Blog The Process of Buying a Property in Spain

The Process of Buying a Property in Spain

The Process of Buying a Property in Spain


At a legal level, buying a property consists of a stipulated process and the fulfilment of a series of requirements established by Spanish regulations. In this post we will look at exactly that. Below you will find a brief summary of the process of buying a property in Spain: what are the steps to follow, the mandatory requirements, and what taxes you will encounter along the way.


Steps to Follow when Buying a Property in Spain

We can divide the buying process into two distinct parts:



First Phase

This phase of a more preliminary nature includes the control of the property, the prior agreement and the mortgage.

    Property diligences. This mainly consists of checking the property by verifying its registration, owner(s), verifying details such as location and size, and ensuring that the property is debt free.
    Reservation and down payment contract. Through this contract, both buyer and seller state their explicit intention that the sale and purchase will take place. This contract is called Contrato de Arras in Spain. There is a down payment.
    Mortgage. This is a long process, so it is advisable to start it as soon as possible. We will need to collect all the documents required by the bank, receive approval for the mortgage, and sign the Contrato de Arras.

 


Second Phase

This second phase deals with everything related to the transfer of ownership of services and various utilities, as well as the registration of the property.

    In the event that a loan (mortgage) is granted, we will be faced with the evaluation phase of the loan. The bank receives the prior agreement, will send an appraiser to evaluate the property, and once the estimate has been established, the financial entity will sign the mortgage favourably.
    Closing. Here, the transfer of the property is notarised. Both parties provide the requested documents (identification document, title deeds, payment, etc.); and finally the contract is signed and authorised by the notary.
    Registration. Once it has been verified that the taxes have been paid, the transfer of the profits takes place. After registration in the Land Registry, the buyer becomes the definitive owner of the property.


Taxes Associated with the Purchase and Sale of Real Estate in Spain

There are mainly 4 different taxes that can be associated with the purchase and sale of real estate, which will become 5 in the case that the interested party is a foreign person.


ITP

The transfer tax is a tax related to the transfer of property. Determining the exact rate will depend on the location of the property, as it varies according to the autonomous community, but it is always between 5% and 10%. As for the deadline, it must be paid within the period between the purchase and 30 days after the purchase.


Stamp duty (Impuesto de los Actos Jurídicos Documentados)

This tax is only applicable to dwellings. Again, it is between 0.75% and 1.5% depending on the region. It is usually paid with the ITP.


Capital gains tax

This is a local tax payable by the seller.

The seller goes to the Town Hall and sends the form, and then receives via email the amount due for the Plusvalia.

What does this amount depend on? Basically, it depends on how old the property is and its cadastral value.



IBI

The property tax is a property tax issued by the municipal entity in which the property is located. It is usually between 0.5% and 1.1% of the cadastral value of the property.


What Taxes Does a Non-Resident Foreigner Have to Pay When Buying a Property in Spain?

Mainly it is a tax, which will differ depending on whether you are a resident or non-resident of the European Union.

Firstly, there is the non-resident tax for own use. The income is calculated on the basis of the cadastral value of the property, and is between 1.1% and 2% of the value of the property. In the case of EU residents, it is 19% of this income, while it is 24% for non-residents.

The declared income, without any tax deduction, is the amount collected from the tenant of the property.

What taxes does a non-resident foreigner have to pay when buying a property in Spain?

Mainly it is a tax, which will differ depending on whether we are residents or non-residents of the European Union.

Firstly, there is the non-resident tax for own use. The income is calculated on the basis of the cadastral value of the property, and is between 1.1% and 2% of the value of the property. In the case of EU residents, it is 19% of this income, while it is 24% for non-residents.

The declared income, without any tax deduction, is the amount collected from the tenant of the property.


Encuéntranos en

Domo Estate Agency, Avenida de Almería, 15 04639 Turre Almería
+34686177622
+34722448252
[email protected]

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