1.1. Capital flows. Money coming from abroad into Spain

According to Spanish legislation, you can only enter and leave Spanish territory with capital not exceeding 10,000.00 euros per person per trip. Higher amounts must be declared at customs control. You should also find out what the tax and customs limits are in your country of origin in order to avoid any offences or administrative infractions.

1.2. Private documents of sale.

The buying and selling procederes consist of several phases. Some are between private persons and take place in a notary’s office. Generally, the seller agrees with the buyer to reserve the property for a certain period of time, subject to a deposit of around 10% of the price of the property. This operation is formalised in private documents, which can have many denominations and have certain differences in their legal nature: deposit contract, option to purchase, reservation document, promise of sale, etc. In these documents we could find the basic conditions for the future purchase, such as the signing period, the purchase price, the distribution of expenses and taxes between buyer and seller and the consequences of not formalising the future sale (normally the loss of the deposit -if the buyer fails to comply with it- and the return of double the amount paid -if the seller fails to comply with it-).

1.3. Signature of the deed of sale

It is signed at a notary’s office and contains the purchase agreement. Generally, on the date of signing the deed, the full price is paid, the key is handed over and, with it, the property is transferred to the owner. According to the Anti-Money Laundering Rules, the payment must be made by bank intervention, usually by cheque drawn on a non-resident current account. Therefore, the buyer must open a bank account in Spain. In addition, before the date of signature, he must have obtained the NIE (foreigner’s identification number).

1.4. Mortgage

If you need a mortgage, a representative of the bank must appear at the notary’s office to simultaneously sign another deed: the mortgage loan contract. Before signing the mortgage contract, the bank and the buyer will have had to agree on the terms and conditions: financing, repayments, etc.

1.5 Paying taxes.

After signing the deed, you should pay the taxes. For this purpose, the buyer must be registered in the Spain’s Agency for Tax Administration (Agencia Tributaria) as a taxpayer, otherwise you will not be able to pay taxes.

1.6. Registration in the Land Registry.

Once the transfer taxes have been paid, the property must be registered in the Land Registry in order to obtain maximum legal protection. Transfer taxes must be paid for the inscription to take effect.

2.1) Taxes (in force on the date of 2011/06/24)

2.1.1) Second hand property

Usually in Andalusia (Costa del Sol) the transfer taxes are distributed as follows:

To be paid by the buyer:

– Transfer Tax (ITP): 7-8% of the purchase price.

Payable by the seller:

– Tax on the Increase in Value of Urban Land (ITP): 7-8% of the sale price.

– Plusvalía: Variable amount to be determined according to the cadastral value of the land and other factors. This amount can be _ small or high, and could be as much as three thousand euros. It is advisable to obtain information from the Town Hall before signing any contract or document.

2.1.2) New properties / homes

To be paid by the buyer:

– Value Added Tax (VAT): 10% in the case of houses and garages linked to residential properties; 21% in the case of independent garages and locals.

– Tax on Documented Legal Acts (I.A.J.D.): 1.5% of the sale price.

Payable by the seller:

– Tax on the Increase in Value of Urban Land.

– Plusvalía: Variable amount to be determined according to the cadastral value of the land and other factors. This amount can be small or high, and could be as much as three thousand euros. It is advisable to obtain information from the Town Hall before signing any contract or document.

2.1.3) In case of mortgage financing

In Andalusia, to be paid by the buyer:

– Stamp Duty Tax (Impuesto sobre Actos Juridicos Documentados – I.A.J.D.): 1,5% on the capital loaned, interest and court costs.

2.2) Notary fees

In Andalusia the notary  fees are paid by the buyer

2.3) Land Registry fees

Are paid by the buyer.

2.4) Lawyer fees

Buyer and seller will pay the bill of their respective attorneys, or will split the fees between them if only one lawyer is hired by mutual agreement.