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Guide step-by-step to purchase a property in Spain

Show light - BARNES Agency, luxury real estate in Barcelona

BARNES Barcelona would like to share with you the steps involved in the purchasing process of a property in Spain. The guide has been structured in the following sections:

I.      RESERVATION OF THE PROPERTY

II.     ARRAS PRIVATE CONTRACT

III.    PUBLIC DEED OF CONVEYANCE

IV.    TAXES AND COSTS INVOLVED

V.    REQUIREMENTS FOR NON-SPANISH BUYERS

VI.   MORTGAGE LOANS


I.      RESERVATION OF THE PROPERTY

Once you have found the home with the characteristics you are looking for, the first action taken is to write an offer and reserve the product by giving a deposit to your real estate agency.

The amount of this deposit may change, depending on the price and features of the property. Your real estate agent will be in charge of confirming the exact amount. If the offer is accepted, the reservation agreement is signed by the seller and the property is taken off market. This agreement includes conditions and a specific timeframe to take the following steps.



II.     ARRAS PRIVATE CONTRACT (Down payment)

The arras contract is a private document where the parties (buyer and seller) agree to reserve the trade of the property with an initial up-front partial payment (down payment).

This amount is usually paid directly to the seller, and it is frequently the  10 % of the total Price.

Important information such as characteristics of the property, the price and buying conditions, and ending date of the contract, is registered in the arras contract. It is worth noting that this contract includes a statement that specifies the conditions applied if one of the parties withdraws from the contract: If the buyer backs off, the down payment will be lost. In case that the seller does, the buyer is entitled to receive double the downpayment as compensation.


III.    PUBLIC DEED OF CONVEYANCE

The conveyance deed is the final contract in which, the seller transfers all property rights to legally own and keep the property. By the completion date the total amount of the property has to be paid. This contract is signed by the seller and buyer in the presence of a public notary that certifies the property transfer. It has place 3 months after the arras contract. It is paid by Spanish checks or through transferences through the Spanish Bank or the buyer’s country.

A copy of the document is sent to the Spanish Tax Office and the Property Registry.


IV. TAXES AND COSTS

TO PAY WHILE BUYING THE PROPERTY


Purchase taxes:

  Brand new properties:

  - IVA (10% of the purchase value)

  - ADJ (1,5% of the purchase value)

  Used properties:

  - ITP (10% value until 1 M €.

Costs:

•Property Registry Fees (it is usually less tan 1%).

•Notary Public’s Fees

•Solicitor’s Fee. 



V. TAXES FOR OWNERS

RESIDENTS AND NON RESIDENTS

IBI (“Impuesto sobre Bienes Inmuebles”). It is a local tax assigned by the Spanish Tax Office, if you are a resident in the country.

IRPF (“Impuesto sobre la Renta de las Personas Físicas”). Applicable to natural residents in Spain (they reside more than 183 days in the country). Obligation to declare the property in the Income Statement (Declaración de la Renta).

IRNR (“Impuesto sobre la Renta de No Residentes). It is a Non-Resident Income Tax that applies to the owners of properties who do not reside in the country.

Wealth Tax for Non-residents. (Patrimonio). Annual wealth tax based on the net value of their assets in the country while being a non-resident, after permitted deductions such as mortgages.

Capital Gains (plusvalía). When purchased, it is mandatory to pay the “Goodwill” for the increase in the value of the property. It is a tax paid by the person who sells a property to the City Council where the property is located.



REQUIREMENTS FOR NON-SPANISH BUYERS

The necessary requirements to purchase a property in Spain are an NIE (Número de Identificación de Extranjeros) and a bank account in Spain.

•The NIE is an identification code for foreigners in Spain. This number proves that you reside in Spain and it is associated with both taxation (payment of taxes) and social security (medical assistance and contribution).

•A bank account in Spain is needed to manage all payments during the purchase process. The bank will ask you to provide proof of the origin of the funds that will be used for the purchase. We advise to open a bank account in Spain at the time of the deposit.