First and most importantly - don’t let your heart rule your head! It is always tempting to make the first choice of location a resort where you have enjoyed a holiday but choosing a property to stay in on a more permanent basis, is significantly different from choosing a holiday home.

Then there is the language.  Unless you are fluent in Spanish it is a must that you engage a Spanish speaking solicitor who is also fully conversant with the legal process.  The Abagado is the equivalent of na solicitor who acts on behalf of the purchaser. Budget for costs in the region of 1.5% of the purchase price plus IVA (their equivalent to VAT) for this service.

You will then be liable for capital gains tax when you sell and a transfer tax or Impuesto de Transmisiones Patrimoniales (ITP) of 7% when you resell.  In Spain, the ‘Inland Revenue’, who deal with all tax issue is known as the Hacienda.

A Gestor will need to undertake conveyancing on your behalf.  This is done in conjunction with the Abagado in the presence of the Notaria, who is the local government official who oversees that the process is correctly followed.  The Notaria must witness the signing of the Title Deeds (Escritura), and will apply to formally change the land registry.  You should at this stage, obatin a copy of the Copia Simple (Title Deeds).

As a foreign national, you will have to apply for a NIF (Numero de Identificacion Fiscal) - a number which identifies you as a foreigner purchasing a property in Spain.  Although your legal representative should do this for you, it is wise to check that they have done so on your behalf.

Local taxes you need to know about include Plus Valia which is a tax paid by the vendor and is a percentage of the profit made since the previous purchase.  You also don’t escape Stamp Duty which fluctuates around the 1% mark and finally there is ITP which is referred to earlier in this article.

In Spain allow 10% above the asking price of the property to cover the Abagado’s fees, translation costs, Notaria and land registry frees, stamp duty and iva.

It is important to stress the need to get a good agent.  You may look to save costs but the financial penalties of making mistakes, or missing important parts of the buying process, can well outway the costs of good legal advice and guidance.

Check:

That the property has a clear title;

If there are restrictions on renting it out;

If there is tax on rental income;

If anyone else has laid claim to the property;

If your Will is recognised in Spain and what happens to the property if you die?

There is more to Spain than the main tourist areas and it is worth checking out as much of the country as feasibile before investing your life savings.  Madrid, Seville and Cordoba are fascinating places as are Bilbao, in the north and Corunna in the north west corner.  These areas are often defined as ‘real Spain’.

For properties to buy in Spain visit AddMyProperty.com

This entry was posted on Monday, December 11th, 2006 at 3:54 pm and is filed under Buying property, Spain. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.