Frequently Asked Questions
When you decide to buy a certain property, it is important to have a private contract signed. On signing the contract, it is customary to pay a reservation deposit of 3,000 euros. The contract defines the method of payment, the takeover date, and the date for signing the Public Deeds.
Note: The registration of a new Title Deed automatically invalidates the old one.
If you are buying a resale property, you are normally expected to pay the balance, sign the Title Deed, and take the property over in no more than 8 weeks. In many cases, vendors expect the deposit to be more substantial, say, 10% of the agreed price. Alternatively, a lesser initial reservation deposit should be supplemented with an additional payment of this magnitude as soon as possible.
If you are buying a new property from a builder or a promotor, the following method of payment is usual:
– One month after the signing of the private contract, 30%―50% of the purchase price plus the corresponding VAT is transferred to the builder’s bank account in Spain
– Another 20%―25% stage payment plus the corresponding VAT may be due half way between the first payment and completion
– The balance plus the rest of the VAT—minus the reservation deposit—is payable on completion.
In order to protect your investment, you should request the builder to issue a bank guarantee for each of the amounts you have paid, especially if the handover of keys is not imminent. This should be business as usual to the builder.
To legalize the property sale and purchase operation, both the Vendor and the Buyer must appear before a Spanish Notary, whose job it is to act as an impartial witness of the transaction and ensure that:
– The identity of each party is verified from valid ID documents
– The details of the property are correct
– The parties are in agreement over the price
– There are no debts or encumbrances on the property or, if there are, the parties are in agreement over them.
The current state of the property with regard to possible mortgages, debts, embargos, and other encumbrances is certified by the local Property Registry.
Note: The Notary will not sign the Title Deed, unless the state of debts and encumbrances has been clarified by means of a fax sent by the Registrar in response to the Notary’s official request.
Once registered in the Property Registry, the Title Deed is sent back to the Notary’s office, where it is filed. You get a First Copy of this public document. This process normally takes a few weeks.
If either of the parties is unable to appear before the Spanish Notary on the agreed day, they can be represented by proxies. A person appearing as a proxy needs a Spanish Power of Attorney. If you are a first-time buyer in Spain, it is a good idea to use the services of a Spanish lawyer. Their typical fees are likely much lower and cover more intrinsic legal issues than you would expect. Besides, they can file your annual tax returns in connection with your property – a cost well worth paying for the peace of mind.
Well, in most situations it isn’t, as English and other languages are normally spoken by the people attending you as a buying customer. But when you go to the Notary Public for the signing of the Deeds of your property and are not fluent enough in Spanish in order to fully understand the proceedings, then the Notary will require an official interpreter to give a reading of the Title Deed in the native language of that party. The same applies in Government offices, public hospitals etc. where the personnel is not obliged to speak any foreign language.
Correct. A number of local and state taxes are levied on the property transfer. These taxes are based on the price of the property. They are:
– Value-Added Tax (IVA), currently 10% of the value declared in the Title Deed (new-build properties only). Levied by the Government.
Note: VAT for business properties counts at 21%.
– Capital Transfer Tax and Stamp Duty (ITPAJD), either 1.5% of the declared value (new-build properties only) or 10% of the declared value (resales only). Levied by the Government.
Note: These percentages are not necessarily the same in all Autonomous Regions.
If the vendor is non-resident, then the buyer has the obligation to withhold 3% of the declared price and pay this amount to the Government Tax Agency as an advance for the taxation of the vendor’s capital gains. The Government Form (Modelo) to be used for this payment is number 210. The vendor can solicit the refunding of this money using form number 212.
Also please consider the following:
If your fiscal status in Spain is non-resident and you own an urban property here, you are liable to Income Tax, and to Real Estate Tax (“local rates”).
When a property is owned by a married couple or by various individuals, each one is defined as an independent tax payer. This means that each co-owner must file a separate tax return.
Yes, you can finance part of the property purchase with a Spanish mortgage. The paperwork should be sorted out with the bank well in advance of completion. Provided that the property is surveyable (that is, in existence), the application procedure can be completed in just a week or so.
Non-residents from most European countries can expect to finance up to 70% of a dwelling, or up to 50% of a business unit, with a Spanish mortgage.
There are also many intermational actors on the mortgage stage. The advantage in using their services typically arises from the fluent communication with agents based in the country of origin of the buyer. However, in the end it will always be a Spanish bank issuing the mortgage.
If you have made a Last Will and Testament in your own country, it will stand up in Spain on your demise. However, there would be quite a few bureaucratic stumbling blocks and other inconveniences – not least legalisation and translation costs – ahead, so it is a good idea to go to a Spanish Notary and sign a generic Open Testament (Testamento abierto) governing all your property in Spain.
All Spanish wills are registered centrally in Madrid. Upon the death of the testator, the Registry of Wills will issue a certificate of the contents of the will and, if necessary, procure the transfer of the assets to the inheritors.
On the execution of a will, the heirs must sign an Inheritance Acceptance Deed before the Notary. This document states the deceased person’s all assets in Spain (real estate, cars, jewelry, etc.).
Spanish Inheritance Tax is levied on a progressive scale from 7.65% to 34%. The percentage is applied on each heir’s received capital gain, discounting the liabilities.
The legal period to pay the Inheritance Tax is six months from the signing of the Inheritance Acceptance Deed. The heirs pay their taxes on a pro rata basis.