General Property Info
The N.I.E number (Número de Identificación de Extranjero) is the Identification Number for Foreigners. It is imperative that all foreigners who purchase a property in Spain have one as this is needed in all fiscal and legal matters. You can obtain a N.I.E. number from the Police Station or if you prefer you can obtain a legalised photocopy of your passport and sign a Power of Attorney so that your solicitor can act on your behalf and obtain one for you. You will need to have your N.I.E. number before completing the purchase of your property. In fact the N.I.E. number is also required for buying a vehicle, employment, inheritance of assets in Spain, insuring property, paying taxes and even for signing onto the national social security health scheme.
Opening a Bank Account in Spain Owners of properties in Spain need to open a bank account in a Spanish Bank in their name for the purpose of meeting ongoing costs, utilities (such as electricity and water), mortgages, local taxes and duties. The Bank or Savings Bank will draw up a contract to open the account and ancillary documentation, and will require from the client the necessary information to complete that documentation (passport). On the “Costa del Sol”, most of the Bank offices have at their customers’ disposal English versions of the above mentioned documentation, as well as employees fluent in various languages. Remember to ask the Bank about their charges and commissions for keeping the account operating, for cheque clearing, international transfers, etc.
Normally the purchase is initiated with a reservation contract called “Contrato de señal o arras”, the deposit that will be paid on signing the reservation contract is approximately 6,000e, which is normally kept by the Real Estate company or either the vendors or purchasers lawyer. The main purpose of the reservation is for the purchaser to be assured that the property has been taken off the market (usually for a limited period of time) and for the vendor to know that the purchaser is serious about proceeding. The reservation contract implies that the “purchase agreement” (contrato de compraventa) will be signed within a specific time period and if for any reason this does not take place, the property will be again placed on the market. The deposit is usually non-refundable. The reservation contract must be dated and signed by both parties and should
include the personal details of the parties and the identification of the property. It should also define the amount to be paid upon signing the contract, the total price, payment conditions and the period of time in which the Title Deed will be signed. The amount paid on reservation is deducted from the total price to be paid by the purchaser. The contract should also establish the consequences if a) the purchase agreement is not signed or b) if either of the parties with draw from the transaction.
If the potential buyer does not go ahead, he would lose the deposit unless this is due to irregularities found on the Title Deeds of the property. If the seller refuses to go ahead the buyer is entitled to claim a compensation of double the amount of the deposit. Once the reservation document has been signed the Lawyer will begin to check the property to make sure that everything is in order including the proper ownership, if there are any charges on the property and that all Licences have been obtained.
Private Purchase Contract
According to Spanish law, the Private Purchase Contract is used to reflect the agreement reached between two parties in the transaction of the sale of a property, for both new build and resale property. In order for the Private Purchase contract to be valid and of use to both parties it must include a series of compulsory requirements. Apart from these requirements, both parties can freely agree all the terms they consider should be reflected in the private purchase contract. However there are three different types of Private Contract: These are known as the Purchase Deposit Contract, the Option Contract, and the actual Private Purchase Contract. All three have the same requirements mentioned above, but each binds the parties legally in a different way to the agreement reached.
The registered title deeds of the property are always signed at a Spanish Notary. This is the official document that certifies that the property has been sold and it includes the details of the buyer and the seller, description of the property that has been sold and its price. Once the title deeds are signed they must be registered at the Property Registry. Before signing the property title deeds the Lawyer will make sure that the seller has no debts with the Town Hall with unpaid IBI (Property tax) and garbage fees as well as no debt with the neighbours’ community, mortgages and that the property has a valid habitation permit ( first licence of occupation )
The Property Registry
The Property Registry/ Registro de la Propiedad, is the authority where all properties and their title deeds are registered. This is an extremely important office for the purchaser of a property in Spain, because this is where you will be able to find all the information about the property with a true description of it detailing area and owner and more importantly if there are any charges, debts or mortgages against the property. You can check all of this with the nota simple who will supply a report provided by the Property Registry.
LOAN MORTGAGES are most useful for financing the purchase of your Spanish property. For a non-resident buyer, a mortgage is usually limited to around 70% of the valuation of the property. Our advice is to go for a variable-rate mortgage. The lender’s rate will be a margin over Euribor. Fixed rate mortgages are available at slightly higher interest rates. Note that re-mortgages are not common practice in Spain.
Transfer tax is calculated on the fiscal value which is assesed by the town hall. Properties up to € 450,000 8% Properties up to € 700,000 9% Properties up to € 1000,000 10% Notary fees 0.5% of sales price and Registry fees 0.3% of sales price. Lawyers fees 1% of sales price.
Plusvalia tax: this is based on the length of time you have owned the property.
Up to 3 years € 1000, up to 6 years € 1800, Up to 10 years € 6000.
Capital gains tax 3% of the sales price
Lawyers fees 1% of the sales price.
Mortgage redemption 1%
Notary to cancel the mortgage 0.5%
Land registry mortgage cancellation 0.3%
This is the equivalent of council tax and is payable to the town hall yearly based on the fiscal value set by the local town hall.
Basura: This is the also paid to the town hall for the local rubbish collection, normally paid twice yearly.
Paid to the community of owners for the gardening, cleaning, pool maintenance, periodical painting and general upkeep of the community. Normally paid Quarterly.