How to purchase a property in Spain?

There are no limits for foreigners to buy and sell residential and commercial properties or land in Spain.

Once the chosen property has been found and both parties have agreed the sales price, the buyer must check the deeds in the Registro de la Propriedad (Property Registry) and check as well if there is any outstanding mortgage. Then, the parties sign a Contrato privado de compraventa (preliminary contract) and the buyer is requested to pay a 10% of the purchase price as deposit.

If an estate agent is involved in the sale, he will hold these funds in a bonded client account until the sale is closed.

The Escritura de compraventa (the definitive contract) is then signed by the buyer and the seller before the notary, and the balance of the purchase price is paid in full by the buyer.

In Spain, the notary is a public official and he is required to witness the deed of sale, however it is envisaged to getting independent legal advice in order to better protect your own interests. The notary prepares the official contracts and makes sure they comply with Spanish regulations and enters the sale on the local property registers (Registrio de las Propriedad) to protect against third party claims. The transaction is normally completed in about fifteen days.

Buyers of re-sale property (as opposed to brand new) are required to pay a Property transfer tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, ITP), which varies from 6% up to 10% depending on the autonomous region. For example, the property transfer tax rate is 6% in Madrid.

Buyers of new residential properties are required to pay 10% Value Added Tax (VAT) and also pay stamp duty at varying rates, from 0.50% to 1.50%, of the purchase price, depending on the autonomous region. For example, the stamp duty rate is 1.50% in Madrid.

Notary fees are around 0.03% to 0.45% of the property value while registration fees are around 0.02% to 0.175% of the property value and include land registry fees, and fees for public deeds.

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