The steps to buying your
property
Once you have decided on the property that you
want to buy, the process is this:
Nota simple informativa
With this
document from the Property Registry (Registro
de la Propiedad), you'll find out if the
property is free of debt, if it really belongs
to the seller, and if the description of the
property matches what the buyer has been told
(to avoid surprises about missing square
meters).
The pre-agreement
Between
the seller and the buyer there has to be a
contract in place until the public deed of
purchase is ready. It's usually a simple
document in which the seller expresses their
intent to transfer the property to the buyer,
and the buyer expresses their intent to buy at
the price and conditions agreed upon. At this
time, the buyer also gives to the seller a
percentage of the agreed-upon price. The typical
agreement in Spain (called arras) is if
the buyer backs out of the contract, they lose
the deposit; if the seller backs out, they have
to pay double. Of course, the buyer and seller
may choose another type of agreement if they
prefer.
The mortgage
The
documents typically required by a bank are:
-
Your
DNI/NIE
-
Your
work contract
-
Your
last 3 paycheck stubs
-
Your
latest income tax return
-
Your
pre-agreement with the seller
-
Proof
that the property tax (IBI) on the
house is paid up.
-
Other
mortgages or loans that you may have
-
All
property titles, both in Spain and overseas
-
Certificate from work authorities (vida
laboral), showing your past work
history
-
Records of your assets (bank/mutual fund
statements, etc.)
-
Prenuptial agreements, if any
-
Nonresidents: A certificate of nonresidency
(form available from the bank)
-
If
self-employed: Local tax on economic
activities (IAE)
-
If
self-employed: VAT tax you paid for the last
trimester and last year
If you get
a mortgage, you will become acquainted with an
appraiser (tasador). The bank requires
an appraiser to ensure that their loan to you is
safe. You will need to pay for the appraiser's
work, usually between 300-500 euros. Note that
the tasador by law is a licensed
architect, so even if you don't need a mortgage,
but have doubts about the structural integrity
of the house, you might want to hire an
appraiser.
The closing
The
property transfer must be certified by a notary.
The deed of purchase will be given to the buyer
after the notary reads it and the parties
present agree to the contents of the deed. The
following must then be presented: proof of
identity (or power of attorney) of both parties,
the seller's title of property (a form that
reports the investment to the Central Register),
and the buyer's payment. The buyer and seller
sign the contract; beneath their signature, the
notary signs using his firma protocolizada
and the deed is ready for taxes.
Taxes
For the buyer: transfer tax(impuesto
de transmisiones patrimoniales) and stamp
tax(impuesto de actos jurídicos documentados).
If the
seller is an individual, the buyer pays a tax of
6% (7% in some regions) of the price specified
in the deed. If the seller is a real estate
developer and the building or land to be built
on represents a first-time transfer, then the
buyer pays VAT tax instead, meaning 7% for
housing, 16% otherwise. If for housing, you have
to add a stamp tax, in this case reduced to
0.5%, depending on the region (for Madrid it's
1.5%). Some special conditions apply for the
Canary Islands.
For the seller:
a local tax called the plusvalia
With a
copy of the deed in hand, the seller must go to
the City Hall (or wherever local taxes are
paid). After filling out the form, the seller
will receive in the mail a notice of how much
they have to pay. This amount is calculated
based on the number of years the property was
held, and on the property's valor catastral.
Be aware that each town has a different
procedure regarding payment of this
plusvalia. It's best to ask at the notary's
office about this payment.
Property Registry
If you
want to be sure that your rights to the property
are fully protected, you must register your
title at the local office. (Some small towns
don't have an office, some big cities have many
-- check the original deed of the seller to find
out which office corresponds to you). You will
be charged a standard fee (about .4% of the
first 6010 euros, going down to .02% for over
6,010,121 euros).
