Legal Advice about Buying Property in Catalonia
Introduction
Buying property is not something you should do unprepared, especially not in a foreign country. The most important advice we would give if you want to buy property in Catalonia is to consult a local lawyer. Although you can find out about all relevant issues by yourself, it is not worth the trouble and the risk. All the possible issues will be addressed and taken care of by consulting a lawyer.
How to actually buy the property?
When an agreement has been reached regarding the price to pay, including who will pay which taxes, a private contract for the sale should be made up by your lawyer. This contract should address at least:
- the price
- the method of payment
- that the property is free of mortgages
- that all bills and taxes are up to date
- which furniture is included
- that all equipment (listed) is in working order
- the amount of deposit to pay
- length of time before the property transfer at the notary
- the fine if any of the above are not met
After this contract is signed you are expected to pay a deposit of usually 10% to the vendor's lawyer or to an agreed holding account. After the deposit is made the vendor should withdraw the property from the market. Then your lawyer should prepare the final document for the sale (escritura de compravenda) to sign at the notary. At the notary you then sign the property transfer and pay the rest of the money.
After this your lawyer should register the "escritura de compravenda" at the Spanish property register to fully install your title to the property. This should take 4 to 6 weeks and only then will you be fully entitled to the property and able to consider your self the owner.
Is the property free of mortgages?
Your lawyer should check if the property you want to buy is free of mortgages by checking the property register and in the same register check if the vendor is the same person as the owner. Before signing the final contract he or she should also check if all bills and taxes have been paid by the owner.
Additional costs.
As a rule of thumb you can count on 9% to 10% for taxes and fees.
This is made up of:
- IVA
Only if you buy from a company you pay 7% VAT. If you buy a terrain to build on later you end up paying 16%. You don't pay VAT on rural properties. - ITP
Property transfer tax when buying from a private person is around 6% over the "registered value". - Plus Valia
Is a tax based on the increase of value since the last sale of the property. Normally this tax is paid by the vendor, because he benefits from the increase in price. In the sales contract it can however be said that the new owner has to pay this tax. Rural properties are not subject to the "Plus Valia". - cost of a lawyer
As a rough guideline count on 1% of the purchase price. - notary fees
Depending a bit on the size of the house and type of land, allow 0.2 - 0.3%. - registry of property ownership
This is to register that you are the new owner and will cost you 0.2%.
All non-residents who own property in Spain have to pay wealth tax. This is between 0.2% to 0.4% of the registered value. Residents do not pay anything on the first 17 million pesetas, and if the property is owned by both the man and wife this amount is doubled to 34 million pesetas.
Non-residents also have to pay property owners income taxes. The income is assessed as 1.1% of the registered value and taxed at 25%. It is not relevant for the tax collector if you in fact generate any income from your property.
Town halls have their own local taxes which can vary substantially between the different villages. Smaller villages are generally cheaper.
Disclaimer
The above advice is only to give a general idea of the issues relevant to buying property in Spain. It should in no way be your only guideline when buying property. Rules might have been changed or are different in your particular situation. We can recommend several good lawyers who have experience in these cases. Use one!