It is advisable to get the services of a solicitor, especially if you do not speak Spanish. The solicitor will arrange fiscal and legal matters, and can contract water, gas and electricity supplies. The costs of a standard package are between 800 - 1.200 Euro.

New property

After the signing of the contract you will be asked for a deposit of 3.000 Euro to be paid cash or in the form of a bankers draft which you should have with you. This secures your property for you and also fixes the price in law.

4 weeks later you will be required to pay 50 % of the total price. The final payment of 50% is due when your property is completed.

At this stage you will have to come out to Spain to examine your property before paying the final payment. You will make your visit to the office of the 'Notario' where your transaction will be legally recorded. At this time you will also be required to pay the 7% VAT and the notary fees and registration fees. These taxes and fees will usually amount to approximately 10% of the purchase price.

Resale property

A deposit of at least 10% of the purchase price will be required at the signing of the contracts and the balance in full to be paid upon completion, usually no more than one month after the contracts have been signed.

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Mortgages

Mortgage Loans

Variable rate mortgage loan
Fixed rate mortgage loan

Required Documentation

The following documents are requested when applying for a loan

Passport
Income tax returns (or P60)
Last three pay slips (Wage earners)
Real Estate valuation (arranged by the bank)

The amount you can borrow will depend on various factors. Two most important factors are your income and the value of the property.

The bank will send own surveyor to "valuate" the house. The mortgages are granted on a percentage of this valuation. The maximum mortgage in Spain is usually 60% of the value the bank surveyor give to the property. The normal term is 15 to 30 years.

Note that you must add expenses and fees totaling around 10 per cent of the purchase price, to the costs of a property.

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Taxes and Running Costs

As a non-resident property owner in Spain you are liable for three separate taxes every year.

1. Property owners imputed income tax
2. Annual real estate Tax

Property owners imputed income tax

You will pay this tax on a purely theoretical income based on 2 per cent of the Valor Catastral*.
You will be taxed at the flat rate of 25 per cent of the 2 per cent of the Valor Catastral.

*Valor Catastral- assesed value of property for tax purposes.

Example:
If you own a villa which has a real value of 150.000 Euro and a Valor Catastral of 40.000 Euro the Spanish Tax Agency will then calculate that 2 per cent of 40.000 Euro is 800 Euro of imaginary income. Taxed at 25 per cent, this gives a bill of 200 Euro.

Annual real estate tax (IBI)

This tax, based on Valor Catastral, can vary widely from town to town for the same type of property because it is a municipal tax.
If you live in a village house further away from the coast, your annual real estate tax could be as little as 60 Euro however if you own a villa on a golf course or close to the sea you could pay as much as 1,000 Euro.

Running costs
For the overview on all taxes and running costs to pay annualy see the table below.

* Standard fee to pay. The actual water and electricity consumption is not included in these amounts. The rubbish collection charges are inculded in these fee's.

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