183 days per calendar year. In that case, you need to apply for fiscal residence in Spain.
Non-European Union citizens who want to reside permanently in Spain must obtain a special residence visa from the Spanish Consulate in their home country. With this visa, they can apply for a residence permit.
N.I.E. (Foreigners’ Identification Number)
Any non-Spanish buyer must apply for an “NIE” number from the local Police Authorities. This number is required for any property transaction (buying, selling, utilities, insurance, etc).
Annual Property Taxes:
I.B.I . (Impuesto Bienes Inmuebles) – Real Estate Tax
This is an annual real estate tax levied by the local Town Hall and is at present a percentage of the cadastral value (“valor catastral”). It may vary depending on the municipality where the property is located. As a reference, the tax scale goes from 0,3% to 1,3% of the cadastral value of the property. The cadastral value is the assessed value for tax purposes and is important because other taxes are based on it as well. When you buy, you need to see the seller’s last receipt for the IBI payment. This contains the value and the exact amount of the tax.
IRNR (Impuesto sobre la Renta de No Residentes) – Non Resident Property Income Tax
This is an annual tax, due to be filed and paid from the year after the property is purchased. The Spanish tax agency attributes all non-resident property owners with an imaginary income each year of 2% of the cadastral value of their property. This 2% “income” is subject to a 24% tax rate. If the property’s cadastral value has increased after 1994, the imaginary income is only 1,1 % of the cadastral value, used as taxable base to calculate the 24,75% of Non Resident Property Income Tax.
Contact your tax advisor on this matter.
IRPF (Impuesto sobre la Renta de las Personas Físicas) – Resident Income Tax
Spanish tax residents are subject to taxes that differ from those for non-residents. They take into account the individual’s work-related income, real estate, tax benefits, etc. Therefore, we will not go into detail in this brief explanatory guide about buying property in Spain, since there are too many relevant factors that can vary according to the individual circumstances.
Wealth Tax for Non Residents in Andalusia
Wealth tax is applicable for years 2012 – 2016 for assets owned between 2011 – 2015. All property owners in Spain (both resident and non-resident) are subject to this tax, which ranges from 0,24% to 3,3% of the net asset value. The net value is reduced by mortgage debt on the property, as well as a 700.000€ exemption (for residents and non-residents alike).
The value of the real estate assets will be considered to be the highest value of the following: the cadastral value, the purchase price or the value set by the Administration for other taxes.
Wealth Tax for Residents
Tax residents in Spain have additional benefits, according to their individual circumstances.
Property owned by a non-resident company
In case the owner of the property is a non-resident company, a special tax has to be paid. Since 1996, the rate applicable is 3% of the cadastral value of the property.
Other taxes and expenses:
Garbage collection tax
To be paid to the local authorities. Amounts are fixed by local authorities but they are usually not high.
These are fees paid to the Community of Owners for services and maintenance of communal areas, when the property is located in a development or condominium apartment building. When signing the purchase title deed at the notary they must be up to date and the owner must provide a certificate issued by the Community, stamped and signed by the administrator. The cost of the certificate is to be paid by the owner.
Energy Performance Certificate
This document must be attached to the conveyance deed and it is the seller’s duty to obtain and pay for the certificate prior to the completion of the sale.