A GUIDE TO BUYING PROPERTY IN SPAIN

Once you have decided on a property and the terms and conditions agreed, the property will normally be secured through a private purchase contract. The private purchase contract will be signed by both parties once due diligence has been carried out and a 10% deposit has been paid. The option contract will stipulate the terms and conditions of the sale. Should you fail to complete the sale by the date stated in the contract you will lose your deposit. Should the seller decide not to proceed you have the right to claim back twice the amount of the deposit.

On completion of the transaction, a deed of conveyance or escritura publica is signed by both parties when the final balance due on the purchase is paid. This signing must be made in the presence of a public notary which makes the document legally binding.

COSTS OF PURCHASING

There are various taxes and costs associated with the purchase of a property which add to approximately 10% of the purchase price.

- Either Transfer tax or Impuesto de Tranmisiones Patrimoniales which is levied at 8% of the purchase price on a re-sale property.

- or IVA (VAT) which is charged at 8% of the value of new residential buildings plus 1% stamp duty. IVA on Urban plots, commercial premises and some garages bought from developing or trading companies is however levied at 18%.

- Plusvalia is a municipal tax charged on the increase of the land since its last sale using the official value of the land as the taxable base. This tax may be paid by either the buyer or the seller as per the private purchase contract.

- Notary fees are fixed at an official scale and varies according to the size of the land, the size of the property and its value.

- Land Registry fees are a similar amount to the notary fees and relates to the entry of the property into the land registry.

- Lawyers fees are between 1 and 2% of the purchase price of the property but can be negotiated lower on larger value properties.

The above fees relate to individual ownership. A property may be owned by more than one individual or a company. The company can be Spanish in origin, from a country with double taxation agreements with Spain, off shore or a combination of any of these. Each option has its pros and cons and your own unique situation will dictate what form of ownership you should consider.

VALUES

During the purchase process various values are attached to the property.

- Valor catastral or catastral value is the assessed value of the property used in the calculation of local rates. This value is normally considerably lower than the real market value.

- Fiscal value is the value assessed by the local tax authorities, and is the minimum value that should be declared on the title deed when a sale is completed.

- Valuation value is the value assessed by a Bank for mortgage purposes.

- Market value is a value given by a real estate agent or property valuer as an estimate of the property's' current market value.

- Declared value is the amount that appears on the title deed which may not necessarily coincide with the actual sales price.

This is a guide ONLY. You should consult your appointed lawyer for advice on all legal matters relating to the purchase of a property.