Information for buyers

A short guide through the procedure after you have decided to buy.

What you need:

• Tax Number: It is necessary to order a Tax identification number (NIE) for the registration of the purchased property on your name in the property register. This service offering lawyers, tax offices (Gestorias) and Estate agents.

If you decide to make the purchase, the usual procedure is for an option or private purchase contract to be concluded, in which all the components of the purchase are defined, and all agreements and arrangements are set down payment of 10 % of the purchase price is made on concluding this agreement.

Within 4-12 weeks of this (depending on the agreement), the notarial contract is concluded (Escritura de Compraventa - deed of sale and purchase), which is a precondition for the purchase registration to be entered and for the new owner to feature accordingly in the land register.

With regard to buildings which are not yet completed, or are still in planning or construction stage, the notarial contract is in most cases not concluded until after completion and handover. The contract will in any event not be signed until payment has been effected in full. Because under Spanish law the private sale treaty has the effect of transfer of ownership, the entry in the land register does not have constitutive effect, but is only of a declaratory nature, and therefore serves to protect the good faith of a third-party purchaser.

When signing the notarial deed, the Notary appends an extract from the land register, which must not be more than ten days old (Nota Simple), and which shows what encumbrances may have been imposed on the property or whether it is free of such encumbrances.

Payments of the purchase price are always made out directly to the vendor. Under normal circumstances there is no additional security for the individual purchase price payments, although Spanish law does require security by way of a surety or bank guarantee.

One-off costs associated with the purchase:

• Value Added Tax (IVA) or real estate transfer tax (ITP)
  21% on the sale of building plots and business premises, and 8% on the sale of new apartments.

• On any other real estate transactions are in the Balearic Islands property transfer tax to pay the following scale:

If the purchase price	up to 400.000,- EUR	8 %
	from 400.001,- EUR up to 600.000,-  EUR	9 %
	from 600.001,- EUR	10%
	Parking spaces
	up to 30.000 EUR	8 %
	from 30.001 EUR	9 %

• Legal TransactionsTax
  0,5 % (Impuesto sobre Actos Juridicos Documentados).
  This tax is incurred only in cases in which Value Added Tax is charged.


• Notary's fees
  registration fee, administration charges (Gestoria): Approx. 2 %. The basis for these taxes and charges is the value of the property as assessed in the Notarial deed.


• Connection costs for electricity
  150,- till 250,- Euros


• Connection costs for water
  Approx. 150,- Euros

Annual overheads:

• Property Tax
  (I.B.I. - ImpuestosobreBienesInmuebles) This tax is paid to the municipal authority concerned. The basis for the assessment of the tax is the land register value of the property plus building.


• Income Tax
  (I.R.P.F. - Impuestosobre la Renta de Personas Fysicas)
  In Spain, the straightforward enjoyment of real estate property is regarded as income, and therefore subject to tax.


• Assets Tax
  (Impuestosobre el Patrimonio)
  The basis for assessment is, as a rule, the land register value, although the Escritura value, or an estimated value from the tax authorities may also be applied.


• Owners' Association
  (Communidad de propietarios)
  IIn the case of ownership of horizontal property, or of a building which is located in an urban development project which has not yet been adopted by the municipality concerned as an urban area, the administration of the common facilities lies in the hands of owners' associations, which are required by law. These associations produce an annual budget schedule required for the administration of the property and is relating to the costs which must be paid in proportion by the owners on the basis of the quota assigned to them in the allocation document or articles of establishment of the association. The amount of the costs will be largely influenced by the scale and quality of the services and installations for common usage.

• Household insurance
  (Seguro de Hogar)
  Communal property is usually insured by the owners' association, which means that only exclusive property items need to be insured. Insurance policies from Spanish insurance companies are very similar to those of British insurance providers.


• Energy consumption costs
  (Consumo de energia)
  In principle, electricity consumption will be assessed by means of an individual electricity meter, and billed on a two-monthly basis. The cost of connection, for which there is a minimum charge, is not included in the consumption charge. Electricity bills are usually remitted by bank transfer from the owner's account at a Spanish bank. In the case of apartments, water consumption is often paid by the owners' association. If individual meters are installed, the payment procedure is the same as for electricity. Water bills also include the costs for waste water disposal. Mains gas supply is only provided in a few urban areas. In most cases, propane gas is installed in communal gas tanks. In these cases, charging is effected as appropriate via the owners' association or individually if meters are installed. In the case of older apartments or detached houses there are often gas installations in the form of butane cylinders, which the owner can buy and renew from the gas supply company as required.