Some aspects of buying real estate in Spain differ substantially from the conveyancing procedure in Germany. In general, we recommend that a local tax consultant or lawyer is consulted to have the local tax situation explained and be doubly protected.
After making the decision to buy and securing finance, we usually first examine the escritura (the public legal document certifying the transfer of ownership to the seller), as well as the current nota simple (office copy of the contents of the land register relating to the property) and produce a preliminary purchase agreement, in which the latest date for a notary’s appointment is agreed. A deposit of 10 % of the purchase price should be paid immediately after signing the preliminary purchase agreement and is equivalent to a binding reservation of the real estate. The preliminary purchase agreement is attached to the nota simple.
The buyer must apply for a NIE number, which is a Spanish tax identification number for people who are not Spanish citizens. This can be applied for locally in Spain or in the home country at the Spanish consulate.
In the following weeks, we compile the documents necessary for notarial certification and agree an appointment with the notary. At the appointment with the notary, the contract is read through and signed; at this time, the balance is also due, usually in the form of a cheque. If a non-resident is selling real estate in Spain, 3 % of the purchase price must be withheld and paid to the tax office as impuesto sobre la renta no residentes, which is similar to capital gains tax. After this, the notary provides the asiento de presentación to the land registry communicating the transfer of ownership. The notarial deed is subsequently registered and a demand is made for the payment of IVA or ITP (the land transfer tax) to the tax office. In similarity with the purchase procedure in Germany, the final entry of the transfer in the land register concludes the transfer of ownership. As a rule, this takes between 2 and 4 months, depending on the land registry’s workload.
The following ancillary costs should be noted in relation to the purchase of real estate in Spain:
A bank loan is normally used when buying real estate, whereby the ancillary costs of the loan vary widely depending on the credit institute, own capital and amount of credit. Any bank transfer fees, processing fees, valuation costs, commitment fees, partial payment supplements and unscheduled repayment charges that may arise should be considered.
If a lawyer or tax consultant is consulted, their fees must be paid accordingly. Hourly rates and expenses differ depending on the region. As a rough guideline, costs of 1,000 € to 2,500 € or 1% of the purchase price should be reckoned with.
Land registry fees and notary’s fees
Court costs accrue for the activities of the land registry. As a rule, depending on the purchase price, land registry and notary’s fees amount to 1 to 1.5 % of the purchase price.
IVA/ ITP/ land transfer tax
The land transfer tax is calculated according to whether the purchase of the real estate is subject to IVA (Spanish value added tax) or ITP (Spanish land transfer tax). On buying new builds, the rate of IVA is 10 %, and in Tenerife it is 4.5 %. On purchasing a plot of land, the IVA is 21 %. If IVA needs to be paid, AJD tax (stamp duty) in the amount of 0.5 to 1.5 % must also be taken into account. ITP is only payable for second-hand real estate, whereby (similarly to Germany with its different federal states) the amount differs depending on the region; in Tenerife it is 6.5 %, in Mallorca and Ibiza it is graduated between 8 % and 11 % and in Barcelona and the Costa Blanca it is 10 %.
The agent’s commission is only charged in the event that a house or apartment is successfully bought. The amount of the agent’s commission depends upon the region, but is usually between 3 and 5 % of the sale price. As a rule, the seller pays the agent’s commission. However, different agreements may also be made.