OBTAINING THE N.I.E. NUMBER (tax identification number for foreigners).
The N.I.E. is an identification number for foreigners for fiscal purposes, necessary to carry out any economic activity in Spain.
EXAMINATION OF THE PROPERTY
Once you have chosen the property you wish to purchase, your lawyer/solicitor carries out a due diligence containing the main details of the property and especially a study about its legality.
In addition he carries out a study of the documentation to be required from the vendor for the completion of the purchase granting the public deed of purchase.
PRIVATE CONTRACT:
Once the vendor and the buyer have agreed the price, conditions of payment and other agreements they consider appropriate an option contract or a private purchase contract with deferred payment is signed.
In case both parties are in agreement and the buyer is already in possession of the necessary financing of the purchase, the public deed can be directly granted in front of a Notary, chosen by the buyer.
Nevertheless in the majority of cases an option or private purchase contract is signed with deferred payment of the price.
Option contract of purchase:
The option contract is a private contract and binding for the vendor. In consequence he obliges himself with it to sell the property to the purchaser. Usually with signature of this contract is paid a 10% of the purchase price as option rate. This option rate can be paid either directly to the vendor or deposited in the bank account of a third party, which usually is the lawyer involved in the purchase. To the buyer is granted a time limit between one and three months to exercise the option.
Exercising the option means, that the purchaser notifies to the vendor that he wishes to buy and grant the public deed of purchase, communicating a day and time of appointment at the notary to sign the public deed of purchase. In the option contract are agreed the consequences of failure to fulfill the contract, in case the vendor or the buyer finally do not appear to grant the public deed of purchase in the notary.
Private Purchase Contract
The private purchase contract is signed, when the buyer wants to purchase the property at the moment of signature of this private contract. In this type of contract is agreed the deferred price, the form of payment, the date of the granting of the public deed and the circumstances of default and cancellation of the contract
PUBLIC DEED OF SALE:
The granting of the public deed of sale is indispensable for the registration of the acquired property in the name of the buyer in the property registry. The public deed is granted in front of a notary, including the legally required documentation, such as proofs of carried out payments and the last receipt of the Municipal Property Tax (IBI). In addition, the vendor is required to hand over the certificate of occupancy, the energy efficiency certificate and in case of rural, urban or point ownership various other documents.
COSTS ASSOCIATED WITH THE PURCHASE:
NOTARY AND PROPERTY REGISTRY FEES
After the granting of the public deed have to be paid the fees of the notary, whereby the original of the deed is provided for its registration in the Property Registry. Before this the taxes related to the operation and the municipal tax has to be paid.
The Notary will charge his fee which is between 600€ and 2.000€ , subject to purchase price of the property for sale.
The fee to register the property is generally approx. between 300€ and 1.000€.
GOVERNMENTAL TAXES:
This tax is levied on the sale of second-hand properties or successive transmissions.
ITP - Taxpayer: It has to be paid by the purchaser.
Term: Payment of taxes is one month from date of the granting of the public deed.
The tax rate varies according to the Autonomic Community and the base of calculation is the purchase price that appears in the deed.
On the Balearic Islands the payable amount is obtained by applying on the taxable base, value of the property fixed in the deed, the rate resulting from the following schedule:
From January 1st, 2013;
Base of the ITP tax Applicable rate;
- 0,00 € to 400.000,00 € - 8%
- 400.000 € to 600.000 € - 9%
- 600.000 € to more - 10%
A transaction that is subject to ITP is not also subject to AJD, however when mortgages are involved, then AJD is applicable. 1.2% stamp duty which may occasionally arise known as AJD (Actos Jurídicos Documentados)
If a lawyer is engaged, which we do recommend, the fees are usually between 0.5% and 1,5% of the purchase price, depending also, upon the complexity of the transaction.
VALUE ADDED TAX (VAT):
The VAT only is applied on properties of new construction and first transmission. The current applicable rate is 10% on the purchase price.
For the rest of transfers of real estate objects subject to VAT as locals, warehouses, garages, which are not transferred together with the dwelling, plots, etc.. is charged the general VAT of 21%.
The buyer must pay it to the vendor at the time of the transmission of the property.
INCOME TAX FOR NON-RESIDENTS
In case the vendor is a non-resident, in the transmission of a property, he has to pay the personal income tax regarding the capital gains. The tax rate is 21 % on the capital gain out of the sale of the property.
Being the vendor a non-resident, the buyer (whether or not resident) is required to withhold and pay to is required to the Public Treasury 3% of the agreed price in a time limit of one month from the date of sale.
Annual Ordinary Expenses:
- Taxes and expenses must pay each year for your property. (IBI)
- Receipts light.
- Water bills.
- Community (if the property is in a community of owners).