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How to buy a property in Spain?

HOW TO BUY A PROPERTY IN SPAIN?

If you want to buy a property in Spain you will have to get personally a fiscal number for foreigners which is called NIE*.

When you receive this NIE, it is your lawyer`s turn to make a proposal for a purchase. If the two parties come to an agreement of the price, a preliminary contract with all details mentioned and described is signed.

To secure the deal a deposit of 10% is stipulated. If the buyer wants to terminate the deal, he loses the deposit. If the seller quits the deal, he is obliged to pay the buyer double the amount of the deposit.

Payment of off-plan is arranged usually on installments as the last one is paid on a completion of the development.

When the property is finished and all is set, the two parties sign the title deeds in presence of a notary. All fees and taxes are paid by the buyer. Copies of the documents are sent to the Land Registry and the tax office.

(*) An NIE is a prerequisite for a number of essential issues, especially for payments to the Spanish Hacienda (Tax Authorities). You need such a number for: work as an employee or to work self-employed; to open phone account; to purchase a car; to open an electricity account; to open a bank account; to purchase a property;

If you want to buy a property in Spain all the procedure will cost you around 10% of the property`s price.

The Spanish legislation divides the properties` taxes and fees depending on property`s status new-build or resale. For a resale the transfer tax is about 7% with stamp duty included, and if your development is brand new you pay 7% VAT plus stamp duty of about 1%.

You should also be advised that there is capital gains tax, imposed by the local authorities. It depends on the profit of the sale and is usually paid by the seller.

For a lawyer you should put aside 1% of the purchase price and the notary will cost you 0,5%.

Property agents` fee is in the range of 2 to 15%

VAT is determined at 16% , if the property you have chosen is a land or commercial but not residential. Stamp duty remains the same.

FEES

A variety of fees are payable when you buy a property in Spain, which usually add around ten per cent to the purchase price. The fees are payable when buying a property will probably include the following:

Transfer tax: Payable when buying a resale property. It actually consist of 5,5 or 6 per cent of the assessed value, plus a 0,5 or 1 per cent legal document fee.

Legal document tax: It is levied on property transfers - 0,5% - 1%, for resale properties it is included in the transfer tax of 6-7% but for new homes it is payable in addition to VAT.

Value Added Tax (VAT): It is levied on new properties purchased from a developer or builder and being sold for the first time. VAT is 16% per cent on building land bought without any immediate plans to construct a dwelling; on building a garage or a swimming pool that is not constructed at the same time as dwelling, and 7 per cent on agricultural land.

Notary Fees: the fees for the notary who officiates at a sale are fixed by law and are based on a sliding scale depending on the sale price. The fees are usually from 300 to 700 EUR.

Stamp Duty: It is 0,5 per cent of the declared price is payable on brand new property that has never been inhabited.

Legal fees: fees for the conveyancing are usually around 1 to 1,5% of purchase price.

Deed registration fee: this is usually between 180 - 500 EUR although the first amount paid is a deposit and is often over-estimated, so you may receive a small refund.

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