A Legal Guide to Buying Property in Spain

The buying process in Spain differs significantly from that in the UK and many other countries. Buyers should ensure they appoint a bilingual lawyer experienced in the Spanish property market to handle their purchase.
 
Once you have found a home to buy and agreed a price, your lawyer will ensure there are no outstanding charges on the property. Spain has the law of subrogation where properties carry the debts of previous owners. The lawyer will also confirm that the property has full title by checking the Registro de Propiedad. 

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A lawyer will also help to secure you an NIE - Número de Identificación de Extranjero, a unique identification number assigned to all foreigners. This is required to open a bank account, buy property and even apply for a driving licence or buy a car.

It is important that your lawyer explains thoroughly all tax-related matters, particularly inheritance tax, wealth tax and the requirement to fill an annual tax return even as a non-resident. Tax rates are assigned regionally so will differ according to location and the value of the property you buy.

From Reservation To Final Contract 
You can reserve a property by paying a small amount, normally no more than €12,000, as part of a reservation agreement. This is a simple contract between the buyer and the seller that agrees the sales price and means the property will be taken off the market for a set period, say three or four weeks.
 
The next stage is for both buyer and seller to sign the preliminary contract, Contrato privado de compraventa. This is legally binding and outlines the agreed sale price, the names of the buyer, the seller and the completion date. A non-refundable deposit of 10 per cent is normally paid at this stage, and should be retained by a lawyer in a client or escrow account.
 
The final contract, escritura de compraventa, is signed in front of the notary. The buyer pays the full amount with all costs and taxes. The notary is an independent, state-paid official who oversees the purchase and acts neutrally on behalf of both parties. He will ensure that the new owner’s name is put on the final deeds, and then logs the deeds with the property registry office.

The Property Buying Costs 

Property buying costs are higher in Spain than in the UK. As a rule of thumb allow 10 to 12 per cent of the purchase price. The main cost is for Property Transfer Tax (ITP – Impuesto de Tansmisiones Patrimoniales) which runs between 6 to 10 per cent depending on the region of Spain: Madrid for example charges 6 per cent, Barcelona charges 10 per cent and Andalucia between 8% and 10% according to the value of the property.

 
The Golden Visa
 
Since October 2013 the Spanish government gives residency rights to non-EU nationals who invest €500,000 or more in property through a bond or home purchase in their Golden Visa programme. Such a purchaser who spends more than 180 days per year in Spain will automatically become a Spanish tax resident with its corresponding fiscal responsibility. For more information on this, please consult a lawyer.

 
 
Spanish Property

The buying process in Spain differs significantly from that in the UK and many other countries. Buyers should ensure they appoint a bilingual lawyer experienced in the Spanish property market to handle their purchase.