Purchasing property in Spain is undoubtedly a big decision. Taxes, urban planning and legal paperwork all need to be taken into consideration when budgeting for expenses. Here at Andalucía Lawyers we have a lot of experience in buying various types of property throughout Andalusia. We can assist you in all aspects of the purchase process, giving you peace of mind as well as saving you money.
Choosing the Right Spanish Property for You
In order to choose the right Spanish property for your need, whether as a home, office or an investment, the first step is always to thoroughly investigate the various options on the market. Once you have found a property you are interested in, it is important to carefully examine the building’s structure and surroundings and check the property’s legal status before committing to a purchase. Our conveyancing service takes care of all these checks for you.
Estate Agents
Choosing a Reliable Estate Agent in Spain
It is important to verify that any estate agent you work with is professionally qualified and licensed, with experience in the area where you wish to purchase. A couple of checks to carry out are finding out if they are a member of a professional real estate association, whose members usually have some level of professional indemnity insurance. You can also request an agent’s registration number and have it checked.
Estate Agent Fees in Spain
Normally the estate agent charges a commission based on the sale price. This fee may vary from 2% to 5% depending on the area, the price of the property and other factors. These fees are normally paid by the vendor and included in the sale price. Therefore, it is worth shopping around to see if you can find the same property for a lower price from a different agent. Each agent sets their own fees, and also whether the vendor or buyer, or both, is charged. The important thing is to establish this from the outset and not to sign anything you do not fully understand. Consulting with an experienced local lawyer is essential to protect your interests.
What is the responsibility of the lawyer and estate agent when purchasing property in Spain?
Everyone is responsible for their own acts. Reputable estate agents and lawyers will have professional indemnity insurance. At Andalucía Lawyers we take responsibility for our job and have third party liability insurance.
Legal Fees When Purchasing Property in Spain
When selecting your property and estimating the purchase expenses you need to take into account a number of costs, such as:
Notary and Land Registry Fees
The scale is fixed by law and ranges from around €300 to €1,000 depending on the price of the property.
Conveyancing Fee
Normally 1% of the purchase price (minimum fee of €1,000). Contact us and we will be happy to prepare a quote for your particular situation.
Taxes on Resale Property in Spain
Spanish Transfer Tax (ITP)
This only affects resale properties; it doesn’t apply to new build purchases. It is payable by the buyer. The national rate is 7% of the purchase price. However, if the minimum fiscal value of the property, set by the local autonomous government, is higher than the agreed purchase price then it is this higher figure that is used to calculate the transfer tax due. Although the national rate is set at 7%, this tax is controlled by the local government so the rates vary from one autonomous community to another. Be sure to check the rate that applies to your property’s location. The following table shows the ITP rates for Andalucía:
| Property including flats, houses, villas, land, and business premises. |
Garages not belonging to an adjacent property.
Garages when a property has 2 or more garages. |
|
| Minimum fiscal value/purchase price. |
Minimum fiscal value/purchase price. |
Transfer Tax |
| Up to €400,000. |
Up to €30,000. |
8% |
| From €400,000 to €700,000. |
From €30,000 to €50,000. |
9% |
| Over €700,000. |
Over €50,000. |
10% |
It is very important to understand that this tax is cumulative. For example, if you buy a property for €900,000 the ITP will be calculated as follows:
€400,000 at 8% = €32,000
€300,000 at 9% = €27,000
€200,000 at 10% = €20,000
Total transfer tax to be paid: €79,000
Spain’s Municipal Value Added Tax (Plusvalía)
This is a local tax payable when a Spanish property is sold, calculated on the increase in value of the land from the time the previous owner (now vendor) bought the property to the time of the present sale. It is calculated from the property’s cadastral value (the rateable value of the property) and the number of years since the property was last sold. It is usually payable by the vendor, however this is negotiable. Depending on the property market, either the vendor or the buyer may agree to pay it according to who has more negotiating power. Again, having a good lawyer representing you will ensure you avoid any pitfalls.
Spanish Capital Gains Tax
In Spain, capital gains tax is paid on the profit the vendor makes on the sale of their property, i.e. the difference between the listed purchase price and the listed sale price. It is payable by the vendor of a property. However, as a buyer it is important to be aware of it as sellers will sometimes seek to mitigate or completely avoid capital gains tax by asking the buyer to list the sale price as lower than the actual price paid. Not only is this legally problematic, but it will also very likely increase your capital gains tax should you sell the property in the future. This is yet another example of why it is so important to employ an experienced Spanish solicitor when purchasing property in Spain.
Spanish Taxes on New Build Property
VAT and Stamp Duty
| New Build Properties Including Houses, Villas, Flats or Garages Annexed to a Dwelling. |
New Build Commercial Premises, Commercial Garages, or Newly Urbanized Land Parcels |
| VAT |
Stamp Duty |
VAT |
Stamp Duty |
| 10% |
1.5% |
21% |
1.5% |
Andalucía Lawyers’ Conveyancing Service
Here are a few of the steps our conveyancing service takes care of on your behalf when you purchase property in Spain:
- We check with the Land Registry that the property is free of debts, encumbrances and charges, and that there are no outstanding payments.
- We ensure that the title deeds are properly executed.
- We check that the property has all the necessary licences and authorisations.
- When buying from a developer there are specific regulations that have to be checked; we take care of that for you.
- We oversee the exchange of private contracts or the signing of an option to purchase, ensuring that the rights of the buyer are protected within the contract.
Property conveyancing
What other legal services do you provide?
We also have a fiscal and tax department in charge of resident and non-resident tax matters, such as capital gains tax, inheritance tax and council tax, which may be of interest to you.
Tax advice
Consult with Andalucía Lawyers
Buying property in Spain can be a relatively straightforward process, when you have the right legal representative. If not, it is possible to fall into traps or simply to miss something that may end up costing you dearly in the future. Our English-speaking team at Andalucía Lawyers has over twenty years’ experience buying property in Andalusia, don’t hesitate to contact us to enquire about our property buying services.
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