If you need assistance to negotiate a mortgage we have excellent long term contacts with some of Spain's leading banks and financial institutions. You can use these contacts to help you obtain competitive quotations. The same contacts are available for money transfers to and from Spain and English bank accounts, investments, etc. We will make the introductions for you to negotiate your requirements, personally and remain available to you if you need any assistance.
VERY IMPORTANT: NIE NUMBER
The SOLICITOR will act strictly on your behalf throughout the entire transaction of purchasing or selling a home. He/she will obtain the NIE number for you.
Without the NIE NUMBER you can NOT buy a house in Spain.
The NIE NUMBER is obtained via the Spanish Police Station, or, if you are abroad, through the Spanish Consulate.
Calculate your budget
Working out how much you have available to you has to be the first consideration when you’re planning to purchase a new property
Once you know what you can afford, you can disregard any areas or properties that are too expensive to save yourself the pain of falling in love with a place that is out of your price range. Think about the total amount you have at your disposal and then reduce it by an estimated 10-15% for taxes and fees. If you will be opting for a mortgage, make sure you have the cash available for monthly repayments as well as other ongoing costs of maintaining a property in Spain.
Opening a bank account
You will need to open a Spanish bank account if you plan to take out a mortgage from a Spanish lender, as well as to pay water and electricity bills, community fees and council tax. This can be done through any of the banks but make sure you do your research as charges and services can vary greatly.
To open a bank account, you must be over 18 years of age. You will also need the correct paperwork:
• Proof of ID
• Proof of employment status (eg. employment contract, pension payment confirmation, unemployment documentation)
• Proof of address within the last 3 months
• Your Número de Identificación de Extranjeros (NIE) number
Living in another country can be confusing when it comes to financial affairs. You may be entitled to tax free allowances so should make sure you’re not paying more than you should be. It could be beneficial to find an accountant or Gestor who can help you deal with any bureaucracy and apply for your NIE as well as doing your annual tax return.
Tell the correct government department in your home country that you’re moving abroad. You’ll need to understand where you stand in relation to taxation rules for pensions and other income.
Tax residence (i.e whether you are a resident in Spain for the purposes of paying certain taxes) is a large, complicated subject. Rest assured though: while you may be required to declare tax in both Spain and your home country, due to Double Taxation Treaties you will usually be able to offset one payment against the other meaning you should not be taxed twice.
Currency exchange Rate
Don’t underestimate the impact that the exchange rate can have on your property purchase. Fluctuating exchange rates can affect the price you will pay for the property almost by the minute. We advise that you contact a currency exchange specialist for advice. They will be able to help you lock in an exchange rate for a future date, meaning you know exactly what you’ll pay for your purchase.
Exchange rate calculator
Once you’ve found the property of your dreams, which you decide to purchase, you may be asked to pay a small deposit – usually around €5,000. At this point you will be offered to sign a 'Reservation Contract'. Make sure that your solicitor checks the contract over before you sign it. You are not committing to buying the property at this point, simply taking it off the market. If you decide to withdraw from purchasing the property after signing the 'Reservation Contract', you will lose your deposit. Once a 'Full Purchase Contract' has been arranged and signed, you will be liable to pay around 10% of the cost as a further deposit, making it clear that it is your intention to purchase.
You are now committed to buying the property.
Additional costs of buying property
You will be liable for a number of taxes and fees on completion of your property purchase, many of which vary from region to region. You should factor in at least 10-12% of the value of the property into your budget to pay fees and taxes.
Notary fees (including title deed tax and land registry fees) (1-2.5%)
ITP or transfer tax (8-10%) – For property resales only. This has to be paid within 30 days of signing the title deed.
Stamp duty (1.5%) and VAT (10%) – This will apply where the property is being sold for the first time, or for the sale of a plot of land, in which case VAT would be 21%.
Municipal plusvalía tax – A tax based on the increase in land value since the property was last sold. This is usually paid by the seller but can be negotiated to become the buyer’s responsibility. You can also expect to pay around 1-2% (including VAT) of the property cost in legal fees. It’s worth noting that estate agent’s fees are usually paid by the seller.
If your seller is a non-resident of Spain, you as the buyer will be required to pay 3% of the purchase price to the tax office to cover their tax liabilities. This will not affect the price you pay, it will simply mean that the seller receives 97% of the money.
If the property you purchase is part of a development with communal areas, you will be liable for community fees. These charges will be determined by the Community of Owners and could cover anything from upkeep of green spaces to water charges for the swimming pool and sometimes even satellite TV charges. You will need to check that these have been paid up to date before you make your purchase.
The cost of living in Spain has increased in recent years. Common expenses will vary greatly depending on things like whereabouts in the country you plan to live, whether you have school age children and whether you prefer to shop in supermarkets or small local shops.