Having a clear idea of how the buying process works in Spain is the best way to avoid surprises and engaging in endless paperwork. At Legal & Tax Help, we receive many enquiries from British and European people who are interested in purchasing property in the south of Spain. Thanks to our years of experience, we have been able to create a checklist with the main steps that lead to a successful buy. Please note that this is only a general summary of the different procedures. Property conveyancing – that is, the transfer of legal title of real property from one person to another, requires a sound knowledge of the Spanish legal language and regional regulations.
- Visit as many properties as you can. Make sure you have someone to accompany you during the visits, (ideally someone who speaks good Spanish and English), so that you can have a second opinion.
- Compare prices and read reviews about the real estate agencies, to know what you can expect.
- Apply for your NIE (an identification number for foreigners). Since your application can take around 2 months to be processed, preparing your documents will help you be faster than other applicants.
Once you have decided to buy:
- Find a lawyer who you feel you can trust. Your solicitor will need access to the deeds of the house, to verify that the seller owns the property and is entitled to sell it. Most importantly, your lawyer will have to check that there are no outstanding charges attached to the property. For this, he/she will get a so-called “nota simple” from the Land Registry Office (Colegio de Registradores). All documents will be examined in detail to ensure that there are no matters adversely affecting the property.
- There are some more documents which you will have to get prior to signing the contract. The most important ones are:
- “Licencia de Primera Ocupación” or “Cédula de Habitabilidad: these certify that it is possible to live in the house and that the electric and plumbing systems have been properly installed.
- The Energy Performance Certificate, stating the average energy use that is needed to run the property in normal circumstances. It must be issued by a certified technician.
- Ask the seller for copies up the bills of the house, showing that all consumption services have been payed. Making sure that there are no debts regarding the community fees and the property tax (IBI) is essential at this stage.
- Inform yourself of the costs and taxes that you will need to cover (10 to 15% of the property price).
- Ask for a copy of the contract in English.
- Open a Spanish bank account and apply for mortgage – if needed.
- Before the official contract is signed, a preliminary agreement is usually established between the parties. This agreement (pre-contrato) should include all relevant details, such as the price, means and date of payment, as well a description of the property.
- Completion will normally take place at the Notary Public office on the date agreed within the contract. The solicitor will have prepared all the necessary paperwork and whatever is required in order to transfer and convey the legal estate in the land to the buyer. The transfer deed must be executed by the necessary parties in the presence of the Notary Public and sets out, amongst others, the parties involved, the agreed price, the date of completion and a full description of the property. Upon completion, the buyer is obliged to pay the rest of the amount and the seller will have to release the keys and leave the property so that the buyer can move in.
- If the buyer happens to be abroad while the property is being sold, the solicitor can sign the contract in his/her name on behalf of a power of attorney.
- Once the transaction has been completed, the buyer will have to register the property at the Land Registry Office.
Taxes and expenses after buying a house in Spain
- Property tax (IBI, “impuesto sobre bienes inmobiliarios” ) is paid once a year. On the other hand, if the buyer is a foreign resident in Spain, it will be necessary to calculate the worldwide income and also the one generated in Spain. This will make it possible to know if and how much income tax (IRPF) is to be payed.
- If the buyer is a non resident, the person will have to pay the non-resident tax once a year. Additionally, if the owner rents out the property as a non resident, he/she will have to declare the rental income.
- Moreover, there are other expenses subject to the purchase of a house, as the community and certainly consumption-related services, such as water and electricity.