A Guide to Buying Property in Spain.

Allow 10% of the purchase price to cover fees and taxes.

If you are getting a mortgage in Spain allow for bank charges of 1% of the mortgage amount.

Some banks will try to charge up to 2%, we can recommend an independent mortgage broker in Spain who will shop around the banks on your behalf and get you the best deal available to you.

This guide is intended to help you understand the process of buying a home in Spain, to explain some of the terminology you will encounter, and to give an indication of the obligations of overseas home ownership. It is not intended as a substitute for professional tax or legal advice.


The Importance of Solicitors and Surveyors.

Though the Spanish legal system is different to Ireland and the UK, solicitors will make checks and enquiries on your behalf, in which case the whole process is little more troublesome than buying a home in Ireland/UK.

Problems can arise when prospective buyers decline the use of solicitors, and later find legal complications which affect their ownership rights. For this reason, we at Property Investor insist our clients take independent legal advice before buying. As with any property purchase, it is prudent to have a survey carried out.

Checking it out

Having instructed a solicitor to handle the purchase, you have the reassurance that all the important aspects will be covered.

• The title of the property is checked
  
• The person selling the home actually owns it
  
• Whether there are any charges on the property
  
• Building licenses and permissions are in order, where applicable
  
• Finally, the terms and conditions stipulated by the seller are checked for fairness.
  
  A report of the findings is then compiled for you to consider, before deciding whether or not to proceed with the purchase. If you decide to proceed your solicitor can then arrange:
  
  
• For transference of the title into your name
  
• For any fees and taxes to be paid
  
• For the title to be registered with the Government Land Registry
  
  

Escritura - The title deed, proving who is the owner as well as describing the property in detail. The Escritura is signed once you are satisfied with the preliminary investigations and arrangements for payment have been made. You may either attend the signing in person or appoint someone as Power of Attorney to attend on your behalf.

The Escritura is signed in the presence of the Notario.


Notario - the public official who is present to officially certify that the title deeds have been exchanged and understood by the parties concerned. After the signing, the Notario witnesses the payment, or an acknowledgement that the payment has already been made, and this fact is incorporated in the deeds.

The Notario is completely impartial and offers no advice.

Registering your Property

After the signing of the Escritura, it is taken to the land registry for payment of registration fees. The registration process is not quick, so be prepared to wait several months to receive your deeds back from the town hall dealing with you.

The Name of the Deeds

At the outset decide from a practical and financial point of view who is to be named as the owner on the deeds. Inheritance tax and change of ownership taxes can amount to several thousand euro, plus fees. So if your property is liekly to be passed on in the near future, it is advisable to take this into account at the initial purchase.


All about Money

Financing Your Purchase - Some people have the funds to buy their property without requiring a mortgage. However, if you want to release equity from a property in Ireland, Kieran Holloway, MD of Property Investor Abroad Ltd is also an independent mortgage broker in Ireland and can assist you with this if you wish. He has access to all lenders so can obtain the finance you require, at the most favourable terms available to you.

A Guide to Costs

Solicitors' fees are usually 1% of the purchase price. This normally includes:
· Advice about the contract
· Investigation of title
· Planning position of the property
· Reporting on enquiry results
· Receiving of any funds sent to Spain - and forwarding same to seller if power of attorney has been signed
· Arrangement for the annual payment of taxes
· Completion arrangments - Notary signing
· Arranging for registration of the property in your name

Other Costs

· Notary fee - around €500 - €750
· Land Registry fee - around €500
· Surveyor's costs, bank charges etc - variable 1-2% normally
· Transfer tax/VAT on new property - 7% of contract price

You may also Need

· Power of Attorney for signing in your absence - typically €250
· Tax office registration for foreigners (NIE) - typically €200
 

 VAT is chargeable on some or all of the above.

Living and working in Spain

Should you want to live permanently or work in Spain you will require a 'residencia' permit, if opening your own business you made require a license, normally issued by the local town hall. If you bring a car over you will have up to six months to transfer the registration onto Spanish Plates. Payment of pensions can easily be arranged to be paid into local banks, many of which are Spanish branches of well know high street banks e.g Halifax, Abbey.

Ongoing Commitments and Obligations

If you spend less than 6 months per year in Spain then you are classified as a non-resident, but you must:
Appoint a fiscal representative
Pay your local rates (Contribution Urbana/UBI)
Declare any capital assets held in Spain and, pay wealth tax on them where due
Pay tax on any income deriving from your activities in Spain, including income you could have earned by renting property
Car tax (when plates are changed) and insurance. Guardia Civil have clamped down on non-insured drivers!!
Electricity, phone and water bills - If you get disconnected it is very time consuming getting re-connected.

If you spend more than six months in Spain you will be classified as a permanent resident and will be expected to pay taxes and social security levies. All of the pointes mentioned above apply but now your income tax will be assessed on your total income, no matter where it is earned

It is much chaepaer than you may expect to employ a "gestor" or local accountant to compile your tax return, unless you are VERY familiar with Spanish tax law it is well worth a couple of hundred euros once a year.


In the Event of Death

When you complete the purchase of your property, the very next thing you do is make a Spanish Will. We cannot stress this enough. Inheritance law in Spain means property jointly owned does not automatically transfer in full to the remaining spouse or joint owner, but will be passed on according to the will of the deceased. If no will is in place, then intestacy rules apply



The next Step

This is just a brief guide to buying a property in Spain. Though matters that arise can be much more involved than indicated here, the whole process is generally as easy as buying a property in Ireland or the UK.

So if you have decided in buying a property in Spain, the next step is to contact us with your requirements. When we help you with your property purchase we can talk from personal experience and guide you on your way to owning a home in Spain.

If you would like any further information please E-mail info@propertyinvestor.ie