German citizens, as well as all other European citizens, can generally purchase property in Spain without restrictions. Real estate can be acquired either through a private purchase agreement or by means of a notarial deed. To avoid unpleasant surprises during the purchasing process, it is advisable to consider the following points carefully.

Once you have obtained your NIE (Foreigner Identification Number), there are no further obstacles to purchasing property or completing administrative procedures with the Spanish Tax Agency or other public authorities.

Purchase Price and Payment

Both the purchase price and the agreed payment method should be clearly specified in the purchase agreement. Please note that, in Spain, cash payments exceeding €1,000 are generally prohibited if one of the contracting parties is a business or professional. Even in transactions between private individuals, cash payments should be avoided, and under no circumstances should payments be made without appropriate proof of payment.

In practice, it is common for the buyer to pay a deposit. The wording of the relevant contractual clauses is crucial. The deposit should expressly be classified as arras penitenciales, as only this type of deposit grants both parties a statutory right to withdraw from the contract.

If the deposit is merely described as arras, the buyer may still be required to complete the purchase even after forfeiting the deposit.

Mortgages and Other Encumbrances

To ensure that the property is free from mortgages or other encumbrances, you should obtain a Land Registry extract (nota simple or certificado del Registro de la Propiedad). This document lists all registered rights and charges affecting the property.

In addition, the community of owners may have internal regulations containing restrictions that are not immediately apparent to the buyer. It is also advisable to obtain written confirmation from the homeowners' association regarding any outstanding community fees. If the seller owes community charges, the new owner may, under certain circumstances, become liable for these debts after the purchase.

Notarial Deed and Registration with the Land Registry

Unlike in Germany, registration in the Spanish Land Registry is not required to acquire ownership of a property, although it is strongly recommended. Registration requires a notarial deed of sale (escritura pública de compraventa).
Even if the parties initially signed a private purchase agreement, either party may require the other to formalize the transaction before a notary.

It is important to note that the notary merely authenticates the transaction. The drafting and negotiation of the purchase agreement should always be entrusted to a lawyer specializing in Spanish real estate law. Once the notarial deed has been signed, it is advisable to register your ownership immediately with the Spanish Land Registry (Registro de la Propiedad). Registration protects your ownership rights against third parties and helps prevent fraud, such as double sales or purchases from unauthorized sellers.

Depending on the Autonomous Community in which the property is located, you generally have between 20 and 60 days to calculate and pay the applicable taxes to the regional tax authorities and, where applicable, the local municipality.

Additional Purchase Costs

Taxes, notary fees, and Land Registry costs are often allocated to the buyer under the purchase agreement. When purchasing from a private individual, the parties may freely agree on how these costs are divided. However, if the seller is a property developer or a commercial company, certain costs cannot legally be transferred to the buyer or only to a limited extent.

 

Taxes (Summary)

For tax reasons alone, it is highly advisable to seek professional legal and tax advice before purchasing property in Spain. Depending on the transaction, the following taxes may apply:

- Property Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)

- Value Added Tax (IVA) and Personal Income Tax (IRPF)

- Municipal Capital Gains Tax (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana – Plusvalía Municipal)

- Stamp Duty (Impuesto sobre Actos Jurídicos Documentados – AJD)

Special Types of Property Purchases

1. Off-plan properties: When purchasing a property under construction, especially where payments are made in instalments, you should ensure that the developer provides proof of the legally required insurance or bank guarantee protecting your payments in the event of insolvency.
2. Timeshare ownership (Aprovechamiento por turno): Purchasing the right to use a property during a specific period each year is subject to special legal regulations that should be carefully reviewed.
3. Holiday apartments and hotel units (Establecimientos turísticos): These properties are subject to important legal restrictions regarding their use and rental.

Property Purchase Process

In summary, the process of purchasing property in Spain can be divided into the following steps, each of which is explained in greater detail in the following sections:

1. Property Due Diligence
2. Reservation Agreement or Preliminary Contract
3. Execution of the Notarial Deed of Sale
4. Payment of Taxes
5. Registration with the Land Registry and Cadastre

Our law and tax firm will be pleased to assist you in analysing your specific situation, completing all necessary administrative procedures, and preparing and filing the relevant Spanish tax returns. If you have any questions or require legal assistance regarding the purchase of property in Spain, please do not hesitate to contact us by email or telephone. You can consult our service agreement at Real Estate Law

Author:

María Santos
Lawyer
CEO, Partner, Legal Director
info@sspartners.es
Tel: (+34) 951 12 13 06
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