To be able to buy and own a property in Spain you need a NIE-number (Número de Identidad de Extranjero) which is similar to a Spanish social security number/tax number but for foreign citizens. You can get the number either at the Spanish embassy in your country or in Spain.
You are strongly advised to engage a lawyer to help you during the buying process.
Your lawyer should investigate all legal aspects of your property purchase, draft and review all contracts on your behalf and explain all the legal and administrative issues you face.
They should also carry out any necessary due diligence (checking the ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).
A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many lawyers charge around 1% of the purchase price plus VAT in legal fees, but fixed price fees may also be negotiated.
In Spain, it is not common with a bidding war. A deal is closed when the buyer and seller agree on a price. Although, it is important to know there is no requirement for transparency in the bidding process, which means that the owner can negotiate with multiple parties at the same time.
Yes. Normally the Spanish banks grant loans of 60-70% of the official value of the apartment, that is the lowest value of the purchase price, based on an inspection made by an independent valuator selected by the bank.
I. Transaction Tax / Valued Added Tax VAT / IVA
- An 8 – 10% transaction tax is applied to the sale of residential property in Mallorca. The tax is calculated according to the value of the property.
- Newly built properties are taxed (IVA – Value Added Tax) at 10%.
- Buying land in Spain, commercial premises or parking spaces in garages results in an increase to 21%IVA
II. Notary Fees
- These are set according to a fixed scaled depending on the official value of the property. The notary will send details of the title deed (Escritura) to the local land registry to inform it of the identity of the new owner. It is a legally required step in the process and around 1% should be allowed for notary and property registry fees.
III. Lawyer’s Fees
- Allow around 1% of the purchase value of the property to be allocated to lawyer’s fees.
- If the buyer needs a mortgage, loan starting fees may apply according to the bank.
Property tax (Impuesto sobre Bienes Inmuebles, IBI) is paid annually and is levied on the value of land and urban land according to the assessment of the local council.
The cost of property tax varies from municipality to municipality and is in the region of 0,4% and 1,1% of the cadastral value for developed land and between 0.3% and 0.9% for undeveloped land.
Income tax for non residents
Non residents whose Spanish property is for owner occupancy, must declare this property for income tax purposes . The tax is calculated as follows: 1,1% of the cadastral value which will be taxed at 19%:
Each community have their own community fee that is based on the facility (Cleaner, elevator, pool area, community garden etc). The monthly cost often varies from 50 euros-200 euros/month.
Each property owner pays garbage fee to the municipal, once a year.
– The estate agents fees, capital gains tax, the ’Plus valia’ tax and bank and registry charges to cancel an existing mortgage.
Real Estate fee:
The standard fee is 5% plus VAT of the agreed purchase price. Included in that fee should be photoshoot, publication and advertising, viewings and negotiating.
Capital Gain tax:
If the vendor is a non-resident, there is also a Spanish withholding tax retention, which the buyer pays directly to the tax authorities, to cover the vendor’s capital gains liability.
Selling property in Spain attracts Capital Gains Tax at a rate of 21% for non-residents. It is paid on the difference between the price on your deed when you bought the property and the new sales price.
For non-residents it is paid in two stages – you pay a contribution towards your tax of 3% of the sales price on the day of completion and the balance of the tax is paid when requested by the Government tax department, which can be anytime up to 5 years after completion.
Residents may, subject to legal advise at the time, avoid the tax when you sell your main residence and put all the profit towards your next home within 2 years.
Alternatively, you will be asked for the tax to be paid with your tax return in the first year after the sale.
Plus valia municipal tax
‘Plus valia’ Municipal Tax is a local authority increased land value tax. It must be paid by the seller as required under Spanish law and is the tax liability on the increased value of the land since last. purchased. The calculation will be made by the local council and increases depending on the number of years you have owned the property.