Buying in Spain

What you should know

Spain's pleasant, healthy climate and wide selection of properties make it the most popular destination for an overseas property. Choose from developed plots, farmhouses and village locations, through to villas, townhouses and new apartment developments.
Fincas

A finca is a plot of land or an estate outside of or in-between towns and villages. Properties advertised as fincas can run from tumbledown farmhouses to lavish modern villas. An advantage is that fincas generally come with a substantial amount of land, which may include olive groves and fruit orchards.
Residency

If you wish to spend more than six months in Spain you need to apply for a 'residencia' to become a resident. Being a resident doesn't restrict movements in any way and it has many advantages, such as lower taxes. If you don't become a resident you must appoint a fiscal representative.
The fiscal representative

It's highly advisable for any person who has a property in Spain but doesn't live there all the time to nominate a fiscal representative. This is a person to whom the tax authorities can send all correspondence relating to your affairs in Spain, secure in the knowledge that it will arrive. The fiscal representative must be resident in Spain, but it's for you to choose whom to appoint. It can be a friend, neighbour, lawyer or tax adviser.
The gestor

For facility management you can appoint a local gestor or legal representative. This person is the official form filler who does the work for quite reasonable charges. If you decide to live or work in Spain your gestor can assist you with residencias, work permits, licences and permits in connection with the opening of new businesses. They'll also advise on importing cars, furniture, electrical goods and pets into Spain, obtaining payment of your pension in Spain, national insurance and other related matters.
The estate agent

Ask your estate agent for details of the outgoings payable every year to maintain the property:

  •    annual real estate tax (1131)
  •    community fees
  •    charges for rubbish collection
  •    water rates
  •    electricity charges
  •    property income and wealth tax

Mortgages

Applying for a mortgage is a straightforward process, as in the UK. A number of documents must be furnished to the Spanish bank in order to accommodate a smooth transaction. Please note that originals of everything will need to be shown and copies will be taken at the bank.

  •    passport, driving licence
  •    if employed: past three months' payslips, latest P60s
  •    if self-employed: last three years audited accounts, tax returns and accountant's reference

Children's Education

If you plan to move the whole family abroad, your children's education is highest priority. You can choose from international, state and private schools.

Buying a Property    

What is called the acquisition process includes all the steps that go from the choice of a property until the complete registration of the notarised Title Deed at the Land Registry of the area where the property is located.  This process generally starts with a preliminary agreement.  

Preliminary Agreement Preliminary Agreement Preliminary Agreement Preliminary Agreement    

By this agreement, commonly called “Reservation Contract” or “Deposit Agreement”,  the seller and the purchaser express reciprocally their intention to draft, in a near future (one or two months) a private purchase contract on a specific property. However the signing of a preliminary agreement is not a compulsory step within the purchase process, in many occasions a private purchase contract is directly signed between both parties. At this stage, the purchaser is normally asked to pay a deposit, which will be deducted from the final price.  

Once the contract has been signed, both parties are entering into a contractual relationship and must fulfil the legal obligations arising from it. In the event that the purchaser decides not to buy the property, the deposit paid is not always refundable. 

Private Purchase Contract Private Purchase Contract Private Purchase Contract Private Purchase Contract    

Once the parties have agreed on the property and the price, a private purchase contract is drafted. Before signing the contract and make it executable, it is important for the parties to fully understand and agree the nature of the obligations and rights arising from the contract. It is recommended to have the contract checked by a Spanish Lawyer before signing it. 

A private purchase contract that complies Spanish law  should state among other things, the personal details of both parties, the buyer and the purchaser, the price of the estate and the different stage payments to be made as well as the description of the property object of the contract and the date of completion and simultaneous hand over of the keys.  

If a preliminary agreement has not been signed before, the first payment to be made would be the equivalent of a deposit which normally corresponds to a percentage of the total purchase price. 

NIE Number 

A legal requirement in Spain is that you hold an NIE (Numero de Identificacion de Extranjeros – Identification number for non residents). This number is necessary for taxes purposes. You will be required this N.I.E. number if you want to acquire a property in Spain, to apply for a mortgage, to set up a business, inheritance process, to by Spanish car, a mobile phone... Therefore, this number will be also considered your Spanish Fiscal number once your fiscal representative registers it in the competent Tax Office. Please, bear in mind that the registration of the NIE number is compulsory.  

Signature of the Public Deed Signature of the Public Deed Signature of the Public Deed Signature of the Public Deed    

The Public Notary, who is the only entitled person to grant a Public Deed, issues a Deed based on the terms privately negotiated by the parties in the private purchase contract. Contrary to the private contract, the Public Deed produces effects and is enforceable before third parties; it can as well be registered at the Land Registry of the area where the property is situated. Copies would be issued to accredit ownership. 

The Notary will not certify the Title Deed if the parties does not identify themselves presenting an original passport or identity card of their nationality. The parties can attend the signing in person or appoint someone, usually a Lawyer, as Power of Attorney, if they can not attend the signing. 

Taxes & Land Registry Taxes & Land Registry Taxes & Land Registry Taxes & Land Registry    

After signature, the notarised Deed should be presented and registered at the local Land Registry. However before doing so, taxes such as Stamp Duty Tax, Transfer Tax, Local Gain Tax (also called Plusvalia) or V.A.T. have to be paid. Those taxes differ whether the property is a resale or is firstly sold by the Building Promoter. Without the tax return stamped by the Tax Authority, the registration will be refused.  

In addition, if the seller is not fiscal resident in Spain (company or individual), they buyer is obliged to withhold from the sale price a 3%, and pay it through the model 211 to the Spanish Tax Office in the following 30 days since the signing of the deeds, being responsible in front of the Spanish Tax Office if they fail. Your lawyer can help you in this case. 

According to Spanish law and prior to the signing of the deed, the Notary is obliged to ensure with the Land Registry that there are no undisclosed charges or encumbrances on the property. The Land Registry is in charge of maintaining all the details of the property and record financial charges and other matters that may affect the title. The registration of the deed provides the highest public level of protection not only to owners but also to third parties.  

   

Community of Owners If you have bought an apartment or villa,  if it is part of a building complex, keep in mind that these will be subject to the Spanish Law of Horizontal Division (Ley de Propiedad Horizontal).  

According to this law, every apartment or villa-owner is co-owner of the common elements of the building complex (stairs, lifts, gardens, swimming pool, cleaning services, drains, supply of water, electric wires etc;), together with the rest of owners. 

All property owners are part of a Community of Property Owners which has legal personality just like a company or a person. This Community of Owners must maintain the common elements of the building.  

Every apartment of the block has a share (cuota de participación) in the common property, usually proportionate to the size of the owner’s property. Therefore the owner of a large flat will have a larger share in the common property. So all owners will participate in the expenses of the common elements according to their share. Those expenses are called community charges.

 

NIE NUMBER A legal requirement in Spain is that you hold an NIE (Numero de Identificacion de Extranjeros – Identification number for non residents) which is very much like a National Insurance Number. This number is necessary for taxes purposes. You will be required this N.I.E. number if you want to acquire a property in Spain, to apply for a mortgage, to set up a business, inheritance process, to by Spanish car, mobile and many other issues here in Spain.  

REQUIRED DOCUMENTS AND INFORMATION 

- copy of your passport (very first page and photo page).  - document that proves why are you applying for a NIE number (purchase contract signed by both parties, mortgage application etc) - applicant’s parents name - Application form signed (one form each buyer). Please, find it attached. - PoA 

We are at your service to discuss and further clarify all those aspects.