Buying a house in Spain
If you decide to buy a house in Spain, you should take into account, -even before to take the step to pay any reservation price-, that you consider some tax implications as well as other legal questions such as inheritance and rental matters.
(Referred to the Canary Islands market, for a 120.000-€ house without financing it with a mortgage)
For a second hand house: Transfer tax to be paid by the buyer: 7.5% of the purchase price.
New house acquired from promoter: VAT to be paid by the buyer: 7% of the purchase price.
Notary fee: (fixed by a legal tariff according to the purchase price and the number of pages of the deed) between 450-900.-€ aprox.
Registrar´s fee: (fixed by a legal tariff) between 400-600.-€ aprox.
Solicitor/ lawyer fee: freedom of prices. This can vary from one law firm to another. Ask for a quotation of fees. It mainly depends on the working hours incurred in the file and the extent of the task you want the lawyer to be involved in: (bargaining sales price, obtaining the NIE before the Police (your fiscal identification number), draft a private sale agreement in way of a purchase option agreement or reservation agreement with earnest money; open a local bank account; assistance to the closing at the Notary office to sign the purchase deed, tax clearance, apply for enter in to the Land Register, change of utilities such water and electricity supply ..)
Agency commission: If you are buying a listed property in one of many Real Estate Agencies. Ask whether the selling price offered include de agency commission. We would recommend you not to use the legal services of the agency or its recommended solicitors to conduct all steps related to any reservation agreement and or private purchase document and, -instead, get the assistant of an independent lawyer. You, as prospective buyer, will be asked to make a down-payment of 55 to 10% of the sale price.
Most of all those steps can be done without your personnel assistance provide you grant a Power of Attorney (POA) than can be at your first visit to Spain or by the nearest to you Spanish Consulate.
Other expenses: you may incur in others minor expenses such as; translations of documents, land register previous report, town council report, POA …
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If you are married, it is also important that you study which will become the ownership relation between the spouses, as in Spain rules the community of property, with means, unless other evidence of your personal law, the property belong 50% to each spouse. This legal presumption has direct consequences in case you want to re-sale the property, rent it or in case to be involved on an inheritance proceeding. (for an in-deep comment on inheritance proceeding, please, have a look to our previous post)
Being a proprietor in Spain:
Once you become a proprietor in Spain, you are request to pay a yearly real property tax, called Impuesto de Bienes Inmuebles (IBI), which is owed to the Town Council where the house is located. You can ask the competent tax department of the Town Council to get this yearly tax be paid by direct debiting you local bank account.
Apart from this local tax, you should comply with filling out the Self Assessment Yearly Personal Income Tax (non-resident income tax) for any property you have in Spain and any rental you may obtain from it.
Personal income tax for non-residents only represents income from the property; income from salary is declared where you are a resident. If the property is for your own use, you must pay a certain percentage of your property; if the property is rented, you declare the amount you have received in rent. The income to be declared in this case is the total amount collected from the tenant, without almost deducting any expenses. The tax rate is 24.75% of this income.
The income to be declared in case of not rental is a percentage of the cadastral value of the property, as indicated on your property tax receipt (IBI). It “presumed income” is 2%, or 1.1% of the IBI value upon which, the tax rate of 24,5% is applied.
If you are thinking to buy an apartment to obtain rents, please note that actual ruling on holiday rentals are very strict: Although the actual regulation (Decree) in under revision by the Canary Islands Government, at the very day of this post- it is forbidden to rent an apartment in case it is located in declared tourist areas.
Basically this means, that if your holiday apartment is in an already regulated tourist area, then it is prohibited for you to rent to tourists or anyone for short periods.
The Canary Islands government has announced a decision to halt the Decree regulating vacation homes, (holiday rentals) that was approved some months ago. This will leave the sector without rules until the new amendments come into force.
For an in-deep view, please go to: