Buying property on the Costa Blanca
The process of buying in Spain:
As a non-resident it is possible to purchase a property using your passport, however, in order to have any utilities connected or transferred into your name, or to apply for a mortgage or any finance in Spain, you will need to obtain an NIE number, sometimes called a NIF number.
Bank Account
We can assist you in setting up a Spanish bank account to allow
utility bills to be paid through direct debit. If you need to
transfer money we would recommend a bank that liaises with the
currency exchange companies, in order to minimise transfer
charges.
Using a Solicitor
Once we have found you the property of your dreams we would
recommend that you use the services of a solicitor to carry out
necessary searches on the property for debts and any building
work, which may have been applied for. We are happy to recommend
English speaking Spanish Solicitors and introduce you so that you
can decide who you feel confident with to carry out the conveyance
on your property purchase.
How long does it take?
The timescale of the purchase process varies and is dependent on
both parties reaching a mutually suitable completion date.
For example if you as a purchaser already hold an NIE number and
have the cash to purchase the property and the vendor wishes for a
quick transaction this can take place within a couple of weeks.
However, if there is a mortgage to arrange and NIE numbers to
apply for the earliest would be 4 ? 6 weeks for completion. These
are just a guide as each property is different.
There is no gazzumping in Spain.
To secure a property you will need to leave approximately 3000.00
euros as a deposit with the vendors solicitor or agent and an
initial selling contract will be drawn up and signed by both
parties.
At this point a date is agreed for the next instalment usually 10%
of the purchase price. It is important that this date is given
careful consideration. If you are unable to proceed with the 10%
on this date you could loose your initial deposit. However, if the
vendor pulls out of the sale he will have to give you back double
your deposit. Should the solicitor find a problem with the
property which you feel unhappy with, you will be entitled to a
full refund of your initial deposit.
Once the 10% has been paid
the vendor and purchaser enter into a private contract agreement
and again will agree on the completion date (day at the Notary
office)
If for any reason you are unable to proceed on this date (give or
take a few days) you would loose your 10%.
If the vendor negates on the contact, then he must pay you 20% of
the purchase price. At this point the declared and undeclared
value of the property will have to be agreed. This is a normal
practice in Spain and we would recommend that you declare between
70% ? 80% of the purchase price.
You will pay 7% tax and notary fees on the declared value of the
property. The undeclared amount is paid in cash or by bankers
draft. This does have capital gains implications should you wish
to sell, but we can recommend a Gestor (accountant) to enable you
to get appropriate advice.
At the Notary
If you are unable to attend the notary this can be done by power
of attorney with your solicitor. The monies are agreed and
exchanged bills are checked, when everything is agreed, you go
before the Notary who signs and confirms the sale of the property
with both parties.
Buying Off Plan Property
All developers vary in their payment terms on new property but
normally they would accept 3000.00 euros as a holding deposit to
secure the property you desire.
Some developers on communal properties will generally ask for
either 30% or 40% within 8 weeks and the rest on completion. On
private villas this can be very different. Some developers require
you to buy the land first to secure it before any building is
started, then they may ask for stage payments during the building
process. Others may just ask for stage payments. We can advice on
individual projects to suit your payment plan and budget.
Buyers should expect the total costs of purchasing a property in
Spain to be approximately 10% of the property value.
For example; A property with a declared valued of 100.000 euros
| IVA (Spanish equivalent of VAT at 7%) | 7.000 euros |
| Stamp duty (On New Properties at 1%) | 1.000 euros |
| Legal fees (Spanish Lawyers fees at 1%) | 1.000 euros |
| Notaries fees (Approx 0.5%) | 500 euros |
| Land Registry & Gestoria fees (Approx 0.5%) | 500 euros |
| Total | 10.000 euros |
There are some items not always applicable to every purchase such as a plus value tax, or local government capital gains tax payable on the increase in value of the land since the last sale.
Connection charges for water and electricity on new properties are approximately a total of 1000.00 euros.
Annual Running Costs
NON - Resident Property Owner
Wealth and Income Tax are payable once a year and are calculated
as a percentage of the property value.
Wealth Tax = 0.2% of property value.
Income Tax = 0.5% of rateable property value.
Local Rates are payable between August & October. Fiscal fees are payable yearly.
Community (Urbanisation fee) is usually paid in one or two payments per year.
Electricity bills come every two months & the minimum charge is around 22 euros.
The Water bills arrive every 3 months & the minimum charge is approx 15 euros.
House Insurance is due once a year depending on the date of your
purchase contract. The cost depends on the size & value of the
property.
It is recommended you deposit enough money into your bank account to cover these charges. If you are not in the country at the time payment is due, your fiscal representative (Gestor) will pay them on your behalf. Spanish Wills
Once you own a property in Spain
it is advisable to make a Spainsh will, especially if the property
is in joint names.
A basic Spanish will for foreigners bequeaths any assets to the
partner of the deceased and in the event of death of both owners
the property and assets are inherited in equal shares by all
remaining children.
Prime Locations offer free advice on buying in Spain from Alicante to Valencia. Call us now:
