Frequently Asked Questions about buying, owning and selling a property in Marbella

• Table of contents
• Legal formalities and transaction costs
• Taxes
• Miscellaneous

How much does a buyer pay in Notary fees and Property Registry inscription fees in Spain?

Notary fees can be up to approximately €1,750 although the cost increases according to the number of pages or complexity of the title deed (e.g. transcription of statutes, payment in stages, property partially finished, etc.) As an example, an apartment costing €300,000 will cost around €546 in notary fees, whilst a property costing €600,000 will cost around €678 in notary fees. Any higher than this amount, the fees go up marginally. The property registry inscription fees also depend on the complexity of the transaction. For example, fees for an apartment costing €600,000 to be registered in the name of one person and purchased without a mortgage loan, will cost around €300. For an apartment with the same sales price to be registered in the name of 2 individuals and purchased with a mortgage loan, will cost around €800.

What are the other purchase costs for a property in the Marbella area?

Resale properties.

TRANSFER TAX (I.T.P.) Since April 28 2021, the Regional Government of Ansalusia reduced permanently the Transfer Tax to a flat rate of 7%  payable by the buyer for the purchase of any real estate (villas, apartments, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties (waiver to VAT exemption). 

Reduced transfer tax for real estate companies or professionals that buy resale property and sell within 5 years, at 2%.

VAT at 10% and STAMP DUTY (A.J.D: Actos Jurídicos Documentados, on notarising of documents, only payable on land and new property sales) has also been reduced to 1.2% – For any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader for brand-new properties.
 

Brand new properties.

VAT at 21% and STAMP DUTY (A.J.D: Actos Jurídicos Documentados, on notarisation of documents, only payable on land and new property sales) at 1.2% – for PARCELS OF LAND, COMMERCIAL PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories.

What are the local legal formalities and costs involved in purchasing property in the Marbella area?

Panorama always recommends that purchasers of property in the Marbella area retain a qualified solicitor to represent them and qualified financial advisors to deal with tax issues.

Purchasing property in Spain is a relatively straightforward procedure. The “last word” in property ownership is the property registry, which will show immediately if the seller owns the property free of liens and encumbrances. Most frequently, unless an immediate payment of the full purchase price is made, a private contract of purchase is drawn up wherein the details of the purchase are reflected – the legal description of the property, purchase price, form of payment, date of completion, date of possession, etc. Upon signing the private contract, a payment on account of the purchase price is always made which can vary substantially according to the terms of the sale and the date of completion. A quite normal deposit for completion within 30 to 60 days would be 10% of the agreed purchase price.

New properties which are unfinished obviously are paid for over the construction period, and all payments on account before finishing must be guaranteed, according to the BUILDING ORDENANCE LAW (LOE), LAW 38/1999, by a bank or insurance company: if the property is not finished by a certain date, a purchaser has the right to reclaim the monies paid, plus legal interests. Additionally, this law obliges the property developer to arrange a TEN YEAR insurance policy with respect to any basic building defects with the purchasers as beneficiaries.

When the entire purchase price is paid for the property, the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances. This deed is issued before a Spanish Notary, is passed from the notary to the tax office to be assessed for Transfer Tax if the property is a resale or second hand property, or assessed for Stamp Duty if the property is sold directly by the developer. Is then presented to the Property Registry for inscription. A provisional inscription in the registry is made immediately upon issuance of the deeds.

What are the main taxes property owners in the Marbella area will be faced with?

• Municipal Added Value Tax (PlusValía Municipal).
• Capital Gains Tax (Impuesto sobre Ganancias Patrimoniales Inmobiliarias) and Retentions.
• Income Tax (Impuesto sobre la Renta).
• Annual Property Tax (IBI).
• Wealth tax.
• Rubbish Tax (Basura).

What is the Municipal Added Value Tax (Plusvalía Municipal) and who pays it?

This is an “added value” tax based upon the increase of the Town Hall index value of the land only, from the prior (vendor’s) purchase to the present sale. It is usually not a significant amount with respect to apartments or townhouses – less than €1000 for the most part for an apartment or townhouse which last changed hands five or six years ago – but can be more in the case of villas with a large tract of land.

This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated. As there are several variable factors used in calculating this tax, especially the length of time of ownership of the property, the amount payable can vary substantially and should be verified before proceeding with the purchase.

The total official costs involved in purchasing a constructed residential property should be around 9-10% for resale properties or around 12% for new properties if VAT is paid on the purchase price, plus lawyer’s fees.

What do sellers in the Marbella area pay in Capital Gains Tax and what is a Non-Resident Retention?

Capital Gains tax on the sale of properties for non-residents is set at 19% payable on profits earned on the difference of the property value between the year of purchase (purchase price plus costs) and the year of sale (sales price minus sales expenses), based on the approved annual percentage increase on the base value approved by law. 

All non-resident sellers, regardless of when they acquired the property, are subject to 3% retention of the sales price, paid to the Tax Office by the purchaser on account of the seller and submitting a 211 form, taking this amount for the seller as payment on account of tax due on the income derived from this transmission. Therefore, the acquirer will deliver to the non-resident seller a copy of Form 211 with which the entry of the retention is made, so that the latter can deduct this amount from the tax liability resulting from the income returns. If the amount withheld exceeds the tax liability, you may obtain a refund of the excess.

Do I need to declare Income Tax in Spain if I own a home in the Marbella area?

Residents (IRPF).

RESIDENTS in Spain must file Income Tax and declare the income they receive worldwide, regardless of their source.

For tax purposes, one could be considered a FISCAL RESIDENT in Spain if one resides in Spain over 183 days per calendar year, and has the main economic and vital (family) interests in Spain, regardless of whether one is officially resident.

Non-residents (IRNR).

NON-RESIDENTS must also pay Income Tax (IRNR) on income received through the ownership of property in Spain. There are two forms of taxation applicable depending on the source:

• Income gained on property rentals: 24% on returns, with the exception of those taxpayers with fiscal residence in any countries within the European Union, Iceland and Norway, in which case the rate applicable is 19% (and are also allowed to deduct expenses related to the rental).
• Derived benefit on own use of property: 24% of 1,1% of the rateable value of the property (if the rateable value has been revised or modified and has been entered into force during the taxable period or in the previous ten taxable periods), otherwise, the applicable rates will be: 24% of 2% of the rateable value of the property) with the exception of those taxpayers with fiscal residence in any countries within the European Union, Iceland and Norway, in which case the rate applicable is 19%.

Note: We refer here to property income tax. Different taxation applies depending on the source of non-resident income.

What is the Annual Property Tax (I.B.I.) for Marbella-area property owners?

Property taxes (known as the I.B.I. or Impuesto sobre Bienes Inmuebles) are payable annually, and are calculated from the cadastral or rateable value of the land assigned by the Spanish Tax Office. The cadastral value takes into account the value of the land plus the value of the building, according to type, location, and usage. Upon this value, each municipal Town Hall decides on the percentage to be charged with respect to I.B.I. In the case of Marbella, the formula applied is 0,76% (for 2021) of the rateable value of the property, which is almost always far less than its true market value.

Examples: In 2021, a 2-bedroom apartment in the beachside complex of Marina Puente Romano which is in the heart of the “Golden Mile” paid rates in the range of €1,700 to €2,000 approximately. A free standing, large beachside villa in the heart of the “Golden Mile” paid annual rates of approximately €3,000.

Is there a "wealth tax" for people owning property in the Marbella area?

There are Wealth and Solidarity Taxes to consider, and these are complex and depend on the taxpayer’s tax obligations as well as the assets they have in Spain and in some cases worldwide. Some types of assets may be exempt for the calculation of the tax liability, although never from the obligation to declare them. Because of the current complexity involved with these taxes, Panorama always recommends speaking to your lawyer about your particular circumstances and what your tax obligations might be.

Rubbish collection tax.

The rubbish collection rate is applied by the Town Hall according to the property and payable every 6 months. For an apartment in Marbella rubbish collection is approximately €180 and a villa approximately €300 per year.

What if I want to buy a plot and build my own home?

Providing that a building plot is situated within an urbanization, or an area zoned within the Municipal Plan for such use, outline planning permission will already have been granted for the construction of a detached home. However, building regulations, which vary considerably, dictate the permissible size of the villa according to the size of the plot. Care should therefore be taken before proceeding with the land purchase that one will be allowed to construct one’s chosen home on it. Panorama will be pleased to provide a list of bilingual architects, and to arrange viewings of some of their previous work.

Are there medical and health insurance facilities?

Marbella has the newest, most modern and well-equipped Regional Hospital in Spain (Hospital Costa del Sol), in addition to a good, well-equipped Clinic with a substantial selection of general practitioners and specialists.

Private medical insurance is available through various groups such as SANITAS. This could cost from €30 to €400 per person per month, depending on their age and the state of their health. Spain’s social security system now allows EU-residents access to the health network via a special form (E-101). For residents who are self-employed, own a company, or are employees, your social security contributions automatically entitle access to the Spanish health network.

Notes:

Panorama considers the above information to be current and accurate at the time of writing, but it is nevertheless by its very nature abbreviated and intended to serve only as a guide and subject to errors or omissions.

Panorama always recommends purchasers or sellers of property to consult qualified lawyers and tax advisors.

Is financing available?

Spanish banks do provide financing to non-residents, but their criteria is much more stringent than before. A qualified foreign applicant can reasonably expect a mortgage loan to be approved for up to 60% of the official valuation price of the property. However, the purchaser must prove that between 30% and 35% of his net disposable income after taxes and after other mortgage commitments, is free to service the new loan.

Current conditions dictate the need to have at least two or three banks to apply to. Your agent and lawyer can be very useful in this procedure, which can take anywhere from three weeks to almost two months from the time all the documentation is submitted.

A recommended route is to pre-qualify oneself with a bank before negotiating a purchase, which would be subject then only to the valuation which can normally be accomplished within 10 days. This allows a purchaser to negotiate for the property he chooses, without having to ask the seller for a purchase contract which would be conditional to the approval of the mortgage, as the basic loan would already almost have been approved. Sellers generally are reluctant to reserve a property under this type of condition.

A sample documentation required by the Spanish banks does not vary substantially from that required by banks in other countries, and includes:

• Two years’ tax returns.
• If you are receiving a salary, the last 6 months payslips, as well as proof of any other regular income. If you are a company owner, the proof of your various means of income.
• A list of your current monthly mortgage payments (if you have any).
• A statement of one’s total assets and liabilities, confirmed by a professional accountant.
• Copies of one year’s bank account statements.
• Copies of your passport.
• In all cases, there will be a mortgage application form to fill in, and sometimes additional documentation is required, depending on the case.

The above can be supplied in English, for most applications, but if these documents are in another language, they must be translated officially into Spanish.

Panorama's Client Services Department, among many other useful services, helps with organising introductions to banks for mortgages on a regular basis for our buyer clients.

Are technical surveys available?

A building survey, as it is understood in the U.K., is not necessary in Spain for mortgage purposes. It is nonetheless advisable when purchasing an older property. Common things to check for are the condition of the plumbing and electrical installations, waterproofing, roofing, and so on. These checks, as well as a full structural survey, can be carried out by a Spanish technical architect (aparejador) or indeed by a qualified British Chartered Surveyor. Any fees involved would be to the account of the prospective purchaser.

Who pays estate agency fees in the sale of a property?

The seller always pays agency fees, unless you come up with a different agreement with your agency. Although the seller remunerates his agency, the agent has an ethical obligation to see that the purchaser gets fair value for money, and at the end of the day, a good agent’s job is to bring the buyer and seller together in harmony. This highlights the importance of working with an established estate agency with a strong reputation. The agency also has an obligation to see that the title deed to the property is passed free of all liens and encumbrances.

What is an urbanization?

An urbanization is a planned community which has met the standards of the various governmental agencies with respect of the use of the land (residential, commercial, sports area, green zones), and to providing a specific set of services and a minimum level of quality in the construction of roads, sidewalks, drainage, sewage systems, electricity and water installations, and so on. Obtaining permission to develop land into an urbanization can take a developer up to several years and several million euros of expense. The most obvious advantage to the owner of a property within an urbanization is the fact that the land usage is strictly controlled. If one decides to build a house on a plot in a section of an urbanization zoned exclusively for single-family dwellings, you are assured by law that neither an apartment block nor a rabbit farm can be located on the adjacent single-family plot!

How long can I stay in Spain as a tourist?

Europeans from the EU can stay in Spain indefinitely. Visas are not required for some other countries such as the United States, but are still required in other cases, depending on one’s country of origin, and with varying lengths of stay permitted. Any non-resident residing in Spain 183 days or more per calendar year is considered by the Tax Office to be a resident for tax purposes.

Where can I send my children to school?

There are many excellent private schools in the area. International schools are available that teach in English, Swedish, French and German and varied choices of curriculum are offered depending on the school's primary language. For English-speaking secondary schools the curricula typically offer GCSE's and A-Levels, and the International Baccalaureate.

Read our complete guide to schools on the Costa del Sol here.

For more information

If you are thinking of buying or selling a property in the Marbella, Benahavis or Estepona areas and have and further specific questions that we might be able to help with, please feel free to contact us without obligation. We are more than happy to help.