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As real estate agents we can advise you during the research and purchase of the property process, but to give you better advise in legal aspects we recommend you using the services of a lawyer. We have an agreement with a law firm specialized in real estate and construction law that can advise you throughout the purchase process: www.leymar.com.
In this section we briefly summarize the buying process and the most important concepts to consider when buying a rural property in Spain:
THE PURCHASE PROCESS
- Once you have chosen the property that you wish to buy and agreed the buying price, buyer and seller will sign a “Contrato Privado de Compraventa” (Private Sales Contract), including a penal clausure, or a “Contrato de Arras” (Purchase Deposit Contract) to assure the good aim of the transaction.
As a general practice the “arras” (deposit amount) will be 10% of the selling price, this way the property is booked and out of the market. The “Contrato de Arras” will contain all the information and clausures that both parts (buyer and seller) consider needed for the good end of the transaction. Nevertheless, it usually contains the selling price, the deposit amount given for “arras”, the remaining balance, and will fix the date for the signature at the notary of the “Contrato de Compraventa” (Sales Contract) , that is usually fixed 30 days after the formalization of the “Contrato de Arras”.
The “Contrato de Arras” will fix the consequences for both parts if there isn´t fulfilment of the agreed terms, in practice it is usually set that if the buyer doesn´t fulfil the terms agreed in the “Contrato de arras” he will loose the amount given ; if the seller doesn´t fulfill the mentioned contract then he will return the double of the amount given in deposit.
- At this point, your lawyer will ask for a “Nota Simple” (Property Registry Certificate) to the “Registro de la Propiedad” (Registry Office) to confirm that the seller is legitimized for the sale being the owner, and to confirm that the property is free of charges like loans or rentals.
- At the same time your lawyer will revise the documentation needed for the purchase, making sure that the property is up to date on payment of IBI (tax on properties), payments to the community of neighbours, rubbish collection tax, and water and electricity.
- The last step is to sign the sales contract at the Notary. After signing the contract the buyer will pay the outstanding balance of the agreed price and the seller willl deliver the keys of the property.
EXPENSES AND TAXES DURING THE BUYING PROCESS
In Spain, in general, we must consider a 10% of the buying price of the property for expenses and taxes
EXPENSES
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Legal expenses: it is normally the 1% of the buying price, plus 16% IVA (VAT).
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Notary expenses: fixed by law, depending on the declared value of the property, they can go from 300€ to 900€ average.
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Registry expenses: approximatelly 45 % of the notary expenses.
- Real estate brokerage expenses: paid by the seller as a comisión to the Real Estate Agency that intermediates the buying and selling process. They can go from 2% to 15%.
TAXES
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Modalidad de Transmisiones Patrimoniales Onerosas (TPO) del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (ITPyAJD): (Onerous Patrimonial Transmissions Modality of the Tax on Patrimonial Transmissions and Documented Legal Transactions ): in general, when buying a resale property, the tax that the buyer will have to pay is 6% or 7%, depending on the region where the property is located.
- Impuesto sobre el Valor Añadido y modalidad de Actos Jurídicos Documentados (AJD) del ITPyAJD: (VAT and Documented Legal Transactions Modality): when buying a newly built property directly from the promoter the buyer will pay the 7% VAT (IVA) and 16% when buying a land . The buyer will also pay AJD of ITPyAJD at 0,50% or 1% over the real value of the property.
- Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU): (Urban Land Value Incresement Tax): Also known as “plusvalía”. It is the tax that taxes the increasement of the land value from the moment of acquisition to the moment that it´s sold. It is usually paid by the seller but it can be agreed to bepaid by the buyer.
- Retención a vendedores no residentes: (retention to non resident sellers) If the seller is a non resident in spanish territory, the buyer will retain the 3% of the selling price and will deposit the amount to the public funds by means of the 211 model.
COSTS OF HAVING A PROPERTY IN SPAIN
EXPENSES
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Community expenses: when you own a property that is part of a residencial estate or a building, by law you are obligad to belong to the “Comunidad de Propietarios” (community of owners) and to pay the corresponding quotes for the maintenance of the comunal areas and services.
- Insurance: the home insurance is different depending on the owner of the property, the type of property, the coverage of the insurance policy; is is another expense to take into consideration as a property owner.
TAXES
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Impuesto sobre Bienes Inmuebles (IBI): (Property Tax) Council tax that taxes the ownership of a property. Is is calculated based on the property value and depending of the location of the property.
- Impuesto sobre el Patrimonio (IP): (Wealth Tax) Tax that taxes the net wealth at 31st December every year. It is a tax also to be paid by non-residents.
- Impuesto sobre la Renta de las Personas Físicas (IRPF): (Income Tax) the residents will be taxed yearly for the income that may arise from their properties (capital gains).
- Impuesto sobre la Renta de no Residentes (IRNR): (Non-residents Tax) the non-residents in Spain will be taxed yearly for the taxable income that may arise from their properties.
- Impuesto sobre Sociedades (IS): (Corporate Income Tax) the corporations owning properties will be taxed yearly for the income obtained from the exploitation of the property.
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BUYER'S GUIDE