Legalities of buying property in Spain

1. Preliminary procedures

• No purchaser should consider buying a property in Spain without making a full search at the land Registry
• The first Notarial copy of the seller's "Escritura de Compraventa" (title deed) should be obtained as this will indicate any special conditions affecting the property. Registration details are entered on this thus purchaser/agent can see whether vendor has good title
• For new buildings it is necessary to check that "declaration of new building" has been executed and registered "Declaracion de Obra Nueva". This is the developer's document of title.
• Where a plot only is being purchased it is advisable to inspect the "cadastro" (Official mapping office) to check the area.
• In the case of new properties searches should be made at the Town Hall "Ayunamiento" to ensure planning permission has been obtained
• Newly completed villas and flats should have an official approval certificate "Certificados de primera ocupacion".
• Buyer should check that there are no outstanding rate demands and that increased land value tax "plusvalia" has been paid on previous transfer.
• Communal property regulations should be examined
• Coastal protection law "Ley de Costas" prohibits building too close to the shore line. Check local application of this.

2. Private contracts

Where a property is under construction and stage payments are necessary it is advisable to enter into a preliminary contract prior to the "escritura de compraventa" (completion).

3. Completion

The formal and final transfer is the "escritura de compraventa". This is a public contract signed before a Spanish Notary. The notary is independent.

4. Tax

IVA (VAT) is 7% of the declared price. First transfer of property from developer there is stamp duty of 1%

Transfer tax, usually 7% on second and subsequent transfers

A local authority increased land value tax "plusvalia" is also payable.

5. Liability for payment

Purchasers are usually required to pay all expenses and costs of transfer. The vendor is responsible for the plusvalia tax. 10% approximately should be allowed for purchase costs

After signature the official copy of the "Escritura" must be presented to the tax office within 30 working days. So that the transfer tax can be paid. (Vat is paid by vendor on receipt of funds).

6. REGISTRATION

After taxation procedures have been carried out the "Escritura" should be sent to the Land Registry for registration. This takes sometime to complete.

7. MORTGAGES

Any mortgage deed "Escritura de Hipoteca" must be prepared and executed by the notary in Spain and must be registered. Costs will include 1% stamp duty.

8. ON-GOING EXPENSES

Community charges
Refuse collection and council tax
Gas, water, telephone, electricity etc

9. OTHER TAXES

Wealth tax (Sliding scale from 0.2% for non resident foreigners)
Capital gains tax (35% - seek advice)
Income tax (depends on residency status)
Inheritance tax (various allowances-seek advice)

NB The above is for guideline purposes only and although believed to be correct, the figures and facts should not be replied upon. The information has been provided by De Pinnas of London who should be contacted for specialist advice. David King and Associates Ltd are not legal advisors and take no responsibility for any actions taken in respect of the contents of this page.

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David King & Associates Ltd. International Property Consultants 76 Gosberton Road, London SW12 8LQ, England

Tel 1: +44 (0)20 8673 6800 Tel 2: +44 (0)70 2094 0020 Fax: +44 (0) 7020 94 00 36 Mobile: +44 (0) 7050 28 35 83 E-mail: spain@dkassociates.co.uk