Buying
process
One you have found your property and the terms are agreed
the property must then be secured. This can be done through
private contracts 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
publica" must be signed by both parties at the Spanish
Notary Office.
Legal
It is extremely important to appoint a Notary who will certify
the deed of conveyance as a registered public document. It
is advisable to appoint a local lawyer, who speaks the purchaser's
language who will carry out a title search, & advise the
purchaser on all aspects of the investment. Lawyer's fees
are between 1-2% of the purchase price of the property.
Estate Agents' fees vary depending on the
state or region & 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 & the agent) & this may vary depending
on the price of the property.
Tax
On new residential buildings there is VAT (IVA) charged at
7% of the value, plus 1% stamp duty, & these are paid
by the purchaser. However, on urban plots, commercial premises
& some garages (not annexed to a home) purchased from
developing or trading companies, VAT is 16%.
On re-sales there is a property transfer tax
set at 7%. In all cases there is also a municipal tax, "plusvalia",
which should not be confused with capital gains tax. In theory,
this "plusvalia" is paid by the seller. It is a
municipal tax on the increase in value on the land only. However,
it may be subject of negotiation between buyer & seller.
Registration
You must register the new ownership by inscribing the deed
of conveyance, "escritura publica" at the land register
office. This inscription is the final step in assuring your
legal title to the property.
Ownership
Besides individual ownership, a property can be owned by one
or more companies.
Residence Permits
It is not necessary for European Union citizens or citizens
coming from the Swiss Confederation to have Residence Permits.
Non-European Union citizens who want to reside permanently
in Spain must first obtain a special residence visa from the
Spanish Consulate in their home country. With this visa, they
can apply for a residence permit.
Professional advice
The laws & personal circumstances continuously change.
The information provided is purely a guide & we strongly
recommend that you contact a professional lawyer or financial
advisor. Our office would be delighted to recommend reputable
professionals.
Annual Property Taxes
I.B.I . (Impuesto Bienes Inmuebles)
This is an annual real estate tax levied by the local town
hall & is usually 0.85% of the cadastral value (valor
catastral). This value is the assessed value for tax purposes
& is important because other taxes are based on it as
well.
When you buy, you want to see the seller's
last receipt for the IBI payment. This contains the value
& the exact amount of the tax.
Non-Resident Property Owners Imputed Income Tax
This tax is yearly & is payable during the following year.
It works like this: The Spanish tax agency attributes to you
as imaginary income each year 2% of the cadastral value of
your property. It then charges you the non-resident income
tax rate of 25% on this imaginary income.
You can also think of it as one half of one
per cent of the "valor catastral". If your "valor
catastral" was sharply increased after 1994, your imaginary
income is only 1.1 per cent.
Property Wealth Tax
The non-resident owner of a property in Spain will be taxed
on the value of his real estate for Spanish capital assets
tax, usually referred to as wealth tax.
Property owned by a non-resident company
When the owner of the property is a non-resident company,
a special tax has to be paid & from 1996 the rate applicable
is 3% of the cadastral value of the property (when there is
no cadastral value, the same rule of the wealth tax is applicable).
The base has a sliding scale (between 0.20%
to 2.5%). The taxable base will be the highest of the following
values: a) The cadastral value; b) The value estimated by
the tax authorities; c) The purchase price declared on the
deed of conveyance. The non-resident property owner is required
to file each year for these two taxes on Form 214.
Community Fees
These are fees paid to the Community of Owners for services
& maintenance of communal areas, when the property is
located in a development or condominium apartment building.
basic
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