Buying property stages
Select a real estate property
Select a property according to your personal requirements on our website or leave a request. Our managers will select the property that best meets your demands.
Visit selected properties
Real estate is a big purchase that can’t be done blindly. We strongly recommend coming to Spain and visiting all the selected properties before making the final decision. Even with a large number of photographs, without visiting it is impossible to feel the spirit of the property.
Once you have found the property of your dreams, you can reserve it. The reservation contract is concluded between the buyer and the landlord, real estate agency or the construction company. The contract specifies the price of the property, terms and conditions of the deeds.
Normally, the buyer pays a deposit of 3000 – 5000 euros based on the cost of the property. After the conclusion of the reservation contract, the property is withdrawn from the market. If the buyer decides not to purchase the property, the seller will retain the deposit.
Preparing for a deal
After the property is selected, the first thing to do is to obtain an identification number in Spain, known as a NIE (Número de Identificación de Extranjero, NIE). Without this document in Spain, it is impossible to perform any significant legal procedure – either buy real estate or open a bank account.
Your NIE can be obtained directly in Spain or at the Spanish Consulate in your country. The reservation contract is a legal basis for its receipt. In accordance with the law, an NIE is assigned within 5 business days (but in practice there are delays.)Required Documents:a completed application form, passport and a photocopy of it, 2 photos size of 3 by 4 cm, and a receipt of the payment fee.
Opening a bank account in Spain
A bank account is required for the final payment of the property, for the taxes and for the utility bills. It is better to open an account in the bank where you are going to take a mortgage. If a mortgage is not needed, the choice of the bank is determined only by the price of its tariffs for servicing accounts. Opening an account usually takes place within an hour.Required Documents: passport and reservation contract, income certificate or tax declaration.
Check the legal status of the property
The process of buying a property in Spain includes checking the legal status of real estate, what it’s exact measurements are, who is its owner, and whether there are any unpaid bills and debts. All the information is contained in the document from the real estate register (Nota Simple), which can be ordered in person or on-line and received within 1-2 days.
Sign a deposit agreement
If a reservation agreement was not signed, a preliminary agreement should be signed. The preliminary agreement indicates the price of the property, the form of payment, and terms of purchase and sale. In this case, the buyer pays 10% of the property price. If the buyer will not purchase this property, he will lose the deposit, and the seller will retain the deposit. Also, if the seller blocks the purchase, he will pay the buyer a double deposit.
Spanish banks provide a mortgage up to 50-60% of the property cost for a period of 10 to 30 years with 2.7-3.5% of interest per year.
According to European regulations, mortgage payments cannot exceed 30% of the buyers income. In other words, you need to earn 3 times more than the monthly payment of the mortgage.
The process of obtaining a mortgage takes up to one month.
Mortgage expenses: opening a mortgage is 1-2% of the property cost; stamp duty is 0.1-2% of the mortgage amount; real estate evaluation (200-500 euros) and its insurance (200-300 euros per year).Required Documents: certificate of employment, work contract, tax statement , bank statement, documents on ownership of real estate or shares.
Sign the deeds
When all the documents are ready, the process of finalizing the deeds begins: it is necessary to transfer the remaining part of the amount of the property price to the seller’s account and sign the sale contract in the presence of a notary. The buyer signs the documents with the owner of the property or the construction company. Any party or both parties can entrust the signing of the contract to third parties (for example, a real estate agency) by power of attorney.
Within 30 days after the public deed, it is necessary to pay purchase tax and make registration of the property under the name of the new owner.
Tax to pay:
1. VAT and stamp duty must be paid when buying a new construction property (10% + 0.5-1.5%), or purchase tax when buying a second-hand property (6-10%).
2. Notary and registration fee (0.02-1.75% of the price).
To obtain a certificate of ownership, you must provide to Property Register office the original purchase – sale contract and tax-paid document. After 2-3 months, the buyer receives the original registrated ownership document.
- Value Added Tax (IVA)
- – is paid by the buyer purchasing a new construction property, its 10% of the property price. This tax is paid at the same time of signing the public deed of sale.
- Property Transfer Tax (ITP)
- -Property Transfer Tax and Documented Legal Acts is paid by the buyer purchasing a second-hand property. The percentage which is applicable is different in each Autonomous Community and is usually between 6% and 10%. In Valencia, property transfer tax is 10% and is paid within a month from the moment of signing the public deed of sale.
- Notary fee
- -is paid by the buyer and is related to the purchase and the deeds of the property. Fee amount varies on the cost of the property and on the established notary tariffs.
- Registration fee
- -property registration fee is paid by the buyer and realated with the registration of the acquired property in the Property Register. Registration fee varies on the cost of property and established tariffs.
- Realtor Services
- -realtor services is 3% of the cost of property, not included 21% VAT and is paid by the buyer
The total amount of taxes and expenses purchasing a property in Spain is 11% – 15%
Annual property tax and expenses
- Annual municipal real estate tax (IBI) – is set by the municipality, averaging 0.4% – 1.1% of the cadastral value of real estate on January 1 of the reporting year.
- Non-Resident Income Tax (IRNR) – A non-resident owner of real estate is required to present an IRNR declaration. If the property is not rented out, but used by the owner for his own residence, a declaration is submitted once a year. If the property is leased, the declaration is submitted quarterly. The amount of tax is calculated depending on the cadastral value, the amount of rent and a conditions that need to be specified in each case.
- Expenses associated with property includes housing and utility services and community fee.
Housing and utility services:
- Electricity: payment for electricity is made on the meter plus a minimum fixed monthly fee. A family of 4 person in an average apartment consumes electricity of approximately 45-50 euros per month.
- Water: payment is made on the meter plus a minimum fixed monthly fee. The approximate water bill is 15 euros per month.
- Gas: hot water and central heating is carried out by gas. Payment is made depending on the value of the meter. The approximate gas bill is 20-25 euros per month
The community fee includes the costs of cleaning of the residential compound, entrance lighting, elevator maintenance, concierge services, swimming pool, maintenance of the gym, sauna, and social club.
The average cost varies from 50 to 200 euros per month.
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