What can be said about this hot, passionate country, held with great affection by the millions of tourists who have visited over the years? Spain is a magical place where ancient traditions are held dear. In just a few short decades many of the previously poorer rural and coastal areas have benefited from extensive international investment resulting in a first-class infrastructure and continuous growth in popularity.

Reasons why property in Spain is a good investment

•  Excellent climate and stunning beaches bordering the Mediterranean .

•  Dream lifestyle with warm climate year round and outdoor pursuits, such as over 26 coastal golf courses.

•  Reliable, established property market with proven track record.

•  Stable both politically and economically.

•  A well-trodden path with plenty of expert, readily available advice available.

•  Property prices rising in a steady manner, offering good capital growth potential (prices rose by 48% during past 3 years).

•  Very good communications - many low cost air services to many Spanish locations from airports throughout the World.

•  Many world-class golf courses.

•  Competitive property prices and a good deal lower than back home.

•  Huge demand for property in Spain , in turn creating large rental demand.

•  EU member country.

•  Excellent tried and tested infrastructure.

•  Scores high in culture and relaxed atmosphere.

•  Low interest rates.

•  80% LTV mortgages readily available.

•  Lost confidence in investing on the stock market, savings plans and PEPs.

•  Young under age 30 investors can afford to buy in Spain , using their investment as a first step onto a property ladder they can ill afford back home.

According to the law, the notary is obliged to duly inform the parties, be aware of the ownership and encumbrances on the property, and consult the Property Registry books before executing the deed. Since the early 2000, the consultations can be done on-line.

Notary fees are on a cumulative scale, as follows:

When the property value does not exceed EUR 6,010.12: EUR 90.151816
For the excess amount between EUR 6,010.13 and EUR 30,050.61: 4.5 per 1,000
For the excess amount between EUR 30,050.62 and EUR 60,101.21: 1,50 per 1,000
For the excess amount between EUR 60,101.22 and EUR 150,253.03: 1 per 1,000
For the excess amount between EUR 150,253.04 and EUR 601,012.10: 0.5 per 1,000
For the excess amount between EUR 601,012.11 and EUR 6,010,121.04: 0.3 per 1,000
For the excess amount above EUR 6,010,121.04 the fees are determined by agreement between the notary and client.

According to Royal Decree 45/2007, the notary must issue an authorized copy of the deed on the same or next day and send it to the Registry electronically, unless otherwise requested by the interested party.

The documentation shall include:
Power of attorney granted by the seller and ID of the person in favor of whom the power was granted.
Power of attorney granted by the buyer and ID of the person in favor of whom the power was granted.
The original property title of the Seller (public deed), which shall indicate the following information:
Company tax identification and registration numbers
Means of payment used in the transaction
Cadastral reference

As a general rule, if the seller is an individual (and not an entrepreneur), the transfer would be subject to a property transfer tax (ITP or “Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados”), at the rate of 6% or 7% depending on the autonomous region of Spain. In Madrid, it is 7%. First transfers of property are subject to 16% VAT (7% for residential real estate) when the transfer is made between entrepreneurs. The Stamp Duty (0.5-1.0% of the property value, depending on the autonomous region) is incompatible with the Transfer Tax. Therefore, the transfer of property will only be subject to Stamp Duty when it is subject to VAT. Second and subsequent property transfers are not subject to VAT, but to the Transfer Tax. However, the VAT exemption on second and subsequent transfers can be refused by the seller in some circumstances.

In Madrid, as the buyer is a company and the property has been transferred at least once in the past, it can choose to pay the ITP (7% of the property value), or if he meets some requirements, reject the VAT exemption and pay the VAT of 16% of the property value plus a stamp duty of about 0.5-1.0% of the property value. The VAT paid is a credit that can be deducted from posterior transactions, such as those related to the normal business of the company. After some time, the VAT paid at the moment of the transfer will be recovered, so that this tax will only have a finance cost.

The ITP is paid at the relevant tax office. In many other cities, without a specific tax office, the payment can be done at the Registry at the moment of registration, so that those steps could merge into one. In some autonomias, like Madrid, Catalunya, and Andalucia, the tax may be paid online.

The public deed is presented for registration at the Land and Property Registry.
The presentation entry’s date gives priority.
The public deed carries the presentation entry’s date and it is registered within the legal time limit of 15 business days from that date. If the procedure takes more than 15 business days, the fees will be reduced by 30%, unless there is an objective reason for the delay. However, with the introduction of technology and online procedures due to Ley 24/2005 de 18 noviembre, and the section II on electronic registration, the time to register is in the process of being reduced.
Registration of the transfer is necessary in order for it to have effect vis à vis third parties but the transfer of the property does not need to be registered in order to be valid. Transfer takes place and is valid as of the execution of the sale in a public deed (granted before a Notary public in Step 1), together with the delivery of the property, (unless otherwise specified in the deed, the granting of it implies delivery).

Registration fees can never be more than €1,900. There are 25% discounts for housing purchases. Low-income housing (80 m2 per home) has fixed fees of €36 per entry and €100 per notarial deed.The documentation shall include:
Public deed
Proof of VAT or ITP payment (attached to the sale purchase agreement)
Proof of stamp duty payment