Support for the buyer
What do I need to know before buying in Spain ? Here you have a brief guidance about the most important things you must have before start.
An account in a Spanish bank
Opening a ‘cuenta corriente’ —a current account— in Spain is quite simple. You will need your passport. We can introduce you to a bank with English speaking staff and manager, and help you with mortgages, finance and international money transfer to Spain.
You will have to pay for your Spanish property with a ‘talón conformado de cuenta de no residente’ — a bank cheque drawn on a non-residents’ account, so the bank has to be in Spain.
We recommend you use a bank that provides Internet banking. Standing orders will need to be set up for water, electricity, rates and community charges, and using the Internet will make it easy to keep track of your account wherever you are.
NIE number -fiscal ID number-
Although not actually needed until Stamp Duty is paid (approximately 3 weeks after the sale-purchase), most Notarios now insist that buyers have an NIE number in order to formalise the sale-purchase. An NIE number is also required when you open a bank account or buy a car and you will need it when you register for local rates, for example.
Getting an NIE number is free. You need to:
fill in a form, available in PDF format from the following site: http://www.mir.es/file/11/11115/11115.pdf
take the completed form, your passport and ONE copy, IN PERSON to a police station
In Tarragona province the police stations that issue NIE numbers are Tarragona, Reus and Tortosa. Which one you use will depend on the address you give on your application and where you are buying your property in Tarragona province. In Tarragona and Tortosa you will need to make an appointment for a visit, while in Reus this is not necessary.
We can help you fill in the forms, and can tell you which police station to go to hand them in. It is all quite straightforward… but you will almost certainly have to queue.
Given sufficient notice we can accompany you to the police station, but we do make a charge for this.
In Reus, when you hand in the completed NIE form to the police you will be given a receipt. A few days later you can go back and pick up a payment form, which you then pay at a bank. Once payment is made the police station will issue you with your NIE document. Note that you do not have to pick it up in person —you can authorise someone else to do this for you.
In Tarragona and Tortosa, you will need to make an appointment to apply for an NIE number, and you may have to wait for a week or so. But the NIE document is issued on the same day, once you have made the payment at the bank. The fee is the same at three police stations: 9 euros and 18 cents.
*Buyers from non-EU countries should check what extra documentation they need to buy a property in Spain.
Finding a property
In the case of Spanish country properties and fincas to reform there are many factors to take into account, most importantly:
- Is the building legal and registered?
- Will I get planning permission to extend, reform or rebuild?
- Will I be able to resell later if I need to?
We have considerable experience in dealing with country properties in Spain, planning permissions etc, and have good local contacts with town halls and planning departments, helping us to avoid problems and make your dream Spanish property a reality.
Carrying out a survey
Often overlooked when buying property in Spain, structural surveys are not automatically carried out here as a routine part of the purchase process.
While developers of Spanish new-build and off-plan properties are required to have insurance to cover structural problems that may arise, sellers of older or resale properties in Spain are not necessarily liable for structural defects.
Surveys here are usually conducted by an aparejador (technical architect), who can also provide advice on the scope and price of work needed and planning issues. We work regularly with aparejadores with experience of all types of property in Tarragona province.
Negotiating the purchase price
While most Spanish sellers are prepared to take an offer, others may still hold out for the full asking price. Offers accepted are usually 85% or more of the asking price.
For many years sellers of Spanish property have declared a lower purchase price in order to pay less tax, and the practice remains common. Buyers are often told that they too will benefit from this, as it means they pay less Impuesto sobre Transmisiones Patrimoniales (stamp duty).
Anyone planning to buy a property in Spain should be aware that money saved in this way may be lost in increased capital gains tax when the property is sold at a later date.
At this stage you need to know the costs and expenses involved. These come to roughly 10% of the declared purchase price, and are as follows:
– Notary’s fees (Honorarios de notario)
– VAT and Stamp Duty (IVA, Impuesto sobre Transmisiones Patrimoniales)
– Land Registry Fees (Aranceles Registrales)
Notary fees are calculated in accordance with a fixed scale, the higher the purchase price, the lower the percentage rate applied.
VAT and Stamp Duty
Buyers of properties that have been bought and sold once or more pay Impuesto sobre Transmisiones Patrimoniales – Stamp Duty, calculated as a percentage of the declared purchase price. This percentage varies slightly from one Spanish region to another; if you are buying a property in Catalonia it is 8%.
Buyers of new residential properties in Spain (i.e. bought or sold for the very first time) pay VAT (IVA) at a ‘super-reduced’ rate of 4%, and an additional 1.2% tax: the Impuesto sobre los Actos Jurídicos Documentados.
If you take out a mortgage in Spain you will have to pay the 1.2% Impuesto sobre los Actos Jurídicos Documentados on the amount borrowed.
Buyers of certain types of commercial property in Spain pay VAT at a higher rate of 18%, along with buyers that purchase garage spaces independently from an apartment.
Land Registry Fees
The Registro de la Propiedad —Land Registry— registers the Escritura —Deed of Transfer— and all details of the sale. Charges are calculated case-by-case, but the Notary should be able to tell you how much it will cost to within +/- 50 euros.
Note that if you take out a mortgage in Spain the Land Registry also charges a registry fee.
The reservation contract — Contrato de reserva
Non-refundable deposit contract sometimes used to hold a property for a few days until a formal contrato de arras can be signed and a 10% deposit paid. The amount paid is typically 500 to 2000 euros, depending on the value of the property.
The private contract — Contrato de Arras
When you have found your Spanish property and have agreed a price, it is usual
—although not essential— to sign a formal, private contract with the seller — the contrato de arras, which specifies:
– The property to be sold
– The purchase price
– The completion date (usually 2 or 3 months from signing the arras contract)
– The deposit paid (usually 10%)
– Any special conditions that have been negotiated
The 10% deposit is not refundable if the buyer pulls out. However if the seller pulls out or otherwise fails to meet the conditions detailed in the contract, he/she must refund the buyer double the deposit paid.
This arrangement protects both parties, affords peace of mind, and greatly reduces any risk of ‘gazumping’.
Note that a contrato de arras is not always signed. Where an early date is agreed, it is possible to go straight to completion, sometimes in a matter of days.
However, most buyers of Spanish property need some time to organise finance, money transfers to Spain etc, so the 2-3 months private contract-to-completion period allows ample time to arrange funds and find a mortgage in Spain.
Completion: signing the Deed of Transfer — Escritura Pública de Compraventa
This is signed at the office of a Spanish Notary Public —the Notario, who ensures that the sale-purchase is carried out in accordance with Spanish law.
The Notary acts primarily in the interests of the State, and strictly speaking represents neither buyer nor seller. We have generally found Spanish notaries to be very helpful, providing detailed information and advice to both buyer and seller.
Before preparing the Escritura, the Notary will have checked that the property is registered at the Land Registry in the seller’s name, and if there are mortgages or other charges that must be cleared before completing the sale.
– Payment is via a bank cheque drawn on a non-residents’ account, given to the seller in the presence of the Notary. Any keys are then handed over, and ownership of the property is transferred to the buyer.
– You will usually get a draft copy (copia simple) of the Escritura before you leave the Notary’s office. This is sufficient to get electricity, water, rates etc put in your name.
– Where possible we always use an English-speaking notary.
– If you are unable to travel to Spain we can help organise Power of Attorney, enabling someone else to act on your behalf.
Registering the Deed of Transfer and paying the sale-purchase expenses
Once buyer, seller and Notary have signed the Deed of Transfer and the seller has received payment, the buyer has to pay taxes (see ‘Negotiating the Purchase Price’ above).
The Notary usually carries out the entire tax payment and registration process. If you are using an independent solicitor, he or she will handle it. Either way, you will be asked to make a payment to cover estimated costs.
The Transfer Deed is then taken to the Land Registry to be recorded and the property put in the new owner’s name. This typically takes around six weeks, and is the last step in the sale-purchase process.
2-3 months later the formal Escritura document will be ready for the buyer to collect at the Notary’s office.
Do I need an independent lawyer (abogado)?
The sale-purchase process for selling or buying a property in Spain is comparatively simple. Notaries ensure that transactions comply with the Spanish law, and the Land Registries record them.
Private sellers rarely use a lawyer, and Spanish buyers usually get their bank to oversee a purchase rather than employ one.
But problems can occur: ownership may be complicated, a property may be adversely affected by development plans or rights of way, or buyers may find themselves liable for unpaid non-residents’ capital gains tax, to name just a few. In particular, planning permission for Spanish country properties is an increasingly complex issue.
Naturally we are happy to work with any lawyer our buyers instruct, English speaking or otherwise. We can also put you in touch with lawyers that speak French, German, Dutch, Russian and other languages.
Do I need to make a Spanish will (testamento)?
Non-Spanish clients who own property in Spain should definitely consider making a Spanish will.
Should you fail to do, the consequences for your descendants can be costly in terms of both time and money. Moreover, the Spanish tax authorities can actually decide who inherits your property in Spain!
Either of the lawyers mentioned above will be happy to help you with making a Spanish will and to advise you on related tax issues.