So, you are thinking of a buying a property in Spain, but you are little worried as you don’t know about the process, the cost’s and don’t speak the language. Well there is no need to worry, here at La Cala Sales and Rentals we make the process as simple as possible from start to finish.
It is important that prior to viewing any properties you understand the cost’s involved. Here we have provided you Wirth out guide to buying a property here in Spain.
The Buying Process:
- After the offer for the property is agreed you will be asked to sign a reservation form and pay a holding deposit. This is normally between 3,000€ and 6,000€ depending on the type of property and price. This deposit will be paid to YOUR lawyer. It will be held by them until they have carried out all the necessary checks on the property with the land registry, to ensure that there are no debts against it, it is legally built and the vendor has the right to sell it. Only after the lawyer is satisfied will they ask for your permission to released the deposit to the vendor.
- After the initial checks have been made and the deposit has been released then the Private Purchase Contract (PPC) will be signed. This will legally bind the Vendor and the Purchaser to sell/buy the property. It is normal at this stage to pay 10% of the purchase price. If the seller fails to complete on the sale after the PPC is signed, then they will have to refund the deposit and will have to pay twice the amount of the deposit to the buyer as compensation. If the buyer fails to complete on the contract then they will loose any money paid up until the PPC is signed.
- The PPC will include a completion date, on that date the signing of the title deeds will take place at a notary. A notary is an official who overseas the signing of the title deed, ensures all the legal requirements have been met and the paperwork for transfer is lodged with the Land Registry. This is when the outstanding amount due on the property is paid.
Costs of Purchase:
In addition to the purchase price there are some additional costs incurred with a buying here in Spain. It is important to consider these cost’s when looking at properties so that you can factor these into your budget. The normal amount is between 10 and 15% of the purchase price.
Transfer tax-
The Transfer tax, called “impuesto de Transmissiones Patrimoniales”, is 8% purchase when the sales price is less than 400,000€, 9% when the purchase price is between 400,000 and 700,000€ and 10% for properties over 700,000€.
Legal fees-
It is very important to have a good lawyer who will carry out all the necessary checks on a property, prepare the paperwork and represent you at the notary. The fees vary but are normally 1% of the purchase price. We recommend N & B Lawyers who have an office in Fuengirola.
Notary fees-
All property sales in Spain take place in a Notary, they will charge a fee for this and also record the sale with the Land Registry in Madrid. This is normally 1% of the purchase price.
Therefore the total is usually between 10 and 14% of the purchase price.
Buying off plan:
If you are buying a new build property off plan, then the costs of purchase is slightly different.
You do not pay any transfer tax on off plan properties but do pay IVA, which is a different tax. This is set at a rate of 10%, no matter how much the purchase price is.
Mortgage fees:
If you are buying a property with a mortgage then there will be an additional fee to arrange this. The fee is normally 1% of the purchase price.
On Going Costs:
After you purchase a property you will have a number of ongoing costs that are associated with the property. It is important to consider these also when looking to buy a property.
The normal ongoing costs are as follows-
Community fees-
If the property belongs to a community then there will be a monthly community fee. This normally applies to apartments, townhouses and some villas.
This fee will go towards the maintenance of the pool, communal gardens, parking and lifts etc. Some communities will offer a discount if you pay the community fees by direct debit or every quarter.
IBI-
This is a local tax payable to the local town hall. This goes towards the upkeep and maintenance of the local area. The amount varies depending on the type of property, where it is located and the size. It is paid once a year.
Basura-
Again this is a local tax payable to the local town hall. This is for the collection of the rubbish. This is paid once a year and is between 70-100€.
Non-Resident property tax-
If you are non-resident in Spain and own a property here then you must pay a yearly tax. This is based on the value of the property as set by the local town hall. It can also vary if you rent the property out for a fee and will also vary if you are resident of an EU or a Non-EU country. We always recommend that you speak to you’re lawyer regarding this.
Here at La Cala Sales we will provide you with all the information you need to make an informed decision about which property is right for you.
If you have any questions regarding buying a property here in Spain then please feel free to contact us on [email protected].
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