Understanding the property legal jargon in Spain
The below section gives an explanation of some of the most common legal terms used in Spain and also provides financial advice to consider when you have found a Spanish property you would like to buy.
Legal jargon | Buying a property in Spain
If you began a search for a property to buy in Spain on the web or through print publications you may have come across the following Spanish phrases;
Abogado, Copia Simple, Escritura, Gestor, Hacienda, Impuesto de Transmisiones Patrimoniales (ITP), Notaria, Numero de Identificaciόn Fiscal (NIE), Plus Valia, Urbanizaciόn, Impuesto Sobre Bienes Inmuebles. For an explanation of these terms please read on:
Abogado is the equivalent of a UK solicitor who acts on behalf of the purchaser of the Spanish property. His or her costs will be 1 - 1 of the purchase price plus IVA, which is Spain’s VAT. You will also be liable for capital gains tax when you sell your property, and then a transfer tax or Impuesto de Transmisiones Patrimoniales (ITP) of 7% when you resell. All taxation involved with buying a property in Spain is dealt with by Hacienda (Inland Revenue). Conveyancing is undertaken by a Gestor who deals with your Abogado in the presence of the Notaria. This is the local government official who presides over the deal to ensure that correct procedures in the house sale are followed. The Notaria must witness the signing of the Escritura (the Title Deeds), he will then apply for the land registry to be formally altered. At the signing of the Escritura the money must either be handed over or proof supplied confirming it has been transferred. Make sure you also obtain a Copia Simple, which is a copy of the title deeds. As a foreign national you will have to apply for a Numero de Identificaciόn Fiscal (NIE), this identifies you (by number) as a foreigner who is buying a property in Spain. Your solicitor should do this for you but it’s as well to know so you can check that they are working efficiently on your behalf. Among the local taxes you will have to be aware of are: Plus Valia, a tax paid by the vendor, which is a percentage of the profit made since the previous purchase. Stamp Duty, which was 1% at the last count but subject to variation and finally ITP, which we have already covered. By now you will be beginning to understand why it will be useful to have the relevant experts on hand to guide you through this minefield of the legal aspects of buying a property in Spain. It will cost you money at the time but could save you a fortune in the long term.
Financial advice when moving to Spain
When you have found a property to buy in Spain you should allow at least 10% above the asking price of the property to cover the Abagado’s fees, translation (unless you are fluent in legal Spanish), Notaria and land registry fees, stamp duty (which is 1%) and finally IVA. All countries have their own little peculiarities and advice when it comes to day-to-day expenses of moving to Spain and buying a property. Imagine someone coming to live in the UK and having to get their head around council tax, water rates, house-hold insurance, life insurance and mortgages, to say nothing of all the different house-hold bills we all face month in, month out. So it is in idyllic Spain, I am afraid. If you buy on an Urbanizaciόn you will be faced with community fees covering shared costs of roads, lighting, swimming pools, gardens and water supplies. Privately owned property is also liable for the Impuesto Sobre Bienes Inmuebles, which is similar to our council tax and based on the value of the individual property. If all of this legal jargon has been overwhelming please visit the link below which provides the basic advice required when moving to Spain.
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