Buying a Property
Buying a property – this is the biggest investment in the life of each person, and if you want to make this investment successful, you should very seriously consider the details.
The Spanish law allows foreigners to buy property in Spain on the same footing as Spanish citizens. To do this, the foreigners Only need a valid passport and sufficient funds.
The company Banus Group provides a full range of services on purchasing property in Spain:
- Organization of real estate tours, as a result of which you will have some suitable options (we make a personalized viewing of different objects, based on the criteria of the client; obtain him a visa and book the plane tickets; also select and book hotels);
- Careful selection of a suitable property;
- The transaction of sale onto the natural and legal person
- The Collection of documents for receiving the loan
The owner of the object is the one inscribed in the official document ‘Escritura’ (Escritura Publica).
- The purchaser has to receive a foreigner’s identification number (N.I.E.) at the local police if he is the physical party; or the Tax identification Number (C.P.I.) if is the legal entity and open a bank account from which later the funds for the property purchased, will be transferred.
- If the property object is defined, a deposit in the sum of 6 000 Euro is paid and the object is then reserved by you. A contract is then executed about the buyers intent of acquiring the given property, reflecting its cost (‘Contrato de compraventa’ or ‘Contrato de opcion de Compra’), the conditions and way of payment. The turnaround time of the contract is 2-4 days. During the signing of the given contract, the buyer pays 10% of the property value (the deposit is included in the 10%).
- The main document in the sale transaction is the ‘Escritura Publica’, prepared within a month by the Spanish notary and signed by the properties seller and buyer in the presence of the Spanish state notary. During the signing of the document, the buyer pays off the remaining sum of money. After this the buyer becomes the rightful owner of the real estate and receives the key of the property.
- After finalizing the sale deal, the real estate object is registered in the territorial property registry where it is assigned a registration number, record number; also location and volume. The registration process lasts from one up to three months. After this you receive the registered original of the Escritura Publica, either you receive a copy, provided that you process a loan; and the original is sent to the bank.
The expenses on the acquisition of real estate objects usually amount to 8,5-11% from the cost of the real estate object and consist of the following components:
- When obtaining a new real estate the V.A.T (I.V.A.) is paid in the amount of 8% of the property value (since 01.07.2010); when obtaining a property on the secondary market, the transfer tax is paid (I.T.P.) in the amount of 7% (if the amount of purchase is up to 400.000 euro) and 8% (if the amount is above 400.000 euro) of the property value; when purchasing plots of land and commercial properties V.A.T (I.V.A.) is paid in the amount of 18%;
- Registration in the territorial property registry – 400 euro;
- Notary expenses 800-1000 euro.
Taxation in Spain
- Value added tax (I.V.A.) When purchasing a commercial property and land plots, the tax is 18%; when acquiring a new real estate – 8%.
- Tax on transfer of property (I.T.P.). Paid on the acquisition of second hand property at the rate of 7-8%
- Tax on legal proceedings (A.I.D.). Rate 0.5%- 1.0%.
- Impuesto sobre la renta – tax on the estimated income from property rental (Filed to the annual tax return). In order to calculate the tax amount, you can use the following formula: Declared value of property: 2 x 1,1% x 24%.
- Impuesto Sobre Bienes Inmuebles (IBI) – annual council tax, paid prior to 10th of September by both, residents and non-residents. Varies from 200 up to 1000 euro per year depending on the cost and location of the property. The money received by the treasury of the municipality of this tax go to the improvement of the city, improvement of infrastructures, etc.
- Retention from nonresidents on account of income tax when selling the real estate – 3.0% of the amount of the contract of sale.
- The tax on individuals for motor vehicles – an average of 120 – 180 euro per year (for example the tax for Sedan BMW is 530 – 130 euro per year)
- The corporate income tax – the company pays income tax at a rate of 30% if the yearly income is less than 90 000 euro and at a rate of 35% if the income is over 90 000 euro.
- Tax on different types of enterprises. The enterprise pays 800 euro to 3,000 euro annually for the right to engage in one or other activity.