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Selling and buying a property in Spain involves transaction costs in the same way as it does in most countries. The principle is that the buyer pays all taxes and fees (a little less than 13%), and the seller pays sales commission (4-5%) and capital gain of the increase of property value. In addition there is of course a yearly property tax to be paid by the the owner of the property. 
 

Type of Cost
Spanish term
Level
Paid by
Property Transfer Tax  of re-sale property
TPO: Transmisiones Patrimoniales Onerosas
 10 % (Valencia)
Buyer
New property pays VAT
IVA: Impuesto sobre el Valor Anadido
 
 10%
Buyer
Buy plot, garages and commercial properties a higher VAT is charged
IVA: Impuesto sobre el Valor Anadido
21%
Buyer
Notary and land register fee
 
0,5%-2% depending on the property
Buyer
"Plus valia" (community tax based on how old and how long the seller has had the property)
 Plus Valia
to be calculated by the Town hall
Seller, but the buyer is charged if seller does not pay
Agent Commission
 
most common is ca 5 % + VAT but depending of price of the property
Seller
Capital gain tax. Only reduction for extending the property can be deducted and transaction costs for buying and selling.  For residents the gain can be  transferred to a new property if the property is used for living.
 Impuestos a las ganacias
Income Tax
0 - €6,000 21%
€6,000 - €24,000 25%
Over €24,000 27%
Seller
If used: Estimated lawyers costs if  an ordinary sell/buy
 
ca 1% + VAT but of course depending of the complexity
Buyer or agent
Yearly Property Tax
Tribune Fiscal 
 
Owner
      "Ca" in the table means that the percentage can vary  depending on property price and community.

The tax rates and scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change.

  

Step 1 - Putting the property for sale.

 Based on prices obtained in your neighborhood, normal square meter prices, the attractiveness of the properties by e.g. having sea view etc., you set an expected price for your property. For sellers not being in contact with a real estate agent, Ancita can help giving input on an acceptable market price.
Be aware of the fact that it is market practice in Spain to go to several real estate agents and have the property for sale at the same time. In parallel, you can make your own sales activities by e.g. entering your property into Ancita. The real estate agent that first comes with a customer you accept, will have the commission.
Therefore, you should only make non-exclusive sales agreements with the agent(s). 
 
Step 2 -  Agree on a price of the property.
If you are a buyer, be aware that the price announced for the property is an expected price and the seller may be willing to reduce the price depending on e.g. how soon the deal can be done or that required financial arrangement can be documented buy the potential buyer.
When the seller and the buyer agrees, a Private Contract (Contracto privado de compraventa) should be written including
 
  • Identification of the property
  • Identification of IDs for buyer and seller
  • Agreed Price
  • Agreed deposit and when to be paid (normally 10 % and to be paid 10 days after signing agreement)
  • Attachment to the agreement including what is included (furniture etc.).
  • Include an amount in the contract to be withheld by the agent/lawyer to cover taxes and costs not paid by the seller, like gas, electricity, water etc. (According to Spanish law the buyer can keep 5% until everything is paid)
  • Agreed completion date (signing the Escritura de Compravente) closed by the Notarius. 

For Ancita members, a template is available for this private contract and can be received by contacting us by using the Ancita portal. We recommend, however, that the agreement is quality assured or made by a lawyer (especially if individual adjustments are necessary). Do not include contractual issues between the seller and the real estate agent in the agreement.  This should be regulated in the separate non exclusive agreement (Step 1) between the seller the real estate agent.

Step 3 -  Before signing the contract.

The buyer must request proof that the seller owns the property, can sell it, that no commitments/limitations are on the property and that it is free from charges. This is done by the following process;
  • Check the deeds in the property register (Registro de la Propriedad)
  • Check in the Town Hall whether large construction or road projects are planed near the property which will reduce its value.
  • Check for any outstanding mortgages and get confirmation by a “Nota Simple”
It is very important that the buyer understands that debts charged to the property and any outstanding mortgage will be passed on to the buyer if this is not paid by the seller. If the buyer is a non-resident, he or she has to apply for a national Spanish identification number for foreigners, NIE Number (Numero de Identidad de Extranjeros). Your lawyer or real estate agent will help you with this, but you have to meet physically at the police station, which is in charge of the NIE administration.
 

Step 4 -  Signing the Contract.
The Private Contract shall be signed in 2 copies - one for the seller and one for the buyer. Deposit could after the signing be paid to the sellers account, Real Estate Agent's client account or client account by the lawyer or seller directly. 

Do not pay anything before the agreement is signed!

According to Spanish law, the buyer can sue the seller and is entitled to twice the deposit as compensation in the event that the seller decides to withdraw from the agreement after signing.
However it is important to know that until a deposit has been paid and the contract has been signed by the seller, the property is still considered to be for sale and could be sold to anyone making an other offer.


Step 5 -  Signing the “Escritura de compraventa”
On the day of the signing, the buyer pays the seller by giving a cheque and cash, (max 10,000 in Euro cash).
In Spain, the notary (notarius) is a public official, and is required to witness the deed of sale. The notary prepares the official contracts and makes sure they comply with Spanish regulations. The notary enters the sale in the local property registers (Registrio de las Propriedad) to protect against third party claims. 

 

You pay the balance of the purchase price and all fees when you and the seller have signed the Escritura de compraventa, the definitive contract equivalent to the Deeds of the property. If you are buying a new property, you do not own the property until the work is completed, and you are in receipt of relevant certificates.
If the seller is non-resident, the buyer is committed to hold back 3% of the price and pay it into the local tax office. If seller does not pay the buyer could be charged by the authorities.

 

 Step 6 -  After the signing

After the signing, the real estate agent, the buyer’s bank or the lawyer should help transferring all contracts like gas, electricity, water, telephone, etc. from the seller to the buyer. In Spain, the system is to have direct debit agreements for all these services to the client's bank account, and the client will receive the invoice from the vendor and a receipt from the bank when it is paid.  Costs for the period until the Escritura date when the seller has had the property, are reduced from the amount regulated in your agreement (see step 2).

The seller shall pay a capital gains tax (See table above). There is a system, however, for the possibility to reinvest the profit in a new property for residents (check this with your lawyer or real estate agent).

 The Seller must also pay a quite small local tax named "Plussvalia", which is a tax set by the local authorities based on the increase of the value of land from the date the seller acquired the property to the date of signing the escritura. The market value or sales price of the property does not have any effect on this plussvalia tax.

 Step 7 -  Yearly tax and costs for a house/apartment 

Impuesto sobre Bienes Inmuebles (known as IBI) must be paid.
The tax is fixed by the local authorities, depending on both the value of the land and of the property itself. The tax is paid yearly, and can either be paid by going to the local tax office (SUMA) directly, when the yearly notice is received by mail, or the bank can set up an automatic withdrawal agreement from the owner's bank account. The first year, the tax should be calculated by a lawyer or an authorized person (could be the real estate agent) based on the price on the Escritura.


Experience says that having an average house or apartment with 2 or 3 bedrooms  in Spain, has a yearly cost of 3,000 and 5,000 Euro including taxes, but excluded amortization/interests on loans should be calculated (3,000 if used only 4-6 weeks a year).

 

Many property owners finance these costs by renting out their property.  A normal weekly rental in the high season in the Costa Blanca area is 700-1,000 Euro, which should be calculated as monthly rental in the winter season. 20-25% commission should be calculated as costs if the renting service goes through a real estate agent or another company offering rental services on behalf of property owners.