Saturday, 4th July 2020

This Month's Magazine
The purchase procedure

The purchase procedure

So you have found your dream home, what next? Belinda Cordell goes through some of the legal requirements

Having chosen your property, you will need an English speaking lawyer to help you through the purchase process. As in England, the agreement to purchase will be contained in a private contract. The document should contain details of the agreed price, payment of deposit, provision for the payment of the balance, any extras that you have agreed to purchase and the intended date of completion, together with all other relevant terms and conditions.

The “Subject to contract” conditions that apply in England, do not apply in Spain. Once you have paid your deposit (usually 10%) then there is a binding agreement between buyer and seller. A specific agreement (Arras) may be entered into between buyer and seller where either party may rescind the contract, the seller returning double the deposit or the buyer losing the deposit.

You will need a notary (el notario) to prepare the conveyance (la escritura) from the information supplied by the seller or his/her lawyer (Abogado) before the visit to the notary, a check should be made against the property to ensure that no adverse entries have been made beyond those disclosed. Once the formalities have been completed in front of the notary, the Escritura publica must be delivered to the land registry for the title to be recorded in the registry of property (Registro De La Propriedad) the sale and purchase of all property in Spain must be registered with the land registry.

The property must also be recorded with the relevant municipality in which it resides for purposes of the annual real estate tax (known as “Impuesto Sobre Bienes Inmuebles” and often called IBI-pronounced “ebe”) the level of this tax varies within municipalities and is calculated on the basis of officially set land values. This level can be checked by your lawyer early in the process if you wish.
The total expenses incurred in the purchase price, should not, on average, come to more then 10% of the purchase price.

House running costs:
You will need to sign a contract with the local electricity company; some electricity companies have English speaking telephone operators. You should expect annual electricity costs to be somewhere in the region of 500Euros, although air- conditioning can add a fair amount more. Water is a precious commodity in Spain, so care should be taken not to waste it. Supplies are metered, but costs are approximately 50% of those in the UK. All resident and non resident foreigners with financial interests in Spain must have an identification number called Numero de identificacion de extranjero (NIE) you can apply for this at any national police station with a foreign department. Owned property is subject to IBI tax, this local tax varies and is based on the land register value (Valor Catastral) of the property, around 0.5% or 1.1% this value is often considerably lower than the real value (up to 20 times).


When purchasing it is always wise to request to see the latest receipts for the IBI before signing a contract, if there are any back taxes and penalties outstanding, the new owner will become liable for it.

In some areas, local authorities may also charge for various services separately, such as rubbish collection, water, sewage and beach cleaning. All residents have to pay wealth tax (Impuesto Sobre El Patrimonio) which taxes on all your assets, whether in Spain or abroad. Tax treaties may affect the application of this rule, although non residents may have to pay this tax for their properties in Spain according to international agreements.

This affects any property with a market value over 170,000 Euros, with 0.2% of the value, and rises up to 2.5% for a property valued over 10,695,996 Euros.

Residents pay only income tax on their declared income and capital gains starting at 20%, there are the usual tax allowances and new ones to encourage owners to rent property. Properties on an urbanization or in a community will have to pay quarterly or monthly community fees, covering the running and maintenance costs of shared facilities. These costs vary considerably depending on the facilities available.

Electricity, water and gas or fuel bills must be paid promptly or the supplies will be cut off and you will then incur a reconnection fee.
The ins and outs of the Spanish legal system may appear confusing, but a good English speaking lawyer will guide you through everything and once all the legal requirements are taken care of, you will find dealing with the Spanish authorities no more difficult then you would dealing with the English equivalent.

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