Is it possible to buy a property if you are not a Spanish Resident?

If a non-Spanish resident wishes to buy a property, they need to obtain a NIE number, which is a fiscal number, issued to them by the Spanish Government. This is a very simple process carried out by the Estate Agent.

How much are the purchase costs?

There are two main costs when buying in Spain. The first is the Stamp Duty, which is calculated as form 8% of the purchase price. There are no allowances for different price ranges, it is always this percentage. There is then the cost of the Notary and the Land Registry, which is approximately 1% of the purchase price. If buying with a mortgage, there are further costs although these depend on the amount being borrowed. However, as a rough guide it is estimated that a further 5% should be calculated to cover the various taxes and commissions incurred in setting up a mortgage.

Who is the Notary?

The only person able to sign the official deeds of a property is the Public Notary. A private reservation contract will be drawn up with the Estate Agency, but the actual exchange of deeds is signed and witnessed by the Notary.

Once I find a property, what happens next?

Once a property is decided on, a sales contract is drawn up between the two parties stating the price, situation and dates that have been agreed. On the signing of this contract, it is normal for a deposit to be paid. In order to formalize the details of the contract, a ‘nota registral’ is requested from the Land Registry Office to check the legalities of the property being sold. This also shows any mortgages that may be in place against the property.

How much is a normal deposit?

A normal deposit is 10% of the agreed purchase price although this is something that can be agreed between the two parties. The higher the deposit the better, as this prevents gazumping. Spanish law states that if a vendor decides to accept a better offer, once a deposit has been accepted, he must return double this amount in order to break the contract.

Can I loose my deposit?

A buyer can loose their deposit if they decide to pull out of the agreement once these monies have been paid. It is stated in the sales contract that this amount is non refundable if the buyer changes their mind.

Can a vendor break the contract?

A Vendor can pull out of the agreement but only if they are prepared to return any deposit received in duplicate as compensation to the buyer.

How long does it take for completion?

Completion can be as quick or a slow as both parties wish. Under normal circumstances, most completions are based on two months although this very much depends on the situation of each individual sale. For example, some properties are unable to complete due to summer rental agreements in which case a signing may take as long as six months. However, in a situation of property being empty and no mortgage being required, completion can be as quick as a couple of weeks.

If there is an existing mortgage, what happens?

If there is a mortgage against the property being purchased, there are two options. A buyer may chose to take over the existing mortgage and its conditions. Generally, this is a cheaper solution to setting up a new mortgage. However, if this is not what the buyer wishes, the mortgage is cancelled at the same time as the exchange of deeds. The bank who hold the existing mortgage come to the Notary, collect the corresponding cheque for the cancellation amount, and then sign a cancellation deed. This is the forwarded to the Land Registry office to be removed from the records.

Do I have to pay the equivalent of rates?

Every property is subject to rates, depending very much on the area and size. A copy of the rates receipt is shown at the Notary to prove payment. The rates year runs from January until December. It is normal for an amicable agreement to be made about splitting this cost if completion takes place in the middle of the year. Non-residents are also required to pay a ‘Wealth Tax’ every year. Again this is calculated depending on the value of the property.

What happens about the water and electric bills?

Once the property has been signed over at the Notary, it is possible for the water and electric to be changed into the new name. This can be arranged by the Estate Agents and is normally set up as a direct debit. The same applies for telephone, gas and community fees where applicable.


What is the Capital Gain if selling?

The Capital Gain applied to a non-resident when selling is for the amount of 21% of the profit. Profit is calculated as the difference between the original purchase price plus the corresponding costs and the selling price. As it takes several weeks for the Capital Gain to be processed, a retention of 3% of the selling price is retained on the day of completion. If this amount is then not sufficient, the difference must be paid. Alternatively, if this amount is too much, any difference is refunded to the vendors’ bank account.

What other taxes do I have to pay as a vendor?

It is al legal requirement that the vendor pay a tax known as the ‘Plusvalia’. This is a tax calculated by the Town Hall and is based on the years of ownership. It is not in anyway related to the Capital Gains Tax.

What length of time can completion take?

Completion very much depends on the agreement made between the two parties and can be as quick as a few weeks. If there are rental agreements or mortgages to be sorted out it can take longer.

Who prepares the sales contract?

The sales contract is prepared either by the Moncloa lawyer or the lawyer of your choice. We recommend it is a local lawyer as this is a lot quicker.

Can I change my mind once I received a deposit?

If you receive a deposit and then choose not to sell the property, you are legally bound to return the deposit received in duplicate to compensate the buyers.