There are a number of things that you will need to know if you are thinking of becoming a property owner here in Spain. The system operates in a way that in many ways is fairer for the seller and the buyer and is also protective towards each party.

Real Estate Companies.
When looking for a Real Estate company it is advisable to find one that operates under the GIPE number and has experience in the rules and regulations that apply in Spain. This means that the company is bound to the rules and regulation and ethical practices and codes of conduct. Finding one that is reliable and experienced can make property purchase a pleasure and will ensure that you will see a variety of property that will suite your requirements.

Professional Advice.
We advise the use of a Spanish Lawyer for obvious reasons. Most of them charge a fee equal to 1% of the purchase price and we believe this to be good value for the peace of mind it will bring. Your legal adviser at the earliest stage of the transaction will obtain a note simple from the local property registration office. This document will show all the fiscal information relating to the owner and the property. From this document you can see what if any problems there are attached to it and you can determine whether you should proceed with the purchase or not.

The Contract.
Once that you have decided upon a property and agreed the price with the owner, it is necessary to draw up a contract with a view to giving the purchase deposit, usually 10% and agree the payment schedule and the completion date for the hand over of the property. Once that this contract has been drawn up and agreed by both parties, the deposit paid and the contract signed, this is the time when as a purchaser you have secured the property. The next step from this is to have the deed ( escritura publica ) drawn up, the balance of the purchase monies paid over, all in the presence of the Spanish Notario (Notary). When this deed is signed you are then recognised as the new owner. The final step is for the deed to be registered at the Land registry Office. All property in Spain is registered at the Registro de Propiedad ( land registry office ).

Purchase Costs
When purchasing property here in Spain there are a number of costs that have to be taken into account. Transfer Tax , this is based on the declared price of your property and is currently 6% for a resale property and 7% for a new property. New property also attracts stamp duty of .5%. Property registration fees, these are charged by the local property registration office to change the old deed to the new deed. Notary charges, these are on a sliding scale, this is where the property will become your possession and the seller is paid the balance of the monies as per the contract. This will not take place unless the Notary is completely satisfied with all the arrangements. Plus Vallia, this is a municipal tax and is based upon an officially assessed increase in the value of the property and can be small if purchasing a new property, or a quite a large amount for a property that has not been sold for 20 years. This tax is usually paid by the seller.

Annual Running Costs.
During the purchase process you and your legal adviser will come across all the paid receipts for the various running costs of the property. IBI. Impuesto sobre Bienes Inmubles, this is the Town Halls annual real estate tax. The previous owner has to give you the previous years receipt for this annual tax, without it the Notary may not allow the completion of the property to take place. This receipt will show the Valor Catastral, which is the official assessment of the property value and is used to asses the tax.

Community Charges.
Most urbanisations have some type of community and you will automatically become a member and be given the right to vote at any meetings. These charges are to maintain any pool, gardens and communal areas. It is also necessary to obtain the paid receipt for this charge also, once again the Notary may not allow the completion to take place if the paid receipt is not produced.

Annual Taxes.
All property in Spain is subject to 2 taxes. Patrimonio or Wealth tax.  The other is IRPF property owners income tax, this is based upon 2% of the Valor Catastral (thought to be your income from the property) and this is paid upon the imaginary income at the rate of 25%.