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  • According to Spanish law, both private individuals and legal entities, residents and non-residents may buy, sell, or rent any property.

 

Selection and Reservation of Property

Once you choose some specific property, you must sign the Earnest money agreement (down payment) that actually initiates the sale transaction – Contrato de arras (penitenciales) Law 1454 of the Civil Code of Spain. (Art. 1454 Código Civil). The buyer shall pay 10% of the property price as a deposit and first installment.

This agreement contains basic information about the seller and the buyer, the terms of the contract, the terms of payment, the amount of collateral and the total value, the real estate plan, etc. After signing the contract, the property is removed from sale, and the buyer has 60 – 90 days to complete registration of the acquired property in the notary’s office (to sign the deed of ownership with the notary).

This type of contract is the most reliable, because it equally protects the interests of both sides:

  • If the buyer decides to withdraw from the transaction, the amount of down payment remains with the seller
  • If the seller withdraws, he/she returns double amount of down payment to the buyer

The Next Step for the Buyer (a Non-Resident in Spain) will be:

  • Getting a foreigner’s identification number from the police according to the Law 36/2006 of 29/11/2006 (N.I.E.). The number is required for all foreign nationals when entering into any transactions: purchase of a real estate, a vehicle, borrowing procedures, and carrying out any business activity. Our company provides services of guaranteed receipt of a foreigner’s identification number (N.I.E.)
  • Opening an account in a Spanish bank. A bank account is necessary not only when paying the balance of transaction, but for further payment of utilities and property taxes as well

Property due Diligence

Initially, our agency asks for all the necessary documents from the Registry of Property, the Bank, and Tax Office. We get various certificates and licenses to ensure the legitimacy of the prospective property.

While arranging for a mortgage loan, the bank undertakes similar verification which ensures transaction reliability.

 

Notarized Signature of the Deed of Ownership and Registration of Transaction

On the appointed day, the seller and the buyer shall sign the deed of ownership in the presence of a notary. Notary shall read the text aloud. Before signing the deed of ownership, it is necessary to transfer the entire amount or its balance to the seller’s account. The most convenient form of payment is issuing a bank check to a named person. After signing, the buyer shall receive the keys to the property in Spain.

In the case of a real estate mortgage, since two notarial transactions are signed (the deed of ownership and the contract for a real estate mortgage), the bank’s representative shall personally be present at the notarial signing of the deed of ownership.

IN SPAIN, THE BUYER ACQUIRES THE TITLE OF OWNERSHIP FROM THE TIME OF NOTARIAL SIGNATURE.

In Spain, purchase and sale of real estate is possible by notarized power of attorney. Each party has the right to send his official representative to sign. The power of attorney can be drawn both in Spain and in the client’s country of residence (it must be translated into Spanish and certified by Apostille).

After signing, the notary shall issue a copy of the deed of ownership. The original is sent to the Registry of Property to register the new owner. Registration takes about 1-3 months. After registration is done, the registered original of the deed of ownership – Escritura Pública – is issued confirming your right of ownership.

  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

 

The Costs Associated with Buying and Selling Paid by the Buyer (Data for Catalonia)

Nonrecurring Taxes:

New residential real estate:
  • VAT (IVA) – 10% of the value specified in the deed of ownership
  • Tax on execution of legal acts (IAJD) 1%– 1,5%. This tax is imposed on the official notarized contract of sale
Secondary residential real estate:
  • (ITP) – 10% tax on transfer of the property right
Commercial real estate and land (no buildings):
  • VAT (IVA) – 21% of the value specified in the deed of ownership

Nonrecurring Expenses:

  • Notarization of the contract of sale. The costs depend on the officially established notarial tariffs
  • Property registration in the state register 400 euros and above
  • The costs of checking the status of the property in the Register of Property
  • The costs of handling the documents 200 euros and above

 

Additional Costs Related to the Arrangement of the Mortgage Loan:

  • Notarization of the mortgage loan agreement. The costs depend on the officially established notarial tariffs
  • Tax on execution of legal acts (IAJD) 1% – 1.5%. This tax is imposed on official notarized contract on the mortgage loan
  • Registration of the mortgage loan in the Register of Property
  • Independent assessment of the property by the bank 300 euros and above
  • Mandatory insurance of real estate – an average of 500 euros per year

APPROXIMATE COSTS ARE AS FOLLOWS:

Purchase of residential real estate                  

  • without a mortgage loan: 10% – 12%                                                                       
  • with a mortgage loan: 12% – 14%

Purchase of non-residential real estate

  • without a mortgage loan: 22% – 23%
  • with a mortgage loan: 23% – 25%
  • We hope information described above will be of assistance to you in your real estate ventures
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

 

Taxes and Costs Associated with Buying and Selling Paid by the Seller (Data for Catalonia)

  • Cost of cancellation of the previous mortgage loan. If at the time of the real estate sale the loan has not been paid, the seller must annul Cancellation is executed by a notary, and a corresponding entry in the Register of Property is made
  • Local tax on the increase in land value (Plusvalía). This is a local municipal tax levied on the increase in value of the land on which the real estate is built. The tax is calculated from the date of purchase to the date of sale
  • The tax on real estate ownership (IBI). This is a local municipal tax paid once a year
  • Certificate of Technical Compliance for reoccupation (Real Decreto 151/2009 and 141/2012). Certificate of Energy Efficiency (Real Decreto 235/2013). These documents confirm compliance with the minimum requirements for housing of the Spanish law. These standards are set by the royal decree and controlled by the Ministry of Environment, Water, and Urban Development. The certificate shall be paid by the property owner and issued for its sale or rent to both private individual and legal entities representative
  • Tax on income. When selling real estate, it is required to pay the tax on the margin between the purchase of the property and its subsequent sale. The percent of the tax depends on the year of acquisition and the type of property. Special indexation rates are applied, which are annually reviewed and approved at the state level.
  • Residents-sellers of real estate who are private individuals shall pay income tax when submitting the declaration for the year in which the sale took place (IRPF)
  • Non-residents-sellers pay income tax for non-residents (IRNR) (Real Decreto 1776/2004)
  • Legal entities-sellersof real estate pay the appropriate profit tax of the company (IS)

      IRPF and IRNR are two mutually excluding taxes. The owner shall pay either one or the other, but never both at once

  • The commission remuneration to the real estate agency (Honorarios agencia inmobiliaria)
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office

 

Obtaining a Mortgage Loan in Spain

Spanish Banks provide one of the most favorable conditions for mortgage loans in Europe:

  • The requested amount of mortgage loan can be up to 80% of the real estate value
  • Cost of credit is 2.5 – 4.5% per annum. This interest consists of the amount of loan repayment and the bank commission
  • A mortgage loan is granted for a term of 5 to 40 years
  • Maximum borrower’s age is 65 years
  • Early repayment of the loan will incur a fee of 0.25 – 1% of the remaining balance
  • The collateral is the purchased real estate.

Spain does not have standardized document requirements, so any required document may vary from bank to bank. Below is a basic list for the borrower:

  • Necessary documents to assess borrower’s solvency
  • Foreigner’s Identification Number (N.I.E.)
  • A copy of the agreement on first installment for the selected real estate (Contrato de arras)
  • Sales Tax (independent assessment by the bank)
  • Signing of the loan agreement with the notary
  • Legalization of documents (translation must be made in one of the following ways):
  1. At the Consulate of Spain in the country of the applicant’s residence
  2. By an official translator in the country of the applicant’s residence. This translation requires notarization and Apostille
  3. By a sworn translator (traductor jurado) in Spain
  • Preparation of all necessary documents and their submission to the bank
  • Confirmation of the loan amount and loan terms by the bank.

 

  • If your request is approved, the bank shall organize the process of registration of the mortgage loan and the deed of ownership with the notary.
  • If the bank refuses or significantly reduces loan amount, the client is encouraged to apply for a loan with another bank.
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

   

General Expenses for Property Maintenance

National taxes are payable before 31 December of the current year

 

ANNUAL TAXES AND EXPENSES

  • Real estate tax (IBI). This is a local municipal tax payable once a year. The same rate applies to both residents and non-residents and depends on the location and type of the real estate (0.4 –1% of the cadastral value)
  • Payment for municipal services in the common area. The cost of services depends on the urban infrastructure (landscaping, swimming pool, elevator, underground parking, garbage collection, security, etc.)
  • Water, electricity, and gas supply are paid by the meter
  • Property tax (Ley 19/1991, de 6 de junio – Impuesto sobre el Patrimonio). The basis for the tax is the net value of the property and assets exceeding the monetary equivalent of the established limit – €700.000. The tax rate depends on the value of the real estate (0.2 5%)

 

RENTAL TAXES

IRPF and IRNR are two mutually excluding taxes. The owner shall pay either one or the other, but never both at once.

  • Residents-lessors pay income tax (IRPF) 19 45 %  from the income of leased property (Ley 35/2006 de 28 de noviembre y Real Decreto 439/2007 de 30 de marzo)
  • Non-residents-lessors pay income tax for non-residents / imputed income (IRNR) (Real Decreto Legislativo 5/2004, de 5 de marzo y Real Decreto 1776/2004, de 30 de julio). Under Spanish law, ownership (in Spain) by foreign nationals is considered attributed income—even if it is not leased and the owner receives no income. Two percent is added to the cadastral value of the real estate and then 24% is deducted payable from that amount.
+ PURCHASE PROCESS
  • According to Spanish law, both private individuals and legal entities, residents and non-residents may buy, sell, or rent any property.

 

Selection and Reservation of Property

Once you choose some specific property, you must sign the Earnest money agreement (down payment) that actually initiates the sale transaction – Contrato de arras (penitenciales) Law 1454 of the Civil Code of Spain. (Art. 1454 Código Civil). The buyer shall pay 10% of the property price as a deposit and first installment.

This agreement contains basic information about the seller and the buyer, the terms of the contract, the terms of payment, the amount of collateral and the total value, the real estate plan, etc. After signing the contract, the property is removed from sale, and the buyer has 60 – 90 days to complete registration of the acquired property in the notary’s office (to sign the deed of ownership with the notary).

This type of contract is the most reliable, because it equally protects the interests of both sides:

  • If the buyer decides to withdraw from the transaction, the amount of down payment remains with the seller
  • If the seller withdraws, he/she returns double amount of down payment to the buyer

The Next Step for the Buyer (a Non-Resident in Spain) will be:

  • Getting a foreigner’s identification number from the police according to the Law 36/2006 of 29/11/2006 (N.I.E.). The number is required for all foreign nationals when entering into any transactions: purchase of a real estate, a vehicle, borrowing procedures, and carrying out any business activity. Our company provides services of guaranteed receipt of a foreigner’s identification number (N.I.E.)
  • Opening an account in a Spanish bank. A bank account is necessary not only when paying the balance of transaction, but for further payment of utilities and property taxes as well

Property due Diligence

Initially, our agency asks for all the necessary documents from the Registry of Property, the Bank, and Tax Office. We get various certificates and licenses to ensure the legitimacy of the prospective property.

While arranging for a mortgage loan, the bank undertakes similar verification which ensures transaction reliability.

 

Notarized Signature of the Deed of Ownership and Registration of Transaction

On the appointed day, the seller and the buyer shall sign the deed of ownership in the presence of a notary. Notary shall read the text aloud. Before signing the deed of ownership, it is necessary to transfer the entire amount or its balance to the seller’s account. The most convenient form of payment is issuing a bank check to a named person. After signing, the buyer shall receive the keys to the property in Spain.

In the case of a real estate mortgage, since two notarial transactions are signed (the deed of ownership and the contract for a real estate mortgage), the bank’s representative shall personally be present at the notarial signing of the deed of ownership.

IN SPAIN, THE BUYER ACQUIRES THE TITLE OF OWNERSHIP FROM THE TIME OF NOTARIAL SIGNATURE.

In Spain, purchase and sale of real estate is possible by notarized power of attorney. Each party has the right to send his official representative to sign. The power of attorney can be drawn both in Spain and in the client’s country of residence (it must be translated into Spanish and certified by Apostille).

After signing, the notary shall issue a copy of the deed of ownership. The original is sent to the Registry of Property to register the new owner. Registration takes about 1-3 months. After registration is done, the registered original of the deed of ownership – Escritura Pública – is issued confirming your right of ownership.

+ BUYER'S COSTS
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

 

The Costs Associated with Buying and Selling Paid by the Buyer (Data for Catalonia)

Nonrecurring Taxes:

New residential real estate:
  • VAT (IVA) – 10% of the value specified in the deed of ownership
  • Tax on execution of legal acts (IAJD) 1%– 1,5%. This tax is imposed on the official notarized contract of sale
Secondary residential real estate:
  • (ITP) – 10% tax on transfer of the property right
Commercial real estate and land (no buildings):
  • VAT (IVA) – 21% of the value specified in the deed of ownership

Nonrecurring Expenses:

  • Notarization of the contract of sale. The costs depend on the officially established notarial tariffs
  • Property registration in the state register 400 euros and above
  • The costs of checking the status of the property in the Register of Property
  • The costs of handling the documents 200 euros and above

 

Additional Costs Related to the Arrangement of the Mortgage Loan:

  • Notarization of the mortgage loan agreement. The costs depend on the officially established notarial tariffs
  • Tax on execution of legal acts (IAJD) 1% – 1.5%. This tax is imposed on official notarized contract on the mortgage loan
  • Registration of the mortgage loan in the Register of Property
  • Independent assessment of the property by the bank 300 euros and above
  • Mandatory insurance of real estate – an average of 500 euros per year

APPROXIMATE COSTS ARE AS FOLLOWS:

Purchase of residential real estate                  

  • without a mortgage loan: 10% – 12%                                                                       
  • with a mortgage loan: 12% – 14%

Purchase of non-residential real estate

  • without a mortgage loan: 22% – 23%
  • with a mortgage loan: 23% – 25%
  • We hope information described above will be of assistance to you in your real estate ventures
+ SELLER'S COSTS
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

 

Taxes and Costs Associated with Buying and Selling Paid by the Seller (Data for Catalonia)

  • Cost of cancellation of the previous mortgage loan. If at the time of the real estate sale the loan has not been paid, the seller must annul Cancellation is executed by a notary, and a corresponding entry in the Register of Property is made
  • Local tax on the increase in land value (Plusvalía). This is a local municipal tax levied on the increase in value of the land on which the real estate is built. The tax is calculated from the date of purchase to the date of sale
  • The tax on real estate ownership (IBI). This is a local municipal tax paid once a year
  • Certificate of Technical Compliance for reoccupation (Real Decreto 151/2009 and 141/2012). Certificate of Energy Efficiency (Real Decreto 235/2013). These documents confirm compliance with the minimum requirements for housing of the Spanish law. These standards are set by the royal decree and controlled by the Ministry of Environment, Water, and Urban Development. The certificate shall be paid by the property owner and issued for its sale or rent to both private individual and legal entities representative
  • Tax on income. When selling real estate, it is required to pay the tax on the margin between the purchase of the property and its subsequent sale. The percent of the tax depends on the year of acquisition and the type of property. Special indexation rates are applied, which are annually reviewed and approved at the state level.
  • Residents-sellers of real estate who are private individuals shall pay income tax when submitting the declaration for the year in which the sale took place (IRPF)
  • Non-residents-sellers pay income tax for non-residents (IRNR) (Real Decreto 1776/2004)
  • Legal entities-sellersof real estate pay the appropriate profit tax of the company (IS)

      IRPF and IRNR are two mutually excluding taxes. The owner shall pay either one or the other, but never both at once

  • The commission remuneration to the real estate agency (Honorarios agencia inmobiliaria)
+ MORTGAGE
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office

 

Obtaining a Mortgage Loan in Spain

Spanish Banks provide one of the most favorable conditions for mortgage loans in Europe:

  • The requested amount of mortgage loan can be up to 80% of the real estate value
  • Cost of credit is 2.5 – 4.5% per annum. This interest consists of the amount of loan repayment and the bank commission
  • A mortgage loan is granted for a term of 5 to 40 years
  • Maximum borrower’s age is 65 years
  • Early repayment of the loan will incur a fee of 0.25 – 1% of the remaining balance
  • The collateral is the purchased real estate.

Spain does not have standardized document requirements, so any required document may vary from bank to bank. Below is a basic list for the borrower:

  • Necessary documents to assess borrower’s solvency
  • Foreigner’s Identification Number (N.I.E.)
  • A copy of the agreement on first installment for the selected real estate (Contrato de arras)
  • Sales Tax (independent assessment by the bank)
  • Signing of the loan agreement with the notary
  • Legalization of documents (translation must be made in one of the following ways):
  1. At the Consulate of Spain in the country of the applicant’s residence
  2. By an official translator in the country of the applicant’s residence. This translation requires notarization and Apostille
  3. By a sworn translator (traductor jurado) in Spain
  • Preparation of all necessary documents and their submission to the bank
  • Confirmation of the loan amount and loan terms by the bank.

 

  • If your request is approved, the bank shall organize the process of registration of the mortgage loan and the deed of ownership with the notary.
  • If the bank refuses or significantly reduces loan amount, the client is encouraged to apply for a loan with another bank.
+ ANNUAL EXPENSES
  • In Spain, the system of paying taxes and costs is quite flexible. Please note what we describe below, applies to typical situations. For more detailed advice on specific situations, please contact our office.

   

General Expenses for Property Maintenance

National taxes are payable before 31 December of the current year

 

ANNUAL TAXES AND EXPENSES

  • Real estate tax (IBI). This is a local municipal tax payable once a year. The same rate applies to both residents and non-residents and depends on the location and type of the real estate (0.4 –1% of the cadastral value)
  • Payment for municipal services in the common area. The cost of services depends on the urban infrastructure (landscaping, swimming pool, elevator, underground parking, garbage collection, security, etc.)
  • Water, electricity, and gas supply are paid by the meter
  • Property tax (Ley 19/1991, de 6 de junio – Impuesto sobre el Patrimonio). The basis for the tax is the net value of the property and assets exceeding the monetary equivalent of the established limit – €700.000. The tax rate depends on the value of the real estate (0.2 5%)

 

RENTAL TAXES

IRPF and IRNR are two mutually excluding taxes. The owner shall pay either one or the other, but never both at once.

  • Residents-lessors pay income tax (IRPF) 19 45 %  from the income of leased property (Ley 35/2006 de 28 de noviembre y Real Decreto 439/2007 de 30 de marzo)
  • Non-residents-lessors pay income tax for non-residents / imputed income (IRNR) (Real Decreto Legislativo 5/2004, de 5 de marzo y Real Decreto 1776/2004, de 30 de julio). Under Spanish law, ownership (in Spain) by foreign nationals is considered attributed income—even if it is not leased and the owner receives no income. Two percent is added to the cadastral value of the real estate and then 24% is deducted payable from that amount.