Buying a property with Obsido

Inspiring confidence in both buyers and sellers is an essential ingredient for any successful property brokerage. Our mission is to set the industry standard of professional excellence and provide the highest quality service available in a rapid and result-oriented fashion. We adhere strictly to the regulatory framework now governing the local property market, and consequently the staff we employ follow a business methodology that demands exceptional integrity, a stringent code of business conduct and total transparency to clients.

We can offer pragmatic guidance towards securing your next investment or new home in a rapidly changing Spanish property market and offer real time contact for convenient viewing times, be it on weekends or evenings.

Obsido Estates agents will guide you through the process of buying a house in SpainWhether you are looking to purchase commercial property, an apartment, a townhouse or a luxury villa, our experienced team of agents will narrow your search down to those properties for sale that best match your requirements. With our expertise and skilful negotiations we ensure that we only register properties that represent the best value for money, and this gives us a winning edge over other competitors in the field.

We want to find the best property that we can within your budget and the more houses you view the more sure you will be when we find your dream home.

We always recommend that you look at a selection of properties in different areas and make comparisons to ensure that when you make your decision it is the right one. We want to find the best property that we can within your budget and the more houses you view the more certain and positive you will be when we find your dream home.

 

Once you have made your decision, a deposit payment will be taken in your name. This sum should be readily available as a delay could mean your dream becoming another person’s reality. Payment of this sum fixes the price, confirms your intention to buy and means that the property is taken off the market and reserved for you. Normally you will be expected to complete on the sale within 30 to 45 days and our team will assist you through the entirety of the sales process, which includes execution of the transfer of title deed from one party to another.

The big move
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STEP-BY-STEP BUYING PROCESS

1.POINT OF CONTACT

Contact us for expert advice on the various areas available: we will help you establish a budget and make a suitable property selection.

2. VIEWING APPOINTMENTS / INSPECTION TRIP

Contact us at sales@obsidorealestate.com to make an appointment or schedule an inspection trip from your country. We will be delighted to ensure a hassle-free trip by facilitating all your travel arrangements, including your choice of accommodation, airport pick-up, etc.

3. SELECTION OF PROPERTY

Browse through our extensive portfolio and we will help filter the search for your ideal property.

4. AGREEING A PRICE

We will negotiate with the owner on your behalf to ensure that we achieve the best possible price for you.

5. SIGNATURE

The buyer and seller will sign an “Agreement of Sale”. Upon both parties signing the contract you will secure the property by paying a deposit.

6. CONVEYANCING THROUGH TO COMPLETION

We can recommend a lawyer who will carry out any necessary due diligence and arrange all the required documents to complete the process. If you choose to buy with a mortgage, we will work together with you and the banks to find the ideal offering.

Legal info when buying a home

LEGAL

The information below is solely for information purposes: you are advised to hire a lawyer for the buying process.

As a buyer of property in Spain there are a number of costs and taxes, apart from the property price, that you will have to pay.

 

Depending on whether you are buying a new property from a developer or a resale property from a private individual, you will either have to pay VAT (IVA) and stamp duty or a transfer tax.

 

The different cases are explained below, together with other costs and taxes that are common to both cases.

NEW BUILD FROM A DEVELOPER

VAT & Stamp Duty

 

These taxes apply if the property is being sold for the first time, and the seller is a property developer.

 

The VAT is 10% on the price of the purchase in the case of built residential property (villa, apartment, etc.), and 21% in the case of plots of land (without built property) and commercial premises.

 

The stamp duty is 1% of the price of the purchase, but might be higher in some regions, so be sure to check on the latest rate.

 

Both VAT and stamp duty are paid by the buyer, and if any deposit is paid before completion of the sale this deposit will be subject to VAT at the moment it is paid.

 

In this scenario there is no transfer tax to pay..

RESALE FROM A PRIVATE INDIVIDUAL

Transfer Tax

 

This tax applies if the property is deemed to be a second or posterior transfer (i.e. not the first time a newly built home is bought), and it is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to pro rata transfer tax. However, the full amount still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax. The transfer tax rate is 7% on properties below €400,000 and from this amount upwards the tax is 8%.

 

Income Tax Provision When Buying from Non-Residents

 

If the seller is not a Spanish resident, the buyer is required to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not completed the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.

COMMON COSTS

Legal Fees

 

You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking the seller’s ownership claim, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.). A lawyer will charge you in accordance with the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees.

 

Mortgage costs

 

If the seller is not a Spanish resident, the buyer is required to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not completed the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.

 

Notary Expenses

 

Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale. You should calculate notary fees as being approximately 1% of the purchase price declared in the deeds of sale. In many cases, however, notary fees are more likely to be 0.5% (or less) of the price declared in the deeds.

 

Property Registry Inscription Fees

 

Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. You should calculate approximately 1% of the purchase price declared in the deeds, though once again it depends on the property and the area, and the fee could be considerably lower.

 

Other Costs

 

It may be prudent to carry out a survey of the property and this will have a cost.

 

IN SUMMARY: allow for up to 10% of the purchase price in taxes and other costs. If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved. In this case transaction costs might reach between 10% and 12% of the value of the property purchased.

 

Banking Costs

 

To pay for the property, you will more than likely need to write a banker’s cheque. In order to do that, you will need to open an account in a Spanish bank and transfer money from a bank in your country. The cost of transferring those funds could be as high as 0.4% of the amount transferred. The banker’s cheque will most likely cost 0.5% of its amount.

 

Property Ownership Tax

 

This local tax on the ownership of property in Spain is charged irrespective of whether the owner is a resident or not. It is calculated on the basis of the “valor catastral” (an administrative value that is usually lower than the market value – sometimes considerably so) set by the town hall, and the tax rate varies from 0.4% to 1.1% of the “valor catastral”, depending on the Spanish region.

 

Annual Wealth Tax

 

This tax has been reduced to zero since 2008.

 

Personal Income Tax

 

Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.

 

Not rented out…

 

Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 25% of 2% of the town hall administrative value of the property.
The tax on a property with a value of €700,000 would be as follows: Property value for tax purposes = €700,000 Taxable base (2%) = €14,000 Tax (25%) = €3,500
Property value for tax purposes = €700,000
Taxable base (2%) = €14,000
Tax (25%) = €3,500

 

Rented out…

 

If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident). In many cases non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain. Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.

 

Community Fees

 

Owners of a property that is part of any development, building or complex in which common zones are shared with other owners are by law obliged to be members of the community of owners. This will entail paying community fees for the upkeep of the common areas, and any other services that the community votes for. The fees will vary according to the magnitude of the common areas, the costs of maintaining them and the services that the community vote for. A budget for annual community expenses is approved by majority vote of all owners, or their representatives, who are present at the annual general meeting of the community.

 

Local capital gains tax

 

A special reference should be made to the local capital gains tax – known as “plusvalía”. This is a local/municipal tax that applies only to the increase in value of the land upon which urban properties are built, and which is levied at the time of transfer of such properties. It is calculated on the basis of the town hall’s administrative valuation of the property. The amount to be paid will depend on how long the seller has owned the property: the longer the period, the higher the amount of tax.

It would be a privilege for Obsido Real Estate to assist you in the search for your dream location, so please leave a contact request and we will be in touch with you shortly…

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