NIE

In order to own a property in Spain you must have a NIE: Fiscal Identification Number, which works as both an identification number and a social security number.
Without a NIE, you won´t be able to open a bank account, arrange credit terms or use temporary employment agencies. Your NIE must be used when dealing with the Spanish tax authorities, including when paying property taxes.

TAX ISSUES

Houses in Spain are subject to 7% IVA (VAT) on the purchase price for New Properties and 7% ITP (Transfer Tax) on the purchase price for Resale Propeties.
Comercial Properties and Plots of Land are subject to 16% IVA (VAT).

All properties are subject to 1% Stamp Duty.

CLOSING THE DEAL

So, you´ve found the house you want to buy and the price is right; so now you have to sign a CONTRATO DE ARRAS or Binding Contract.

This Reservation Agreement takes the property off the market and fixes the price.

After you have paid this reservation deposit we will start a search on the property and start organizing the conveyancing with the Notary. Drawing up deeds and witnessing signatures can only be performed by a public Notary (Notario).

Completion, or the signing of the Final Deeds (which usually takes place one to three months after signing the Binding Contract), involves signing the Deed of Sale, transferring legal ownership of the property and the payment of the pending balance of the purchase price, plus other fees, taxes and duties.

NOTARY SERVICE AND FEES

The Spanish Notary although a lawyer, does not give any legal advice to the seller or the buyer.

The job of the Notario is to witness the signing of the title deeds and to ensure that state taxes are paid on completion of a sale.

It´s normal for all parties to be present and witnessed by the notario, although either party can give someone a Power of Attorney (Poder Notarial) to represent them.
Once the deeds have been signed and the, the purchase price of the property is then handed over to the vendor. Proof of this payment is then noted in the escritura, which is then registered in the local property register.

If the seller is a non-resident, 5% is withheld from the purchase price and paid to the Spanish Tax Agency (Agencia Tributaria) as Capital Gains Tax.
Before preparing the deeds, the Notary ensures that the buyer has received the property as stated on the contract and that the vendor has got the correct price. The notario also advises on taxes which are due on the property. Notaries collect their fees from both the vendor and the buyer.

After the signing of the deeds and the payment of the purchase price and fees, the Notary will pass the purchaser a copy -Copia Simple- of the escritura and the keys to the property.

OTHER TAXES

Property Tax or Rates (Impuesto sobre Bienes Inmuebles - IBI) are payable by both residents or non-resident property owners. These taxes go towards local council administration, education, sanitary services and so on. It is based on the fiscal or rateable value (Valor catastral) of a property.

Spain also levies a Wealth Tax (PATRIMONIO) on both residents and non-residents. This is calculated by totalling your assets and deducting your liabilities.

Property Income Tax (IRPF) is payable at the standard rate for residents and at a flat rate of 25% for non-residents. (Under Spanish Law you become a fiscal resident if you spend more than 183 days in Spain in a calendar year.)