Golf & Country Home always recommends that purchasers of property in Spain 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 stamp duty if the property is a resale or second hand property, and then presented to the Property Registry for inscription. A provisional inscription in the registry is made immediately upon issuance of the deeds.

7% TRANSFER TAX (I.T.P.) payable by the buyer for the purchase of any Real Estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties.

8% (7% VAT and 1% STAMP DUTY) for any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader in these generally new properties.

17% (16% VAT and 1% STAMP DUTY) 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.

Notary fees can cost 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 persons and purchased with a mortgage loan, will cost around €800.

Generally speaking, the Community of Co-Proprietors or Homeowners’ Association is a legal entity comprised exclusively of the owners of the apartments in a building, or villas on an estate. The purpose of the Community is to own and maintain the common elements of the building or estate in question, and each homeowner is obliged to participate in the expenses of the upkeep of the community areas and services on a prorated basis with the other owners. Usually, a homeowner’s percentage of the costs is fixed by the size of the apartment, or plot, divided by the total area of all the apartments or plots.

A budget for the annual community expenses is presented at the annual general meeting of the homeowners, and they or their authorized representatives must approve the budget by majority vote of those present at the meeting. Expenses can vary substantially according to the services provided, and normally include salary and social security of the hall porter, common garden maintenance, lift maintenance, repairs to common elements, rubbish collection, water for watering community gardens, electricity for lighting communal areas, insurance, security, and administration fees. The President of the community must, by law, own a property within the complex itself and is chosen by way of vote by the co-owners. The President has no remuneration for this role.

A typical 2 bedroom apartment in a building or area with a hall porter, swimming pool, and a small garden, could cost between €90 to €200 per month in community fees In the case of an individual villa in an estate of villas, community fees are often less since the private gardens and exteriors of such properties are generally not maintained by the community.

Since the beginning of 2007, capital gains tax for non-residents has been reduced from 35% to 18%, payable on profits earned on the difference of the property value between the year of purchase and the year of sale.

In the case of capital gains derived from the sale of property acquired prior to December 31, 1994, the new law distinguishes between the gains obtained before January 20, 2006 and those obtained after that date, wherein the capital gains tax of 18% is applied on the proportional time of the ownership from the date of purchase and the time elapsed since January 20, 2006 to the date of sale. In other words the part of the profit obtained from January 20, 2006 will be taxable proportionately to the number of days that elapsed between this date and the sale date, at a tax rate of 18%. Capital gains tax for residents has also been modified, seeing an increase from 15% to 18% in 2007. The changes to the rates of capital gains tax for both residents and non-residents are due to the fact that the previous system was considered penal to non-residents.

Under the new 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 applied against the seller’s capital gains tax.

Most of the property you will view on the coast will be on urban land, that is included in the town hall plans as urban with a completed infrastructure of roads, electricity and water. The planning that applies here varies from municipality to municipality but for Calpe for example, a villa's wall needs to be a minimum of 5 metres away from a neighbour's boundary and construction height can not exceed 7 meters with the villa not occupying more than 25% of the plot area. Currently the minimum plot size to construct is 800m2.

The much discussed LRAU applies only where the land is zoned as Urbanizable.i.e. the town hall is inviting promoters to present urbanisation plans. When one is approved, a new modern urban area will be created with streetlights, pavements, underground cables etc. and the existing owners will have their land incorporated in the plan and be asked to pay their share of the urbanisation cost. This can be a real burden, but of course their land is worth a lot more than it was previously.

The quality of health care and health care facilities in Spain is considered to be equal, if not better, to any country in Europe and is improving every year. Spanish medical staff is highly trained and major hospitals are equipped with the latest high-tech equipment.

Private medical insurance is available through various groups such as SANITAS. This could cost from €30 to €130 per person per month, depending on their age and the state of their health. Spain's social security system now allows E.U. 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.

E.E.C. nationals need to obtain a E-121 form before leaving permanently for Spain to allow them to transfer their national rights to equivalent rights under the Spanish social security system. With this form and a residence permit "Residencia" they can use the social security system in the same way as the Spanish and have their existing years of pension contributions count towards a Spanish pension.

Members of private pension schemes are not entitled to use the Spanish social security system and are advised to join one of the many Spanish private health insurance schemes such as Adeslas.