10 Key legal considerations when buying a property in Spain
February 10, 2023
Buying a property in Spain has become increasingly popular among non-resident buyers in recent years, and for good reason. Spain boasts a warm climate, stunning landscapes, and a rich cultural heritage, making it a sought-after destination for many. However, when buying a property in Spain, it is important to keep in mind the legal aspects that come with the process. By being informed of the 10 key legal considerations, you can help ensure a smooth and successful purchase.
1. Check Land Registry information
Before buying a property, you should carry out a thorough search to make sure there are no outstanding debts or charges on the property, such as mortgages, taxes or community fees.
Whether it is the future owner who negotiates the purchase directly or through a real estate agent, the first step to take is to go to the corresponding Land Registry to find out the legal situation of the property by obtaining a Nota Simple. The Nota Simple is a basic certification issued by the Land Registry that provides important information about the property. It provides information about the current owner of the property, as well as information about mortgages secured by the property, rights of way, or any preventive seizure annotations from the tax authorities. It's crucial to be aware of this information because the information provided by the registry takes prevails before third parties.
2. Check Catastro information
Another source of information that can be consulted is the Catastro. The Catastro contains a map or a plan of the property, which shows its exact location, size, and boundaries. This information is essential to ensure that the property you are purchasing corresponds to the property you are interested in.
The Catastro is also used by the Spanish tax authorities to determine the taxable value of the property, so checking the information contained in the Catastro can help you understand the property's estimated value and any taxes you may be responsible for after purchasing it.
It is important to note that, on occasions, the information offered by the Cadastre does not coincide with the one from the Land Registry. Since 2015 an attempt has been made to unify both registers.
Overall, checking the information contained in the Catastro is a key step in the process of buying a property in Spain, as it helps to ensure that you have a complete and accurate understanding of the property you are interested in purchasing.
3. Review the Residents' Association Rules.
Before buying a property in Spain, it is crucial to familiarize yourself with the rules that govern the building. The bylaws of the Residents' Association are recorded on the building's page in the Land Registry and outline the obligations and rights of the owners. This information can be obtained from the seller or the property manager.
Additionally, there may also be internal rules that are specific to the building and different from the Residents' Association rules. These rules are usually private and do not appear on the Land Registry. However, it is important to be aware of them as they do bind third parties, according to recent interpretations by the courts. Hence, it is advisable to inquire about these internal rules from the seller or property manager and have a clear understanding of them before finalizing the purchase.
4. Review urban planning infringements
When purchasing a property in Spain, it is important to check for any urban planning infringements. This may include unapproved modifications, such as the installation of a window without the required permit, or the placement of enclosures on terraces. To obtain this information, it is recommended to directly contact the local Ayuntamiento.
5. Understanding Spanish property laws.
It's important to familiarize yourself with Spanish property laws, especially those that are specific to non-resident buyers, such as restrictions on purchasing property near military installations or in protected natural areas.
Once you've found the right property, you will need to make a sales contract, which should include all the terms and conditions of the sale, including the purchase price, payment terms, and completion date.
After the sales contract is signed, you will need to complete the transaction by paying the purchase price and registering the property in your name.
On occasions, it's recommended that you hire a lawyer to help you with the purchase process and to advise you on any legal issues that may arise.
6. Community fees
If you purchase a property in Spain that is part of a community, such as an apartment building, you will be required to pay community fees. These fees are used to cover the costs of maintenance and upkeep of the common areas, such as elevators, swimming pools, and gardens. Before purchasing a property, it is important to understand the amount of community fees you will be required to pay and how often they will be due.
Lastly, it is important to consider purchasing insurance for your property in Spain. There are different types of insurance available, including home insurance, which covers damages to the property, and liability insurance, which covers any damages you may cause to third parties while living in the property. By taking out insurance, you can protect yourself against any potential risks and ensure peace of mind.
8. Obtaining a NIE number.
As a non-resident, you will need to obtain a NIE number (Número de Identificación de Extranjero), which is a tax identification number for foreigners in Spain.
9. Taxes on the acquisition
When acquiring a property in Spain, it is important to consider the taxes that will be owed on the transaction. For new build properties, the taxes owed are the Value Added Tax (VAT) and the Stamp Duty. Second-hand properties, on the other hand, are taxed through the Property Transfer Tax, which is a percentage of the purchase price, determined by the regional government.
10. Non-Resident Tax (Modelo 210)
In addition to the taxes on the acquisition of the property, non-resident property owners are also required to file the non-resident tax (Modelo 210). This tax declaration reports both the rental income received from the property and the imputed income, which is a presumed income for the days during which the property has not been rented. Filing the non-resident tax can be a complicated process, but it is important to stay compliant with Spanish tax laws.
If you're a non-resident property owner in Spain, consider using IberianTax for your tax filing needs. As one of the leading companies in the field, IberianTax provides an online tax filing service for the submission of the non-resident tax return without the need for any tax knowledge. With their user-friendly platform and knowledgeable team, you can trust iberiantax.com to handle your tax obligations so that you can focus on enjoying your property in Spain.
In conclusion, buying a property in Spain can be a rewarding experience, but involves a complex set of legal considerations that can be overwhelming for non-resident buyers. It is important to be informed of the key legal considerations, taxes, and obligations that come with the process. By taking these factors into account, you can help ensure a smooth and successful purchase.