Property which is owned by a developer and can be  purchased direct or through an estate agent. When declaring a new construction on land a 7% IVA (Vat) and 0.5% tax is payable to the Spanish Government.

 

When purchasing a property which is owned by a private individual or a company (not a developer) a 7% transfer tax is payable to the Spanish Government. There is no IVA charge

 

A document reserving a property, which is usually for about 21 days, and acting as a receipt for the reservation deposit, usually between 2,000 to 3,000 euro.

 

A contract with special conditions attached to the sale of the property such as deferred payments, usually with a new property being built. On a resale property the main contract will require a deposit of about 10% which will  usually include the value of the reservation deposit, 'Option Contract'.

This contract, once signed, is legally binding on both parties. Should either party withdraw from the contract without a justifiable cause they are liable for penalties. The purchaser stands to lose their deposit. The vendor has to return the deposit and is liable to pay the purchaser up to 10% compensation. This legally binding contract should not be signed or any monies paid until your legal representative is satisfied with the conditions of the sale and advises you to proceed with the purchase. On a new build the initial deposit can vary depending on the payments structure of the contract for the building programme.

 

Title Deeds. In some cases there can be two, one for the land one for the building.

 

A document from the land registry office stating who the legal registered owners are and showing any mortgages or other encumbrances registered against the property.

 

A discretionary local tax calculated on the rateable value of a property, to be paid by the vendor

 

A Tax paid on the profit of a property when it is sold. This tax, paid by the vendor, varies between a resident and non-resident. When purchasing, especially from a non-resident, 5% of the purchase price should be withheld by the purchaser's solicitor and paid directly to the 'Hacienda' (Spanish Tax Office). The vendor is then obliged to negotiate  their tax liability with the Hacienda. If the purchaser does not retain this 5% sum and pay it to the Hacienda the purchaser could become liable if the sum is not paid and a tax liability is incurred.

 

When purchasing a property in Spain you should be mindful of the fact that, unlike the UK, property and assets do not pass between husband and wife without an inheritance tax liability.  

The inheritance tax laws of Spain are very complex and independent professional advice should be taken when making a Spanish will, which is necessary if you have an investment in Spanish assets. You can insure against the liability of Inheritance Tax, an option to be seriously considered.

 

A qualified lawyer who will represent the purchaser.

 

A licensed conveyancing specialist, qualified and recognised under Spanish law, to carry out the sale and purchase of Spanish property.

 

An impartial legal witness to all aspects of the purchase, who will witness the signing of the deeds

 

Foreigners Tax Identification Number, which is obligatory for all purchase and sale transactions and when dealing with supplier of services, e.g. when buying a car in Spain etc.