Information for the vendor
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 vendor. If the owner sells the real estate to another buyer, he would have to pay the double option fee to the option taker.
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 registration of the new owner can occur in the land registry.
The vendor pays Increment Value Tax (Plusvalía) and he capital gains tax in the frame of his yearly income tax declaration.
Increment Value Tax (Plusvalía)
The Plusvalía taxes the increase in value of land (not the buildings) since the last real estate transaction. Calculation base for the tax is the official cadastre value, which can be taken from the annual urban rate receipt.
Capital Gains Tax / Income tax (Renta)
The profit from the sale of a property is subject to income tax. Since 2012, the tax rate for non-residents is 21% (residents tax depends from their income of the year of the sales, starting also with 21%). If the vendor is not a resident, the buyer is subject retain 3% of the purchase price and the notary deposit this amount as an advance payment on the (profit) income tax on behalf of the vendor for the Spanish tax authorities.