Once a price for a property is agreed upon, both the vendor and the purchaser sign an initial deposit contract. This consists of putting down a deposit with the vendor, representing a small part of the purchase price, in order to confirm that the buyer’s interest is genuine. The vendor will withdraw the property from the market whilst the buyer and his lawyer check all is in order, that the property is free of all hidden charges and legal impediments in order to transfer the property on the agreed terms. Should the sale go through the deposit will form part payment of the purchase price.
Once the legal situation of the property and the vendor´s legal capacity to transfer the property with all the necessary formalities have been checked, both parties may move on to the private contract. The private contract will clearly state the identity of both parties, the description of the property, the conditions of the transfer, the price and its form of payment, the date of the signing of the public deed and the form into which the expenses and taxes from the sale of the property will be divided. From this moment onwards, the “sales contract” is legally binding for both parties.
Once the private contract has been signed and in order for the transaction to be considered completed and for the new owner of the property to be inscribed in the Property Registry, you need to obtain the registered title deed (“Escritura Pública”). This document must be signed by the vendor and the buyer in the presence of a Spanish Notary who testifies the identity of the parties and sets out the principles of the sales agreement, including the description of the property, the price and form of payment. This is the moment when the buyer receives the keys to the property.
Purchases Expenses and Taxes:
There are only 4 Additional costs which include:
Notary Fees: Approx 0.3% of the purchase price.
Land Registry Fees: Approx 2/3 of the Notary Fees.
Lawyers Fees: generally 1% of the purchase price.
Transfer Tax (Impuesto de Transmisiones Patrimoniales):
– Any amount up to 400.000 €: 8%
– From 400.000 € to 700.000€: 9%
– Any amount in excess of 700.000 €: 10%
You must pay all the taxes arising on the purchase of a property within 30 working days of signing the deed. Beyond this period, the buyer will have to pay a surcharge of 5, 10 or 15% of the tax, depending on each case. All foreign buyers must have a NIE (tax identification number) in order to pay taxes.