Guide to buying property on the Costa del Sol:
The Buying process:
When the property has been selected and the terms and conditions of the sale have been agreed upon by all parties involved, the property must then be secured. Normally, a €6.000 deposit fee is paid to the real estate agency, lawyer or developer and a reservation contract is signed by all parties involved to take the property off the market.
Once the lawyer has carried all necessary checks on the property, usually within a two weeks period, it is customary to sign a private purchase contract and pay a further 10% of the purchase price.
On completion, a document of deeds (Escritura Pública) will be signed by both you and the vendor before a Spanish Public Notary. The deeds can then be submitted to the land registry. At this point, you gain full legal title to the property and receive the keys.
Legal Costs:
Notary fees are normally paid by the buyer, unless agreed otherwise. Notary fees are set by the Spanish state and the final amount you pay will depend on the value of the property you buy. A notary must be present when the parties involved, buyer and seller, sign the sale contract and escritura (the deeds).
It is advisable to appoint a local lawyer. The lawyer will carry out a title search, and advise the purchaser on all aspects of the purchase. Lawyer’s fees are around 1% of the final price paid for the property once the sale has gone through, plus 21% VAT.
Estate Agents’ fees vary depending 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 and this may vary depending on the price of the property. However, the fee is normally included in the sales price.
Taxes:
On new residential properties, sold by the developer, there is VAT (IVA) charged at 4% of the value, plus 1,5% Stamp Duty, and these are paid by the purchaser. However, on urban plots, 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 resale properties there is a property transfer tax (Impuesto de Transmisiones Patrimoniales) according to a sliding scale, as follows:
Property price: Up to 400.000€
Tax Amount: 8%
Property price: From 400.001€ to 700.000€
Tax Amount: 9%
Property price: From 700.001€
Tax Amount: 10%
In all cases there is also a municipal tax, “plusvalia”, which should not be confused with Capital Gains Tax which the seller is liable for when the property is sold. This “plusvalia” is paid by the seller. It is a municipal tax set by the local authorities and based on the increase of the value of the land from the date the owner acquired the property to the time of the present sale.
Registration:
After signing the Public Deeds, you will need to submit them to the Land Registry Office and have your title incorporated as well as register your purchase with the municipal authority where your property is located. This inscription is the final step in assuring your legal title to the property.
N.I.E. (Foreigners’ Identification Number):
Any non-Spanish buyer must apply for a “NIE” number from the
Spanish National Police authorities. This number is required for any property transaction (buying, selling, utilities, insurance, etc).
Residence Permits:
It´s not necessary to have a residence permit to purchase a property in Spain, unless you are planning to live in Spain for over more than half a year, 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 first obtain a residence visa from the Spanish Consulate in their home country. With this visa, they can apply for a residence permit. The
Spanish Ministry of Foreign Affairs and Cooperation has a list of all of their Consulates in the world with information including address, telephone number and opening hours, should you wish to apply for a visa in your home country.
* The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues. The contents herein may be subject to errors, omissions and amendments.
