Information for the purchaser
The purchase of a property is legal according to the Spanish law also without notarial form. Indeed, the owner's change should be put down in the land registry (registro de la propiedad) and therefore notarial form, the Title Deed, (escritura pública de compraventa) is necessary. All citizens of the EU are immediately treated here juridically.
After the decision of the purchaser for his real estate some questions should be cleared, as for example
- Check of the architect, builing expert, tax adviser, lawyer
- Documents which the owner has to provide
- Financial check
This will take some weeks of time.
During this time period in practice there are various reasons why different contracts can be used before the notary date: the reservation contract, the option contract and the private purchase contract.
With the reservation contract the vendor is obliged to hold the property free for a few days and the purchaser has to pay a small reservation fee.
With the option contract the vendor and purchaser have a deeper commitment (up to two months) to the purchase price. Here are determined usually an option fee of 10% of the purchase price. If the purchaser withdraws then from the purchase, this option fee remains with at the seller. If the owner sells the real estate to another buyer, he would have to pay the double option fee to the option granter.
A private purchase contract can be closed directly but it needs than also the notarial form to get the entry in the land registry.
With the date of the notarial form the notary takes a current land registry extract and blocks the real estate for 10 days for other entries.
In the notarial form must be the personal data of the parties, the exact description of the real estate including existing charges, the purchase price and the payment conditions. The notary convinces himself of the identity of the parties and checks whether the information of the parties coincides with the data of the property registry. He checks the last receipt of the urban rate (“Impuesto Sobre Bienes Inmuebles” -IBI) and - in the case of the property being part of a community - certify the existence of the certificate of the community that the seller has paid the community costs. At this time all payments are executed between the seller and buyer including the bank part.
The notary has to inform the Land Registry about this purchase no later than 24 hours after the signature of the notary contract.
After the purchase of land tax was paid with the tax office, the regist ration of the new owner can occur in the land registry.
Purchase costs and following costs
By the purchase of a real estate the purchaser has to pay either the value added tax (IVA) or the land purchase tax (ITP).
Value added tax (IVA)
The value added tax of 21% is paid only by the sales of a plot of land or commercial property by an enterprise. A purchase of a builing developer (new building) results only 10% I.V.A. . All later transference is defeated not by the value added tax, but to the ITP.
Land purchase tax (ITP)
With all sales of private owner (or they are not defeated by the value added tax) the Land purchase tax on the Balearic Islands has to be paid.
From January 1st, 2013 this tax is increased as following:
- until 400.000 Euro sales price it is 8 %
- with a sales price higher than 400.001 Euro, the higher amount will be calculated progressive:
- between 400.001 to 600.000 Euro will be calculated with 9 %
- more than 600.001 Euro will be calculated with 10 %
The urban rate (Impuesto sobre Bienes Inmuebles, IBI) is based on the land registry value of the property and is to be paid annually. The amount varies from municipality to municipality and amounts generally between 0.3% and 0.4% of the land value..
In the case that the owner should rent his property, he is obliged to pay income tax.
But even in the case of self-use, the owner is subject to to income tax, if he uses the property not as his first residence. 2% or 1.1% of the cadastral value has to be paid.
Beyond it, the buyer has to pay approx. another 1 - 1.5% for notary and registration costs.