Spain

Spain have a varied landscape,which nature and surroundings are suitable for many. The landscape of the Pyrenees and Picos de Europa mountain ranges and the snow-covered Sierra Nevada are unlikely to rise from the sunny plains of Andalusia. The cliffs that are facing the Atlantic in the northwest are some of Europe’s most amazing scenery scenes. The sea bays in the Mediterranean is one of Europe’s most sought after resorts for foreigners. Despite of several decades of exploitation, there is still much untouched land to settle on.

 

Buying houses and apartments in Spain

Buying a house or an apartment in Spain is very popular. Many see it as an investment, a second home or a permanent residence. The range of properties varies depending on where in the Spain you would like to reside in. The spanish countryside consists of traditional Spanish country houses, along the coasts is it common with modern functional-inspired villas or more modern villas in more traditional style with saddle roofs lined with tiled tiles and plastered facade with brick walls. Apartments along the coast are most popular among the swedes. They consist almost entirely of apartments in lower buildings, with a height of 5 to 6 floors.

The process of buying Spanish properties, houses or owner-occupied apartments is well regulated. It is very important to ensure that the property you want to buy is free from any debts and restrictions, thats why it is also important that you hire an English-speaking lawyer or lawyer who can protect your interests. The most important thing to consider when buying Spanish property is to have a good lawyer who can thoroughly investigates the property and who could provide you with a “Nota Simple”. Be sure that your lawyer checks the property register which immediately shows if the seller owns the property and if there are any outstanding mortgages (In Spain, a property can be resold with mortgages).

The purchase of Spanish property consists of two parts, a preliminary purchase agreement, a so-called “Contrato privado de Compaventa” and a final purchase agreement, “Escrituta de Compraveta”.

The preliminary purchase agreement, “Contrato privado de Compraventa” is an agreement where the price has been agreed with the seller. Then the parties will sign a preliminary purchase agreement. Before signing the preliminary agreement, a lawyer must verify that the seller owns the property and that it is free from unpaid fees and interest rate. With the “Nota Simple” you can confirm if the property is free from unpaid debts.

When the “Nota Simple” is done, the preliminary purchase agreement “Contrato privado de Compraventa” is established, which contains all the details about the property, like the description of the property, the purchase price and the date of entry. At this stage, payment of a deposit of between 5% and 15% on the purchase price is expected. The lawyer or broker will keep the deposit on a tied client funds account. Should the case be that you the buyer needs to settle your financing for the purchase, the preliminary purchase agreement must include a so-called “Arres” agreement where 10% of the deposit is inscribed and a specified date when the financing must be arranged. There is a possibility to sign a private purchase agreement without a deposit where you will be intitled to the right to sue a seller who withdraws from the purchase with an “Arres” agreement in place. If the seller decides to withdraw, the buyer is entitled to twice his deposit as compensation.

At the final stage of the purchase agreement, the so-called “Escritura de Compraventa”, you will be able to pay the remaining purchase price and all other fees that have to be paid by the buyer on the day of entry. Subsequently, the final purchase agreement, “Escritura de Compraventa”, is signed by both the seller and the buyer. The notary, a public official will witnesses the signing and then issues a public document to the buyer a so-called “Escritura”. A copy of the document is also sent to the Tax Agency and to the property register.

Costs when buying property in Spain

Property Tax

The amount will varie depending on the type of property and the type of seller. If the seller is a construction company, the buyer pays 8% in VAT and 5% in stamp duty. If the property is a piece of land or commercial property, the buyer pays 16% VAT and 1% in stamp duty. If the seller is not a construction company, the buyer pays 8% in VAT.

Plusvalia

Plusvalia is a tax taken out of the local town hall. The tax is based on the specific area in which the property is located, on the valuation value, on the size of the plot and the date of the previous legal transfer. Basically, the Plusvalia tax is a tax on the increased value of the land and can vary from 15 Euro to as much as 15 000 Euro on larger properties with a lot of land. The seller is obliged to pay this tax but it is possible to negotiate with the seller about who will be responsible for this. If you are asked to pay the Plusvalia tax, it is important that you get the exact information about how much it will be, as it can vary.

Notery fee’s

The buyer must also pay a fee for the notary, usually between 400 and 800 Euro. Included in the price is a registration fee at the property registery which is 65% of the notary’s fee. If the buyer withdraws a deposit, another cost will be added for registration of mortgage and will also be added on the property in the property registery.

Attorney fees

Up to 1% of the purchasing price is added for attorney fees, in addition, the bank charges a fee for issuing a check for final payment and VAT, and notary fees for the day of entry.

When owning a property, house or owner’s apartment, electricity and water and garbage disposal are bills that must be paid and paid depending consumption. Every year, a sweep tax of 200 to 250 Euro is also paid. Communal fee for owner-occupied apartment and house with shared facility is paid monthly. Property tax, IBI- “Impuesto sombre bienes inmuebles” 0.5% – 1% of the tax value. The assumption of rental income shall also be taxed, “Rendimientos del capital inmobiliar”.

If you as a buyer are not resident in Spain, these rental income is taken out by the Spanish tax authorities for urban real estate which is not rented or used as another residence. This means that if your Spanish property is not rented or used as your primary residence, you will be responsible for “assessed rental income tax”. The local municipality will charge according to the tax value of your Spanish property. They will assume that you make 2% of the tax value each year and charge you with 25% of that income. This corresponds to 0.5% of the tax value.

Profit tax on sales

When selling your Spanish property within one year from the time you purchased the property, the profit you make is considered an income. This means that you then have to pay a Spanish income tax that is between 15% if it is up to 4,000 euros in profit and 45% if it is over 45,000 in profit.

If you sell a Spanish property that you have owned for more than one year, you are obliged to pay a Spanish income from capital, a GGT on the difference between the amount you sell for the property and the amount which, according to information, purchased it for earlier, less inflation. If you are not a resident of Spain, you pay a GGT tax of 35% if you are a permanent resident you only pay 15%.

Permanent residents have the opportunity to request deferment and transfer the tax into the new property, provided that it is a premier residence. CGT subject to annual indexation (inflation-driven) tax relief. This means that the person who has an inflation index contribution can deduct this from the result for the CGT tax.

A person who is not a resident but bought his property before 1986 has no CGT tax to pay when the tax situation is complicated.