In this guide, we have tried to outline some of the fundemental, points to consider, when looking to make Your Move to Spain.
Some of these points, people often overlook, such as the taxes involved, when buying here, and some agents simply do not mention them until its too late.
There are many different ways, and types to buy a property here in Spin, be that from a developer, private individual or bank. We have compiled some breif information on each of these situations.
If you have any specific questions, which you can't see below please do not hesitate to contact us, and we will be happy to answer them for you.
PURCHASE A NEW HOME FROM A DEVELOPER
(OR A BANK REPOSSESSION PROPERTY)
With a greater number of people than ever before, choosing to opt for a brand new home here in Spain, The New devlopment market here is booming.
There are also some great bargains to be found, from the banks here in Spain, on properties that have been repossessed.
In both cases with these properties, the costs incured with buying are between 10 to 12% on top of theadvertised purchase price of the new residential properties be that a villa, apartment, townhouse etc. and 21% for commercial properties such as Turistico Apartments, and plots of land.
One thing with the New development market to be aware of is that, the prices advertised are non negotiable, and in many cases increase, as the development progreses.
All New Development properties here in Spain are subject to VAT and Stamp Duty know here as (IVA & Actos Jurídicos Documentados – AJD)
These taxes apply for all new residential properties which are being sold for the first time, these also apply for commercial properties and plots of land. This is a national tax, and so the VAT will be the same wherever the property is located. The Stamp duty (known as the AJD) will be 1% of the purchase price, but differ in some regions of Spain, so be sure to check on the latest rate. Both the VAT and Stamp Duty are paid by the purchaser upon completion, at the Notary
BUYING A RESALE PROPERTY FROM A PRIVATE INDIVIDUAL
This is one of the most common types of purchase here in Spain.
With these types of property, you are able to negotiate on the advertised sales price, with the vendor. If you agree a price to purchase the property the tax involed with the purchase know as Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP): Would be between is 7 to 9 %,. However some of the autonomous regions have applied higher local rates.
Therefore the rate you pay will depend upon the autonomous region where you buy.
This tax applies to Re Sale properties, And the full amount of ITP must be paid at the Notary, upon completion.
There is however no VAT to pay, and the stamp duty has already been included within this tax.
Upon finding your perfect property, and agreeing to move forward with the purchase, you will be required to pay a holding deposit, of between €3,000 to €5,000, depending on the type of property and or developer.
This in most cases can be done by bank transfer, Credit or Debit card or in cash. Upon the deposit being paid, always make sure a receipt for the payment is issued to you from the agent, bank or developer.
This will reserve the property you have chosen, and will mean the property is withdrawn from the market immediately.
If a standard completion is possible, which in Spain is typically between 6 to 8 weeks, then no further payments are required, before completion.
However on certain occasions a second deposit is required on Properties over €150,000.
With New Development properties, In nearly all cases a payment plan is agreed, with the buyer and developer, at the start, and payments are made as the build progresses.
Typically a developer will leave anywhere from 50%+ to be paid upon completion, once you are satified with the property.
Please note in some circumstances, mainy new developments, if you withdraw from the sale, you may loose your deposit.
For buyers looking to purchase their new home here in Spain, with a Mortgage, the rates and available loan to value will vary depending on both the bank, and th buyers financial circumstances.
As a typical figure, the banks here usually will provide Mortgages of between 60 to 70% loan to value.
On occasion with some of the Bank Repossession properties, finance may be available of up to 100% of the advertised price. This will again depend on the bank, and the individuals financial circumstances.
Some clients also look to facilitate to purchase via their bank, or mortgage company in their home country, as on occasion they will issue a better rate, or terms.
LEGAL REPRESENTATION FOR YOUR PURCHASE
Once everything is in place and you have found your perfect property, It is important that you have legal representation, to progress with the sale.
We have partnered with a long established Solicitors, here in Spain, who are able to speak several languages and addresss any concerns, or questions you may have.
To proceed with a property purchase here in Spain it is compulsary that all buyers must obtain a Spanish NIE number which is a unique identification number.
For the majority of our clients, as this is included in the Solicitors fees, our clients choose to attend the notary, with their solicitor and grant them power of attorney.
This enables the solicitor to complete and obtain the NIE application and number for you.
By granting the solicitor's power of attorney, this also enables them to compile all the necissary paperwork, and for them to complete on the property purchase on your behalf if you wish.
SUMMARY OF COSTS AND FEES ASSOCIATED WITH THE SALE
All of our online property, and office property are advertised, before taxes and legal costs. As a basic rule you should look to add the following costs, to the advertised price.
ITP Transfer Tax which is between 8 to 12% on resales and bank properties
Land registry, notary costs 1% to 2%
Mortgage costs including stamp duty and set-up fees are approx 1% to 2%
Other expenses upon completion, such as home insurance,community fees
Solicitor/Legal fees. Typically €1,000 to €1,500 + VAT.
Stamp duty, up to 2% – On new development properties and certian bank properties.
We hope you have found this guide useful and informative and as mentioned, if you have any other questions, please do not hesitate to get in touch.