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How to purchase a property

The process of buying or selling a property begins when a person decides to buy a property and has reached an agreement on the price with the owner, and it continues as follows:

Guide for purchasing a property

1. Legal Due Diligence

All the necessary information will be requested from the owner to verify that there are no burdens in the Land Registry, taxes due or administrative disciplinary proceedings.

Once we have carried out the search procedure and evaluated the situation of the property, we will proceed to carry out the Due Diligence Report, introducing a section on the terms and conditions that will be followed in the operation of the property purchase.

2. Signing of a private contract or reservation contract

If everything is in order we will continue with our purchase guide and the reservation contract or private contract (depending on the case) will be signed.

In reservation contracts an amount between 3 and 10 thousand euros is usually deposited, and in private contracts an amount between 10% and 30% of the property value will be required, minus the amount deposited in reservation, if any.

3. Signing of the deed

The next step will be the signing of the deed of sale at a Public Notary’s office, where the payment for the remaining amount will be made and possession of the property will be taken. From that moment on, the new owner will have full rights over the property.

If you are purchasing a property on plan, we will make sure that the developer has all the required licenses and everything is in order for you to receive the property on time.

4. Procedures after signing the deed

Once the deed has been signed, it is necessary to pay the tax on Onerous Transfer and Documented Legal Acts (Impuesto sobre Transmisiones Patrimoniales Onerosas y Actos Jurídicos Documentados), which, depending on the autonomous community, will be:

Andalusia: 1.5% for off-plan purchases and between 8% and 10% for “second-hand” purchases

Catalonia: 1.5% / 1.8% for off-plan purchases, otherwise 10% if the value of the property is less than 1,000,000 and 11% if it is higher for “second hand” purchases

Madrid: 0.75% for off-plan purchases and 6% for “second-hand” purchases

Community of Valencia: 2% for off-plan purchases and 7% for “second-hand” purchases

Once the tax has been paid and presented at the corresponding office, it will be necessary to register the property in the name of the new owner at the Land Registry, as well as to register him/her at the Town Hall as the new owner so that Property and Rubbish taxes can be issued in his/her name.

Finally, the supplies and services of the property will be transferred to the new owner.

5. What you need in order to purchase a property

– DNI (for Spanish nationals) or NIE for foreigners (the number by which foreigners are identified that will allow them to pay taxes in Spain).

– Spanish bank account:Necessary to make the payments for the purchase of the property, as well as to set up direct debits for the contracted supplies.

In accordance with Anti-Money Laundering regulations, the bank will require certification of the origin of the funds used to purchase the property.

– Power of Attorney: we will proceed to sign a Power of Attorney before a Public Notary so that you don’t need to worry about traveling and we can do all the work on your behalf.

6. Costs of the operation

– Tax on Onerous Transfer and Documented Legal Acts: in the case of off-plan purchases it will be 1.5% of the value of the property and for “second hand” purchases it will be between 8 and 10%.

– VAT: it is only applicable for off-plan purchases and it will be 10% of the property value.

– Public Notary fees:between 600 and 1.500 euros approximately (depending on the purchase value).

– Land Registry fees: Between 300 and 800 euros (depending on the purchase value).

– Power of Attorney: between 80€ and 150€.

– Legal fees: 1% of the property value.

– Other expenses: a provision of 200 euros will be requested for the expenses incurred when sending documents by mail, requesting certified documents at the Land Registry or other entities, paying NIE fees, etc.

7. Annual recurring costs

Property Tax:it varies depending on the value of the property (between 300 and 1000 euros approximately).

– Garbage Tax: It also varies depending on the location of the property. This tax costs between 120 and 200 euros per year approximately.

Homeowner association fees(if applicable): it varies depending on the services provided by the homeowner association.

Income Tax on Non-Residents (IRNR):Non-resident homeowners must pay this income tax. The Tax Office considers that a minimum potential income is obtained, and charges taxes on that minimum potential income, set at 1.1% of the cadastral value, or 2% if the cadastral value has not been revised in the last 10 years. A charge of 19% or 24% is made on that amount, depending on whether the non-resident resides in an EU country or not.

 

Do you find this interesting?

If you are interested in the content of this article and you would like to purchase the service, learn more about the process or simply ask a question, book an online meeting with one of our Agents. We will be glad to assist you.

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