Buying Property in Spain Step y Step
Buying property in Spain is an exciting venture, but it’s essential to understand the legal and procedural steps involved. Let’s walk through the process step by step.
Step 1: Searching for a Property
The journey begins with finding the right property. Buyers can search online, through real estate agents, or by visiting the area in person. Soon, we will be releasing a video on how to find properties.
Idealista is the go-to website where real estate agencies list their properties. You can switch languages to enjoy your search and all the information available.
Real estate agencies charge around 3% of the property value, with a minimum fee of €3,000.
Once a suitable property is found, due diligence should be conducted to check for any legal or structural issues. Make sure to visit the property at least twice, and ideally, purchase the property through a real estate agency.
Step 2: Signing the ‘Señal’ (Reservation Agreement)
To reserve the property, a small deposit—known as the ‘señal’—is usually paid to the seller or agent. This signals the buyer’s serious intent and temporarily removes the property from the market.
The usual amount paid is €3,000, but it may vary for very low or high-priced properties.
Step 3: Signing the ‘Arras’ (Preliminary Contract)
The next step is signing a larger deposit contract, called a ‘contrato de arras.’ It is a private contract, usually signed two weeks after the ‘señal’.
This document establishes the terms of the sale and involves a deposit of typically between 10% to 20% of the purchase price. If the buyer backs out, they lose the deposit. If the seller backs out, they must return double the amount paid.
Step 4: Seller’s Documentation
At this stage, it’s crucial to ensure the property is free of any issues. The seller must provide several key documents, including:
- Proof of ownership (Escritura or Title Deed)
- Property Registry report (Nota Simple). You can confirm it at the Oficial Register.
- Certificate of Habitability, by the city hall
- Energy efficiency certificate
Additionally, the seller must provide proof that they are up to date with ordinary bills, including:
- Latest utility bills
- IBI (local property tax) receipts
- Community fee certificate (if the property is in a shared building)
These documents ensure the property is free of debts and legal issues.
Step 5: Signing Before a Notary
The final sale is formalized before a Spanish notary, usually about one or two months after signing the ‘contrato de arras’. Both parties sign the Escritura de Compraventa (Title Deed), and the remaining balance is paid. The notary verifies all documents and ensures the transaction complies with Spanish law.
Step 6: Registering the Property
Once signed, the new owner must register the property with the Spanish Property Registry (Registro de la Propiedad) to officially update ownership records.
Sometimes, the Notary office handles this process.
Step 7: Paying Taxes and Fees
Buying a property in Spain comes with various taxes and fees, such as:
- VAT (Value Added Tax): Applies to new housing at 10% of the sale price, or 4% for government-subsidized housing (VPO).
- ITP (Property Transfer Tax): A tax on property sales between private individuals, varying between 6% and 11% depending on the region. The buyer calculates and pays this tax via a self-assessment form.
- AJD (Stamp Duty Tax) Notary and registration fees: Applies to notarial documents related to property purchases. It includes a fixed fee for stamped paper (0.30€/sheet, 0.15€/page) and a variable fee for registrable deeds, depending on the region (0.5%-2%).
- Administrative costs (optional)
Taxes and Expenses Breakdown
If you handle these procedures personally, make sure to check with the notary about the deadlines to avoid penalties or loss of rights. Alternatively, you may choose to entrust the notary with processing, in which case they will send an authorized electronic copy of the deed to the Property Registry for registration. Later, they will provide you with an official paper copy of the deed, along with all supporting documents and invoices.
Altogether, buying property in Spain can amount to about 10% of the property value.
You can find in our website a calculator of all the expenses when buying a property. Here’s a breakdown for a €200,000 property in the Basque Country:
ITP or VAT (7.000000000000001%): €14,000.00
AJD (0%): €20.00
Property Registration Fee: €600.00
Real Estate Agency Fee: €6,000.00
Administrative Official Fee: €300.00
Total Purchase Expenses: €20,920.00
House Purchase Expenses Calculator
Taxes by Autonomous Community
Step 8: Utility and Service Transfers
Finally, the buyer must transfer utility contracts (electricity, water, gas, and internet) into their name and inform the local town hall for municipal tax records.
Sometimes, the real estate agency handles these issues.
By following these steps carefully, buying property in Spain can be a smooth and successful process. It’s always advisable to seek legal and financial advice to ensure a safe investment. Happy house hunting!