Global Tax Saving Spain
Global Tax Saving Spain

Handling property purchases in Spain: How to buy property in Spain!

Buying a property in Spain is a dream for many – with sunshine, the sea, and Mediterranean charm included. However, handling property purchases in Spain requires thorough planning and a clear mind. Without the right information, the dream can quickly turn into a nightmare.

With this guide, you’ll stay on top of things and master the purchasing process step by step – right up to receiving the keys.

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How does buying a property in Spain work?

Many dreams of owning a home in Spain fail due to unrealistic expectations or a lack of planning. To avoid frustration, it’s essential to clearly define your priorities and desires. Here’s an overview of the key steps:

1. The search: from vision to reality

A successful property purchase in Spain starts with finding the right property. Whether you search through online platforms, local estate agents, or specialised agencies, you should first clearly define your needs. Do you need a holiday home, or are you planning to move to Spain permanently? Legal usage restrictions can also vary depending on the region and type of property – for example, with holiday apartments or agricultural land.

2. Legal check: land registry and ownership

Before reserving a property, it’s wise to review the land registry (“Nota Simple”). This document reveals whether there are mortgages, easements, or other encumbrances on the property. Disputes between owners or unresolved building regulations may also come to light.

This review should always be conducted by a lawyer, who will also investigate the property for hidden risks. A professional legal analysis (Due Diligence) identifies potential issues and protects you from unexpected costs.

Legal risks and due diligence

The due diligence process is a crucial step in minimising legal and financial risks during the property purchase process in Spain. This review examines:

  • Mortgages and encumbrances:
    Are mortgages, easements, or legal disputes recorded in the land registry?
  • Community liabilities:
    In residential complexes, outstanding fees from the seller may be passed on to the new owner. Ensure you obtain written confirmation before purchase that no unpaid fees exist.
  • Building and usage regulations:
    For holiday apartments or rural properties, it is especially important to check the legal framework.

This review ensures that no hidden risks are overlooked during the purchasing process.

3. The reservation agreement

Once you’ve found your dream property, a reservation agreement is usually signed. This secures the property for a specified period, typically 30 days. To do so, you pay a deposit of €3,000 to €6,000. Caution: This deposit is often non-refundable if you decide not to proceed with the purchase.

4. The deposit contract (“Contrato de Arras”)

The so-called “Contrato de Arras” makes the property purchase official. By signing this contract, you typically pay 10% of the purchase price as a deposit. If the buyer withdraws, this amount is forfeited. Conversely, if the seller withdraws, they must reimburse double the deposit amount.

This contract is legally binding and requires the utmost care. Depending on its wording, buyers could even be obligated to pay the full purchase price – even if they wish to cancel the purchase. Professional guidance, such as from Global Tax Saving, can help avoid costly mistakes.

5. Notary appointment and certification

The notary appointment marks the official completion of the property purchase in Spain. You pay the remaining balance and receive the keys to the property. However, be cautious: in Spain, ownership is only transferred upon registration in the land registry. Without this registration, you are not the legal owner – even if you have paid the purchase price.

Purchase property in Spain

The notarial purchase contract and land registry entry

Unlike in other European countries, registration in the land registry is not mandatory in Spain but is strongly recommended. It protects against fraud, such as double sales or third-party claims. The property purchase process in Spain involves several steps:

Notarial certification

The notary verifies the identity of the parties, the land registry extract, as well as tax and legal details.

Tax payment

The property transfer tax (“Impuesto sobre Transmisiones Patrimoniales”) or VAT (“IVA”) must be paid within 20 to 60 days, depending on the region.

Land registry entry

After completing the purchase, the notary submits the ownership deed (“Escritura de Compraventa”) to the land registry. This process typically takes 3 to 6 weeks.

Purchase property

Documents and preparation for the notary appointment

The notary appointment is crucial for completing the property purchase in Spain, as the notarial deed (“Escritura Pública”) forms the basis for registration in the land registry. To ensure a smooth process, all necessary documents should be prepared in advance:

  • Identification documents:
    Passports or ID cards with at least three months of validity.
  • N.I.E. number:
    This tax identification number is mandatory and should ideally be obtained beforehand. A lawyer or specialised service provider can expedite this process.
  • Land registry extract (“Nota Simple”):
    Provides information on mortgages, easements, or legal encumbrances on the property.
  • Tax documents:
    Proof of payment of property tax (“IBI”) and the urbanisation fee.
  • Occupancy certificate (“Licencia de Primera Ocupación”):
    Especially important for new builds to confirm lawful use.
  • Proof of payments:
    All payments should be documented, especially the final purchase price transfer, which is typically made via a bank cheque.

If you are unable to attend the notary appointment in person, a power of attorney must be issued. If issued abroad, it should be translated into Spanish by a certified translator.

Which legal steps must be followed?

Buying a property in Spain involves certain legal specifics that are often overlooked. Proceeding unprepared can lead to costly mistakes or legal complications. The following steps will help you avoid unpleasant surprises.

Applying for the NIE number

The NIE number is required to pay taxes or sign contracts in Spain. Apply for it early – ideally with the help of an expert in relocations to Spain who can also handle the necessary administrative procedures on your behalf.

Hire a surveyor

An independent surveyor is essential, especially for older or newly built properties. They inspect the property for construction defects, faulty designs, and potential renovation costs. This report can help you renegotiate the purchase price or better estimate future expenses.

Clear title and legal documents

In addition to the land registry, check the property owners’ association. Any outstanding fees may transfer to you as the new owner. You should also ensure that zoning plans, energy performance certificates, and, if applicable, building permits are available.

Taking out insurance

Building insurance is not mandatory in Spain but is highly recommended. It protects your property against damage caused by storms, fire, or other unforeseen events.

Padron registration

If you plan to live in Spain permanently, you must register with the local town hall. This is a requirement for various administrative processes, such as enrolling in the healthcare system.

Property purchase Mallorca

What tax aspects need to be considered?

Property buyers need to account not only for the purchase price but also for various additional costs and ongoing taxes. Here is an initial overview of the taxes involved in buying property, but the best option remains professional advice tailored to your personal situation.

Property transfer tax (ITP)

The property transfer tax varies by region and ranges between 6% and 11% of the purchase price.

Value added tax (IVA)

For new builds, VAT of 10% applies instead.

Notary and registration costs

The costs for the notary and land registry entry amount to approximately 1% to 2% of the purchase price.

Capital gains tax (Plusvalía Municipal)

This tax is levied on the increase in the value of the land and is usually paid by the seller. However, you should ensure contractually that no liabilities are passed on to you.

Ongoing taxes

As a property owner, you will pay local taxes such as property tax (IBI) and an annual tax on unused residential property, even if the property is not rented out.

Further important steps after completing the property purchase in Spain

After completing the property purchase in Spain, several administrative tasks still need to be addressed:

  • Register with utility providers:
    Electricity, water, and internet accounts must be transferred to your name.
  • Open a bank account:
    Payments for taxes or utilities are usually made through a Spanish bank account.
  • Create a Spanish will:
    A will in Spain simplifies estate planning and protects your relatives from legal complications.
  • Join the property owners’ association:
    If your property is part of a residential complex, you must join the association and pay regular contributions.

Security and structure lead to success

Handling a property purchase in Spain can be stressful if you’re on your own – but with the right partner, the process becomes simple. With 30 years of experience in tax and legal advice for moving to Spain, we ensure a successful property purchase.

We take care of the bureaucratic hurdles and support you from the initial land registry search to the final handover of the keys. Our full-service approach covers legal, tax, and administrative aspects.

Ready to make your property dream in Spain a reality? Schedule your free initial consultation today.

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