Buying a property is always an exciting project but at the same time it requires being well informed of the different steps to take to avoid misunderstandings and to make sure the process is satisfactory for all parties.
These are the main aspects when buying a property in Spain:
Before the purchase
Filter of properties to visit: Internet portals provide us with a good approximation to the properties that interest to visit but it does not hurt that the potential buyer checks aspects such as the location, distances, environment and conditions of sale of the properties to avoid unnecessary loss of time for all parties involved.
Processing of the NIE: Although this document is not necessary to reach a private agreement with the seller, it is essential to formalize a home sale in Spain officially. This is the Foreigner’s Identification Number and it is recommended to obtain it at the Spanish Embassy of the country of origin before traveling, since its processing in Spain is slower, due to the large number of foreigners who request it.
Spanish bank account: Acquiring a property in Spain will entail a series of economic transactions that will be much easier to manage from an account of a bank located in this country. It will be used mainly for the issuance of checks when paying the value of the sale, direct debit of water, electricity and internet bills, for the payment of home insurance and the payment of taxes, among other concepts. Although a face-to-face signature will be required at the bank’s office, this procedure is quick and work can be carried out by phone and email.
Lawyer (optional): Although real estate agencies can do this job, many buyers (especially foreigners) prefer that a lawyer is responsible for collecting and checking all the necessary documents from both parties for the sale to be a success. The interesting thing about hiring a lawyer is that he acquires a responsibility towards the buyer.
During the purchase
Important documents: The purchasing party must prove their identity with an official document (National Identity Document or Passport), their marital status, their residence and provide the aforementioned NIE. The selling party must also prove their identity, marital status and residence, provide an updated energy certificate of the property and the certificates that the notary or the buyer’s lawyer require, such as being up-to-date in the payment of the property’s taxes and the fees of the owners community (only if there is one).
Private Sale Contract: Once the parties reach an agreement for the sale of the property, this private contract is drawn up which reflects the set of agreed conditions, such as price, payment method , deadlines, furniture inventory, etc. Normally, upon signing this document, the buyer pays the seller 10% of the total value of the sale.
Public Deed of Sale: This is the official and public document of the sale and is processed at a notary’s office. Once signed by both parties, the buyer is officially the new owner of the property. In this act, the buyer pays, normally by bank check, the remaining amount of the operation and the seller hands over the keys.
Taxes and expenses: The main expense to take into account in second-hand properties is the Property Transfer Tax, which in Spain varies depending on the region where the sale is made. In the Valencian Community, which is where we offer our properties, this tax is 10% on the sale price that appears in the Public Deed. Another mandatory expense is that of the Notary’s fees, which is regulated by the public administration and is calculated depending on various factors such as the purchase price, existence of a mortgage, etc. The amount usually ranges between € 500 and € 900, although it may be higher in luxury properties.
After the purchase
Property Registry: Officially there is no mandatory term to register a sale in the property registry, but it is recommended to do so as soon as possible so that the data of the new owner appears. This action can be carried out directly by the buyer or by a professional designated by him, but the most comfortable thing is that the notary’s office where the Public Deed of Sale was granted is in charge. The fees established to register a property are also regulated by the public administration and are somewhat lower than the expenses of the Notary.
Real Estate Tax (IBI): Another of the steps to be taken after signing before the Notary is the change of holder of this municipal tax, which is annual and whose value depends on each town hall. Similarly, when owning a property in Spain, a garbage collection fee must be paid in the corresponding municipality.
Non-Resident Income Tax (IRNR): Non-residents in Spain must also pay this tax annually, which depends on the Tax Agency (Agencia Tributaria). It is not a very high amount but it is convenient to pay it correctly to avoid possible penalties and surcharges.
Tax advisor (optional): Although it is not mandatory, hiring a tax advisor is highly recommended, especially for foreign buyers who are not usually familiar with the different procedures to be taken and taxes to be paid.