CHOOSING LAWYER – FINANCIAL ADVISOR

It is important to have a qualified solicitor to represent you and qualified financial advisors to take care of the tax issues in the process of purchasing a property in Spain.

We recommend you to establish a relationship while you are here since it can be more difficult to choose lawyer when you are far away from Marbella.

BASICS

Before you start your purchase we recommend you to have these aspects ready.

-NIE number (a number issued to foreigners in Spain),
-Spanish bank account -Lawyer

THE PURCHASING PROCESS

After the negotiation that is done by the agent, there will be an offer. If the offer is too low it will not engage the interest of the seller and might be counter-productive.

We recommend you to make your offer in writing which will include the price, deposit amount, when you are willing to pay it, when you are willing to complete the transaction, what is included exactly (furniture, fittings etc.) all technical equipment and installations should be in good working order. Your lawyer can also be consulted in the negotiation process to make sure the terms of the offer meets their legal criteria.

Unless an immediate payment of the full purchase price is made, a private contract of purchase is drawn up wherein the details of the purchase are reflected – the legal description of the property, purchase price, form of payment, date of completion, date of possession, etc. Upon signing the private contract, a payment on account of the purchase price is always made which can vary substantially according to the terms of the sale and the date of completion. A quite normal deposit for completion within 30 to 60 days would be 10% of the agreed purchase price.

New development properties which are unfinished are paid for over the construction period, and all payments on account before finishing must be guaranteed, according to LAW 38/1999, by a bank or insurance company: if the property is not finished by a certain date, a purchaser has the right to reclaim the monies paid, plus legal interests. Additionally, another law obliges the property developer to arrange a ten year insurance policy with respect to any basic building defects with the purchasers as beneficiaries.

When the entire purchase price is paid for the property, the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances. This deed is issued before a Spanish Notary, is passed from the notary to the tax office to be assessed for Transfer Tax if the property is a resale or second hand property, or assessed for Stamp Duty if the property is sold directly by the developer. It’s then presented to the Property Registry for inscription. A provisional inscription in the registry is made immediately upon issuance of the deeds.

TAXES AND COSTS

 

7% + 1.2%

TRANSFER TAX (ITP)
Payable by the buyer for the purchase of any Real Estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties (waiver to VAT exemption). If the “minimum fiscal value” of the property as per the Regional Government, is lower than the purchase price, then the minimum fiscal valuation applies: 7% is applicable in terms of transfer tax plus 1.2% as Documented Legal Acts.

 

10 % + 1.5%
21% + 1.5%

 

VAT (IVA) AND STAMP DUTY (AJD)

  • Villas, apartments, or a garage that is annexed to an apartment or villa, where the vendor is a developer, promoter or habitual trader for brand-new properties.

Parcels of land, for the first sale of brand-new commercial premises. 

 

Around €3,000

 

NOTARY AND PROPERTY REGISTRY FEES
The cost increases according to the number of pages or complexity of the title deed, and value of the property.

 

MUNICIPAL ADDED VALUE TAX (PLUS VALÍA) (to be paid by the seller)
This can be as little as a few hundred Euros or as much as many thousands of Euros on a property with a lot of land that has not changed hands in many years. It is a tax by the town hall based upon the increase in the index value of a property between the year of purchase to the year of sale. This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated.

 

In TOTAL
10-11%

 

The total official costs involved in purchasing a constructed residential property should be around 10-11% for resale properties or around 12% for new properties if VAT is paid on the purchase price, plus lawyer’s fees.