Questions and Answers about buying a property in Spain.
Notary fees and property registry inscription fees
number of pages or complexity of the title deed (e.g. transcription of statutes, payment in
stages, property partially finished, etc.). As an example, an apartment costing €300,000 will
cost around €546 in notary fees, whilst a property costing €600,000 will cost around €678 in
notary fees. Any higher than this amount, the fees go up marginally. The property registry
inscription fees also depend on the complexity of the transaction. For example, fees for an
apartment costing €600.000 to be registered in the name of one person and purchased
without a mortgage loan, will cost around €300. For an apartment with the same sales price to
be registered in the name of 2 persons and purchased with a mortgage loan, will cost around
Municipal Added Value Tax (PlusValía)
only, from the prior (vendor’s) purchase to the present sale. It is usually not a significant
amount with respect to apartments or townhouses – less than €1000 for the most part for an
apartment or townhouse which last changed hands five or six years ago – but can be more in
the case of villas with a large tract of land.
This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless
otherwise negotiated. As there are several variable factors used in calculating this tax,
especially the length of time of ownership of the property, the amount payable can vary
substantially and should be verified before proceeding with the purchase.
The total official costs involved in purchasing a constructed residential property should be
around 9-10% for resale properties or around 12% for new properties if VAT is paid on the
purchase price, plus lawyer’s fees.
Who pays estate agency fees in the sale of a property?
We provides an exceptional after-sales “settling-in” service for its clients, totally free of charge, as part of general company policy
Property purchase costs
If the “minimum fiscal value” of the property, as per the Regional Government, is greater than the price, then the minimum fiscal valuation applies: 8% is applicable up to the amount of 400,000€ or 30,000€ in the case of garages except those belonging to the dwelling and with a maximum of two; 9% is applicable to the amount between 400,000€ and 700,000€ or
between 30,000€ and 50,000€ for garages; 10% is applicable to the amount exceeding
700,000€ or 50,000€ for garages.
VAT at 10% and STAMP DUTY at 1.5% – For any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader for BRAND NEW PROPERTIES.
VAT at 21% and STAMP DUTY at 1.5% – for PARCELS OF LAND, COMMERCIAL
PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories.
Legal formalities & costs involved in purchasing property in Spain
to represent them and qualified financial advisors to deal with tax issues.
Purchasing property in Spain is a relatively straightforward procedure. The “last word” in
property ownership is the property registry, which will show immediately if the seller owns the
property free of liens and encumbrances. Most frequently, unless an immediate payment of
the full purchase price is made, a private contract of purchase is drawn up wherein the details
of the purchase are reflected – the legal description of the property, purchase price, form of
payment, date of completion, date of possession, etc. Upon signing the private contract, a
payment on account of the purchase price is always made which can vary substantially
according to the terms of the sale and the date of completion. A quite normal deposit for
completion within 30 to 60 days would be 10% of the agreed purchase price.
New properties which are unfinished obviously are paid for over the construction period, and all payments on account before finishing must be guaranteed, according to the BUILDING ORDENANCE LAW (LOE), LAW 38/1999, by a bank or insurance company: if the property is not finished by a certain date, a purchaser has the right to reclaim the monies paid, plus legal
interests. Additionally, this law obliges the property developer to arrange a TEN YEAR
insurance policy with respect to any basic building defects with the purchasers as
When the entire purchase price is paid for the property, the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances. This deed is issued before a Spanish Notary, is passed from the notary to the tax office to be assessed for Transfer Tax if the property is a resale or second hand property, or assessed for Stamp Duty if
the property is sold directly by the developer. Is then presented to the Property Registry for inscription. A provisional inscription in the registry is made immediately upon issuance of the
Capital Gains Tax and Retentions
percentage increase on the base value approved by law.
All non-resident sellers, regardless of when they acquired the property, are subject to 3% retention of the sales price, paid to the Tax Office by the purchaser on account of the seller and submitting a 211 form, taking this amount for the seller as payment on account of tax due on the income derived from this transmission. Therefore, the acquirer will deliver to the nonresident
seller a copy of Form 211 with which the entry of the retention is made, so that the
latter can deduct this amount from the tax liability resulting from the income returns. If the amount withheld exceeds the tax liability, you may obtain a refund of the excess
Income gained on property rentals: 24% on returns, with the exception of those taxpayers with fiscal residence in any countries within the European Union, Iceland and Norway, in which case the rate applicable is 19% (and are also allowed to deduct expenses related to the rental).
Derived benefit on own use of property: 24% of 1,1% of the rateable value of the property (if the rateable value has been revised or modified and has been entered into force during the taxable period or in the previous ten taxable periods), otherwise, the applicable rates
will be: 24% of 2% of the rateable value of the property) with the exception of those
taxpayers with fiscal residence in any countries within the European Union, Iceland and Norway, in which case the rate applicable is 19%.
For tax purposes, one cou ld be considered a FISCAL RESIDENT in Spain if one resides in Spain over 183 days per calendar year, and has the main economic and vital (family) interests in Spain, regardless of whether one is officially resident.
2017, but we are not certain if it will continue to be extended after this year. Spanish Wealth Tax is based on the total net assets held on December 31 of each year and the tax rates range from 0.24% to 3.03%. Fiscal residents are liable for wealth tax on their net worldwide assets, while non-residents are taxed only on their net assets located on Spanish territory or
taxable in Spain.
The general cond itions of the new Wealth Tax are as follow:
The minimum taxable amount has been raised to €700,000 (previously: €108,182.18).
Therefore, individuals whose total wealth in assets is less than €700,000 are not liable to pay Wealth Tax.
Each resident may deduct from the Wealth Tax the value of their main residence in Spain up to a maximum of €300.000 (previously: €150,253.03).
Wealth Tax is applied and adapted by each Autonomous Community
Main taxes for non-residents in Spain include:
- Municipal Added Value Tax (PlusValía): Please refer to Part 1 of this article ”Municipal
Added Value Tax (PlusValía)”.
- Rates or Annual Property Tax (IBI): Please refer to Part 2 of this article ”Local rates or Annual Property Tax (IBI)”.
- Rubbish Tax (Basura) Please refer to Part 2 of this article ”Rubbish collection & water rates (Basura) (Agua)”.
- Wealth Tax (Impuesto de Patrimonio).
- Income Tax (Impuesto sobre la Renta).
- Capital Gains Tax (Impuesto sobre Ganancias Patrimoniales Inmobiliarias) and Retentions
dial, presently costs about €0.69 (excluding VAT). Fixed line calls to mobile numbers are in the region of €0.16 per minute per minute. There are many local and national telephone companies that can offer substantial savings to those who wish to spend some time studying
the market. ADSL broadband services are available virtually anywhere and ADSL “packages” cost approximately €39per month (plus VAT), including all local and national calls to fixed lines
from about €100 to €150 per month, depending largely on the extent of the electrical installation. General usage is €0.08 per Kwh plus tax. All rates are exclusive of taxes.
With all the sunshine in Marbella, you will nevertheless be using less lighting and heating than in a lot of other countries!
is not comprehensive. For a villa with a reproduction value of €500,000 with contents insured at €180,000 the annual insurance would be in the area of €1,580.
of the upkeep of the community areas and services on a prorated basis with the other owners.
Usually, a homeowner’s percentage of the costs is fixed by the size of the apartment, or plot, divided by the total area of all the apartments or plots.
A budget for the annual community expenses is presented at the annual general meeting of the homeowners, and they or their authorized representatives must approve the budget by majority vote of those present at the meeting. Expenses can vary substantially according to the services provided, and normally include salary and social security of the hall porter, common garden maintenance, lift maintenance, repairs to common elements, rubbish
collection, water for watering community gardens, electricity for lighting communal areas, insurance, security, and administration fees. The President of the community must, by law, own a property within the complex itself and is chosen by way of vote by the co-owners. The
President has no remuneration for this role.
A typical 2 bedroom apartment in a building or area with a hall porter, swimming pool, and a small garden, could cost between €120 to €300 per month in community fees – but could go up to €600 or more per month in a high luxury building with a large community staff and many services.
In the case of an individual villa in an estate of villas, community fees are often less since the private gardens and exteriors of such properties are generally not maintained by the community, and the community fees are limited to road and roadside garden maintenance, basic common service maintenance, and security.
Rubbish collection & water rates (Basura) (Agua)
Local Rates or Annual Property Tax (IBI)
of the property, which is almost always far less than its true market value.
Examples: In 2006, a 2-bedroom apartment in the beachside complex of Marina Puente Romano which is in the heart of the “Golden Mile” paid rates in the range of €800 to €1.000 approximately. A free standing, large beachside villa in the heart of the “Golden Mile” paid
annual rates of approximately €2,800.
What if I want to buy a plot and build my own home?
dictate the permissible size of the villa according to the size of the plot. Care should therefore be taken before proceeding with the land purchase that one will be allowed to construct one’s
chosen home on it. .
Are there medical and health insurance facilities?
(Hospital Costa del Sol), in addition to a good, well-equipped Clinic with a substantial selection of general practitioners and specialists.
Private medical insurance is available through various groups such as SANITAS. This could cost from €30 to €130 per person per month, depending on their age and the state of their
health. Spain’s social security system now allows E.U. residents access to the health network via a special form (E-101). For residents who are self-employed, own a company, or are employees, your social security contributions automatically entitle access to the Spanish health network.
We considers the above information to be current and accurate at the time of writing,
but it is nevertheless by its very nature abbreviated and intended to serve only as a guide and subject to errors or omissions.
We always recommends purchasers or sellers of property to consult qualified Lawyers and Tax Advisors.
Is financing available?
of the official valuation price of the property. However, the purchaser must prove that between 30% and 35% of his net disposable income after taxes and after other mortgage commitments, is free to service the new loan.
Additionally, please note that valuations from so-called official valuers are coming in as low as 20% to 25% below real, proven market values. This is not always the case, but the banks are apparently encouraging low valuations, and the quality of the professionalism of the valuer is often up to the luck of the draw.
The easiest loan to obtain is that for 50% of the property’s value. However, the banks are equally concerned about the ability of the applicant to service the mortgage loan, and still require a lot of documentation.
A foreign applicant should not be discouraged, however, and it is important to meticulously prepare the documentation needed by the bank. Current conditions dictate the need to have at least two or three banks to apply to. Your agent and lawyer can be very useful in this
procedure, which can take anywhere from three weeks to almost two months from the time all the documentation is submitted.
A recommended route is to pre-qualify oneself with a bank before negotiating a purchase, which would be subject then only to the valuation which can normally be accomplished within 10 days. This allows a purchaser to negotiate for the property he chooses, without having to ask the seller for a purchase contract which would be conditional to the approval of the
mortgage, as the basic loan would already almost have been approved. Sellers generally are reluctant to reserve a property under this type of condition.
How will I deal with standard bills, e.g. electricity, water, telephone, rates, etc?
What is an urbanization?
governmental agencies with respect of the use of the land (residential, commercial, sports area, green zones), and to providing a specific set of services and a minimum level of quality in the construction of roads, sidewalks, drainage, sewage systems, electricity and water installations, and so on. Obtaining permission to develop land into an urbanization can take a
developer up to several years and several million euros of expense. The most obvious
advantage to the owner of a property within an urbanization is the fact that the land usage is strictly controlled. If one decides to build a house on a plot in a section of an urbanization zoned exclusively for single-family dwellings, you are assured by law that neither an apartment block nor a rabbit farm can be located on the adjacent single-family plot!
How long can I stay in Spain as a tourist?
Where can I send my children to school?
For further information, check out the below e-mail addresses:
Aloha College – www.aloha-college.com
Swans School – www.swansschool.net
Calpe School – www.calpecollegeschoo l.com
Colegio Las Chapas – www.attendis.com
St. Anthony’s College – www.stanthonysc ollege.com
The English International College – www.eic.edu
For an in-depth guide to schools in the Costa del Sol area, please consult the website:
Are technical surveys available?
purposes. It is nonetheless advisable when purchasing an older property. Common things to check for are the condition of the plumbing and electrical installations, waterproofing, roofing, and so on. These checks, as well as a full structural survey, can be carried out by a Spanish
technical architect (aparejador) or indeed by a qualified British Chartered Surveyor. Any fees involved would be to the account of the prospective purchaser.