FAQ

If you buy a house or a flat in Spain, you will need to pay the property transfer tax. How much is that? It depends on whether the property is new or not. When buying a second-hand property, the PTF is equivalent to 10%. But, if we are talking about a completely new house/flat, you should add an extra 1,5% in terms of registration. Being under 32 years old means that the 10% before mentioned would be reduced in half, paying just a 5% on property transfer tax.

Selling or renting a property means that you will be registering an income from the transaction. And, as you may know, income in Spain is taxed via capital gains tax. The exact amount will depend on your exact situation, but we are referring to a range between 19 and 23%. If you are a Spanish resident or not will make that rate be higher or lower. For example, if you are a Spanish non-resident but you live in another European Union country, you will need to pay 19%. But there is an exemption! The main home exemption means that if you sell a property and reinvest the amount you gained to another property (which will be your new residence), you don’t need to pay capital gains tax.

Once you have found your desired residence, you can buy your new house in just 1 or 2 weeks. But the exact time will also depend both on the seller and the agency. The most time consuming part of the process is the due diligence. 80% of the time will be spent verifying the registration certification, and the other 20% to inspect the property condition. If the “nota simple” is fine, the due diligence can take up to just 2-3 days; having the whole purchasing process in just one week.

Nowadays banks will usually give you from 60 to 80% of the property valuation. The loan is issued on the valuation price, which is emitted by an architect that works for the bank.

Banks usually undervalue when the property is in an area in which the market conditions for the future are unknown. On the other hand, if you live in a big city such as Barcelona, in which the market is solid, that difference will not be that big. In terms of restrictions, there are none. The bank analyzes your capacity to pay the loan back, and your ability to do so is the only restriction. It does not have to do with any district or area the property is located in. It responds to an internal evaluation process from the bank, based on the evaluation of your future solvency.

The certificate of occupancy is a document that accredits that a property meets the necessary conditions of health and hygiene making it livable. This document is fundamental when buying a property, as you will need it to register services such as water and gas. Can you buy a property that does not have the certificate? Yes you can, although it isn't advisable because living in a property without “cedula de habitabilidad” will likely result in a penalty when you get inspected.

No, you can rent to anyone. There is no restriction in terms of occupants. If you are planning to rent a property, you will need to sign a contract. Depending on how long your rent will be, you have 4 normal types of contracts:

• Tourist rental. This contract will enable you to rent your property for days or weeks only. You need a license from the City Hall in this situation.
• Seasonal contract. This contract is up to more than 30 days. We are referring to the so-called “contrato de temporada” in Spanish.
• Then there is an annual contract for rentals which last for 12 months.
• There are even longer term rentals, usually from 5 years and longer.

Normally, Spanish mortgage lending is made with the interest rate fixed for one year. This can, however, be extended to a five-year period.

There is no legally stipulated loan ceiling. Mortgages of 60–80% of the property value are most common, depending on the bank chosen.

It depends on the size of the sum being borrowed. Normally, it will cost 3-5%. Some costs are fixed, while others are variable.

We recommend that you open an account with a Spanish bank and set up auto-payments and internet banking. Many Spanish banks operate internet banking in English.

The down-payment (also known as the deposit) is usually 10% of the agreed purchase price for secondhand properties. For new build properties, the down-payment (also called the booking fee) is normally between 3,000€ and 6,000€.

The remainder of the agreed purchase price is paid as part of the take-over process. At that time, the property deed is transferred to the buyer at the office of a Public Notary (the official in charge of preparing all title registry documents in Spain).

If you choose to take out a mortgage to finance part of your property purchase, then some additional costs will apply. Generally, allow 12-15% on top of the purchase price if you are buying with a mortgage add 3-5%. The precise cost will depend on the lending agreement in place between you and your bank.

There are numerous other fees and taxes, so you need to allow around 12-15% on top of the purchase price to cover all these costs.

The buyer is responsible for paying the Public Notary's fees when the partners exchange contracts. The cost can be difficult to calculate in advance as a range of different factors are involved. However, a reliable rule of thumb is that the fees will be in a range of 450-1500€.

The buyer also must pay to register as the new owner in the property register. It is difficult to calculate the exact cost in advance.

New House

• 10% VAT (Impuesto al Valor Anadido).
• 1,5% IAJD (Impuesto Actos juridicosdocumentados)
• Property’s Land Registry Office: Registration of the property varies according to the property price and locality
• Public Notary’s fees: 450-1500€, depends on property price.

Generally speaking it would be fair to say that between both (Registry Office and Notary) the costs are around 1,5% of the property price.

Secondhand Property

• Transfer tax (ImpuestoTransmisionesPatrimoniales), which depends on the Autonomous Community where the property is located.
• Property’s Land Registry Office: Registration of the property varies according to the property price and locality
• Public Notary's fees: 350-650€, depending on property price.
• Generally speaking it would be fair to say that between both (Registry Office and Notary) the costs are around 1,5% of the property price.

Yes. You will have to pay a municipal property tax, which is calculated on the basis of the assessed value. The tax rate varies from one local authority to another and is typically charged at 0.4-1.1%. You will also have to pay a kind of state property tax. This is usually around 0.3-0.5% of the assessed value of the property.

Capital gains are taxed in Spain at 21%

There is no obligation, but it is very advisable to do so in order to fix in writing the conditions of the agreement (price, payment schedule, expenses, etc.) and ensure that they do not vary before the signing of the deed.

It is a home for which tax benefits are awarded both to developer and final purchaser in exchange for several limitations on usage, transmission, selling price, etc. VPO are usually priced below market and aimed to facilitate access to housing for people with a limited financial capacity. Therefore, the legal conditions imposed on the purchase do not make this kind of properties interesting if investment is the main purpose.

It is a contract by which the owner of a property transfers its legal ownership, but retains the usufruct (right of use and enjoyment) in exchange for an initial payment and a monthly income while he/she lives. Upon the death of the usufructuary, the owner acquires the full ownership and the obligation to pay the rent ceases.

When the Administration believes that a self-assessment tax has been calculated taking as reference a value below the official value they will issue a receipt for the difference between the amount paid and the correct tax amount. That receipt is what is known as complementary tax assessment.

Yes. However please note that it is compulsory to justify in the title deed all payment means used to settle the price, and therefore you are bound to produce to the notary a copy of all drafts, transfer orders, cheques, etc, that have been exchanged matching exactly the price reflected in the deeds. On the other hand, it would hardly ever be possible to pay the full price abroad as in most cases you will have to withhold funds to the vendor in order to settle taxes, cancel existing mortgages or pay outstanding debts on the property.

The problem is that the Spanish Inland Revenue may consider that there has been a gift, that is, you have given your children the necessary funds to purchase the property. Therefore you will be taxed separately for each transaction, first, for the donation and then, for the purchase, which will incur enormous expenses. Due to the control policies on investment and the obligation to certify the payment methods and the source of funds, it is often difficult to pretend that the invested funds belong to the children, especially when by their age or personal circumstances they do not establish any income, or the one they prove is insufficient.

The payment of the fees is the responsibility of the seller. In Spain, this percentage is around 3% to 5% of the final purchase price, an amount to which VAT must be added, although each agency is free to apply variations to this percentage. Also, in some areas of Spain, these fees are often shared between buyer and seller, even though there is nothing obliging the buyer to pay them.

Real estate agencies have a wide knowledge of the area in which they operate. This allows them to share the house with multiple clients.

This is perhaps the biggest question people ask themselves when they want to sell their property. This valuation is subject to a comparison with nearby properties. What will get your home a more defined estimate will be aspects such as the orientation (whether it is north- or south-facing), the general state of the building, the refurbishment work that has been done, which floor it is on if it’s an apartment building. These kinds of features could alter the value that you first had in mind by up to 20%.

While properties in large cities such as Madrid and Barcelona may take less than three months to sell, the waiting time in smaller municipalities may be twice as long. The price/time ratio is crucial meaning the higher the price of a home is raised compared to the price of a similar one, the longer it will take to sell.

Using the same time as a barometer, if you think that your property is not going to sell within this timeframe, you may want to avoid granting just one real estate agency the rights to sell it for you and try your luck with others, or doing it yourself in order to complete the transaction faster. On the other hand, allowing full and total control to one agent could inspire them with the confidence to sell your house faster, as well as give them the chance to get to know your property inside out and upsell its best qualities to their clients. At the end of the day, it depends on the personal preferences of each seller, and how involved you want to be in the sale process, or to what extent you want someone else to take the reins.

If a capital gain is made as a result of the sale of a Spanish property, then this will be subject to taxation in Spain at an 18%. How is it calculated? In principle, a capital gain is determined by first calculating the “purchase value” of the property (original purchase price to which are added the directly related taxes and costs), and the “sales value” (sales price from which are deducted the directly related taxes and costs, including legal fees and estate agent’s fees). Then, the amount of the “purchase value” is deducted from the “sales value” to give you the capital gain. This resulting capital gain, which is then subject to taxation, can then be reduced even further by the following:

• Adjusting the amount by applying an inflationary co-efficient which is updated on an annual basis by the General Budget. The coefficient depends on the year of purchase. It is important to note that an inflationary co-efficient can only be applied if the property was purchased at least one year prior to the sales date.
• If the property has been rented, the purchase value could be reduced by the amortization corresponding to the rental period. The amortization is also adjusted by relevant coefficients.
• The final adjusted capital gains tax amount is then taxed at the flat rate of 18%.

It is incredibly important to make sure you don’t confuse a solicitor with a notary. The first one is employed by you alone to protect your interests. While Spanish notaries are legally trained and mandatory for any property transaction in Spain, they are employed by the government and so officially do not act for either the buyer or vendor. The role of a notary is to oversee and rubber-stamp the paperwork in a property transaction, check all necessary taxes are paid and register the property with the Spanish Land Registry.

There is a big difference in tenant rights for short vs long term rentals. Short term rentals (anything less than a year) do not give tenants nearly as many rights as long term rentals. In fact, in the past landlords used to try and get tenants to sign eleven-month contracts to give themselves maximum protection. However, those days are over. Even if you have signed an eleven-month contract, the courts will consider that as a long-term contract if you have been living in the place daily, you have engaged WiFi/telephone services, etc.

The owner of the property is responsible for paying the rent commission. However, many unethical agents in Spain often try to get paid twice by telling renters they (renters) are also responsible for paying the rent commission. The Spanish Law states that an agents rent commission is the responsibility of the property owner. If an agent wants you to pay the rent commission for finding a property, DON’T DO IT! Call us instead, because at Bella Nova Realty renters pay no rental commission to find a property in Spain.

Long-term rental contracts are typically for year. After that, landlords are legally compelled to renew the lease for annual periods for the next three years. The only exception to this is if the landlord wants to live in the property as their primary residence, or if a first degree relative needs to live in it due to separation, divorce or marriage annulment. This must be established in a court of law. In this case, the tenant must be compensated by the landlord. Tenants, however, can choose not to renew their leases each year. This is one of tenants’ greatest powers. Moreover, they can choose to opt out of their contract after the first six months, provided they furnish the landlord with written notice thirty days in advance.

Landlords typically ask for one months rent for unfurnished places and two months for furnished. The deposit is payable in cash or via direct bank deposit and held in an escrow account. If you pay via cash, make sure you get a receipt.

You have the right to privacy. The landlord is not allowed to enter a tenant’s property without prior consent.

If the property is repossessed, the tenant has the right to live in the property for five years, from the day the lease was signed.

If the landlord wishes to sell the property, they must notify the tenant in writing of the intent to sale, the sale price and other key conditions. The tenant is first in line to buy the property at the stated price and can even “jump the queue” if the landlord has lined up other buyers. If the tenant wishes to exercise this right, they must do so, in writing, within thirty days of being notified that the landlord intends to sell.

If you wish to sublet a portion of your apartment, you may do so but you must obtain written permission from your landlord. Legally you can only sublet a portion of your apartment. Moreover, you legally cannot charge more for the sublet than you pay in rent for the entire property. If you want to sublet your entire place, you must have the lease reassigned to the new tenant. Obviously, this requires the landlord’s approval.