To purchase a property in Spain might be different from what you are used to at home. Therefore it is very important that you use a sound legal advisor from the outset as well as a reputable real estate agent. The extra costs for your legal advisor is in fact your insurance against possible problems that might rise in the future. The following steps give you a guideline of a standard property purchase procedure. STEP 1: The real estate agent It is extremely important to use an established real estate agent who is able to answer all your (legal) questions. A good estate agent will also guide you through the negotiations and procedures to the completion of your investment. There are numerous agents on the Costa del Sol that have been joining "the property scene" the last few years, without any prior experience in real estate before starting the company.

Passepartout Andaluz is founded and managed by experienced real estate professionals who have a broad experience in the European and Costa del Sol Real Estate market for several years.

STEP 2: The reservation agreement

Normally the purchase is initiated with a reservation agreement, which takes the property off the market and fixes the price. In most cases the deposit to pay at this stage will be between € 3000 and € 6000. After you have paid this reservation deposit your lawyer will start a search on the property. This is very important because this search will show whether there are any charges against the property and will reveal any other possible (legal) problems.

STEP 3: Private purchase contract

On average within 1 month a private contract is signed between you and the seller (or builder) and at this stage it is normal to pay 10% directly to the seller. The seller's and buyer's lawyers, together with Passepartout Andaluz, will determine all outstanding debts and rates in order to arrange the payment of these according to the agreement. This could include property taxes (I.B.I.) community fees, telephone-, electricity- and water bills. But also the purchasing fees and plus-valia will be determined at this stage. A more detailed description of all costs and taxes involved in your property purchase will follow below.

STEP 4: Title deed

This is the last phase of the purchase procedure and in the case of a resale property the completion will take place 2-3 months after the reservation agreement. This title deed ("Escritura") will be signed in front of a notary. If you purchase the property with a mortgage the bank representative will also be present to pay and sign the mortgage. The title deed will then be registered by the legal advisor in the corresponding property register. In the case of a new construction it can take up to 18 months before completion and usually payments are made in stages of 3-4 months.

 

Purchasing costs

To be safe calculate 10% on top of the purchase price for the total of all fees and taxes. Below follows a more detailed guideline.

1: Transfer taxes

For a resale property there is a 7% transfer tax. For a new (first hand) property from the builder there is a 7% VAT (IVA) plus an additional 1% stamp duty. On plots and in case you are building your own house you have to calculate 16% VAT on top of the purchase price as well as 1% stamp duty.

2: Notary, registration-fees and legal advisor

Most legal advisors charge around 1% fee. The costs involved with the notary will vary between 0,2% and 0,3% depending on the type of property. Finally, for the registration of your property the costs involved are around 0,2%.

3: Mortgage fees

In case you are purchasing with a mortgage, you should take into account the bank charges. Most banks will calculate a 1% mortgage fee for their services.

4: Estate Agent's fees, Plusvalia and Capital Gains taxes

These costs / taxes are usually paid by the vendor. The Capital Gains tax he has to pay is a maximum of 18% tax (for non-residents) calculated over the profit (that is the difference between what he paid for the property and what he sells it for now). For residents the applicable rate will be a maximum of 18%. The profit will be adjusted for inflation and also some costs can be deducted.

The Plusvalia is a municipal tax and is more difficult to calculate. It depends on the increase in value of the land and for how long it has been owned by the seller. It will vary between € 400 and € 5000.

Finally, the seller will always pay the fee for the estate agency. The buyer will never be charged a fee for the use of these services.