The process to buy a property in Spain is quite straight forward and, although it may vary, even a lot, for special cases, the idea of these articles is to establish the general case. The starting point would be when the price and additional conditions (time frames, furniture, etc.) for a purchase are agreed between the parties. The process includes the reservation (or taking the property out of the market while the due diligence is performed), a Private Purchase Contract, the signature of a Public Purchase Deed in front of a Notary and the Land Registration of the property on the buyers name. Although the steps are simple, I am going to dedicate an article to each one of those to try to cover as many general aspects as possible.

1.– RESERVATION OF THE PROPERTY

Usually the first step is to take the property off the market with a deposit while the due diligence on it is performed. That deposit is in most of the cases held by the real estate agency or the lawyer representing the seller on a escrow account. In general, the document establishes that if the legal and physical situation of the property is correct for the sale, the buyers should proceed to the following step or they will lose that deposit. If something is not fully legal or a physical defect that makes the property unsalable appears during the due diligence process, the party holding the deposit should released back to the buyers.

a) What documentation is checked during the due diligence process:

- Nota Simple: it states who is the owner, the description of the property and the liens on the property.

- The property can be in the name of more than one individual or in the name of a company so in the first case, all owners should agree with the sale and sign the proper documentation or for the second case, a proper official of the company should be the one signing all documentation for the sale.

- The description of the property at the Nota Simple (including and not limited to address, sizes and neighbors) has to match with what the buyer is has been told it is buying.

- The properties are sold, in general, free of liens. If any lien appears on the Nota Simple, the seller is liable to remove it from the record of the property at the Land Registry prior to the closing (that may include mortgages, embargos, urbanistic liens, etc.)

- Planning permission: that should be checked, specially in Marbella where the planning situation is not fully clear, to see if the property complies with the planning regulations of the area/urbanization/complex. This is not an easy step and should be dealed by a an expert on this issues like a lawyer, an architect or an experience real estate agent.

- Payment of the taxes (mainly council tax—IBI—and rubbish collection) and community fees: those expenses are charged against the property and should be checked that are up to date on payments.

b) A physical check by an expert technician or an experienced real estate agent to establish if the property has any defects that can or not be corrected or, or not, compensated. In case of major defects, like serious structural damage, the deal will be broken.

* Since each particular case is different, it is fully recommended that you check your own details with your lawyer.

Selling:

Capital Gain Tax — is the tax you have to pay for the difference between what you sold the property for and what you paid for it discounting the expenses you had on the transactions and investments on the property (if you are a non resident in Spain, the buyer has to deposit 3% of the purchase price at the Tax Office to cover for this tax or other non paid taxes in Spain. A tax declaration of the sale has to be presented by the seller to liquidate that tax where the 3% retained will be accounted for: if the tax is higher than the 3% the seller will have to pay the extra but if the tax is lower the seller will get a refund). There are also special cases when you are over 65 years.

Plusvalia Tax—Payable to the Council to account for the increase of value of the land where the property is. The amount is calculated by multiplying the catastral value of the land, the number of years of ownership of the property and two more coefficients that depend on the Council.
Additionally and independently of the taxes, you can download a cheat sheet here to calculate your net after discounting all the cost associated to the sale: Net Sheet Page

Buying:

Transfer tax or VAT (plus AJD) — I have written some articles about this because there are some different cases depending on the type of property: residences, land, garages, storages or commercials. In general, if it is a new property it will pay VAT (plus AJD—an additional 1,5%) ranging from 10 to 21% of the purchase price and if it is a second hand property will pay transfer tax ranging from 8 to 10% of the purchase price.

Notary and Land Registry expenses (although they are not really taxes are payable on each transaction).

Owning:

I.B.I. tax — it is payable to the Town Hall to pay for the maintenance expenses of the Council. It is calculated from the catastral value of the property.

Rubbish collection tax—it depends on each municipality and in some cases is also calculated from the catastral value of the property.

Wealth tax—this tax may be complex so if you are a resident in Spain is advisable to have a tax advisor.

Rental income of non residents—whether you are renting your property or not, the Tax office will require non residents to pay this tax. The base for the tax is also calculated from the catastral value.

Since each particular case is different, it is fully recommended that you check your own details with your lawyer or tax advisor.