Real Estate Buyer's Guide Valencian Community

This easy guide will help you understand all the steps involved in buying and selling a property in the Valencian Community, the costs involved in the purchase and who is responsible for them.

1.- Purchase of second-hand or newly-built homes

If you buy a second hand property (second or subsequent transmissions)

If you buy a second transfer property in the Valencian Community, these are the costs to take into account:

• Transfer Tax (ITP).
• Notary fees, Land Registry and cost of processing agency (Gestoría).
• Lawyer.

The purchase of housing is subject to Transfer Tax, which varies by autonomous community. In the case of the Valencian Community, the general rate is 10% of the value of the property, except for young people under 35 who will pay 8% if it is the acquisition of their first habitual residence and do not exceed the income threshold stipulated.

From January 1, 2023, the special rate of 11% will be applied when the value of the property exceeds one million euros.

Tax exemptions can also be obtained if the buyer is a large family, has a physical or mental handicap, or if the property is a VPO (Officially Protected Housing) with the current qualification and is going to be the buyer's first home.

This tax is calculated on the basis of the declared sale price reflected in the title deed, unless the value of the property, according to the tax authorities, is considered higher, in which case the price will be recalculated by the tax authorities using the cadastral reference value and the tax would be paid according to the real value calculated by the tax authorities.

Notary fees, registration and administrative costs. The costs for the handling of the deed of sale are around 3.000€ in total and include notary fees, costs for the registration of the property in the Land Registration (Registro de la Propiedad) and the costs of the processing agency (Gestoría).

In the case of the purchase of luxury properties, the notary fees may be higher as they are calculated on the basis of a fee depending on the amount of the sale.

Lawyer. It is advisable to be assisted by a professional during the whole process of sale and purchase. Luxinmo advises you to hire a lawyer for the correct verification of the whole process. The fees derived from the legal assistance of a lawyer are approximately between 0,5% and 1% of the value of the operation.

If it is a newly-built home(first transmission)

In case of purchase of a new home or first transfer, these are the costs to be taken into account:

• VAT (value added tax).
• Notary fees, Land Registry and the cost of the processing agency (Gestoría).
• AJD (Tax on Documented Legal Acts, or "Stamp Duty").
• Lawyer.

VAT is paid by the buyer to the seller (together with the purchase price) and must be paid directly by the seller to the tax office. In the case of the purchase of a property, the VAT rate is 10%.

The notary fees for registration, Gestoría and lawyer are the same as in the case of the purchase of a second hand property.

Whenever the purchase of a property is subject to VAT, the buyer must additionally pay Stamp Duty Tax (AJD) at 1.5% of the purchase price. The buyer must submit it within one calendar month from the date of signature of the public deed, through the self-assessment procedure.

In the Valencian Community, a reduced rate of 0,1% is applied for the purchase of the habitual residence, provided that it is intended for this purpose, a circumstance that the Tax Agency may check in the future.

2.- Documentation required for the purchase of a property

In order to purchase a property, the following documents are required:

• Original DNI or passport
• Original NIE / TIE number (residence/work permit abroad). The NIE / TIE is the tax identification of foreign residents who carry out an economic activity in Spain. It must be presented at the notary's office and is necessary for the payment of taxes. To obtain the NIE / TIE, an application accompanied by specific documentation must be submitted to the corresponding police station of the National Police Corps. The processing period is usually two to three weeks. Please contact your gestoría to make progress in this regard.

It is also possible to obtain these documents through the respective Spanish Consulates in the purchasers' countries of habitual residence.

• Energy Efficiency Certificate. - Since 2013 it has been compulsory for any flat for sale or rent to have this certificate. It must show the energy rating of the property.
• First Occupancy Licence in the case of New Construction. The Town Hall will be in charge of publishing this document. In this way it confirms that the property complies with the town planning regulations and that it can be habitable. In addition, new homes will have a compulsory insurance called decennial insurance.
• Certificate of Habitability. This document must be signed by an architect or quantity surveyor and guarantees that the property complies with the obligatory quality requirements for habitability. If the building does not have this document, in many municipalities of the Valencian Community they do not allow the change of ownership of the electricity, water and gas supplies.
• Justification of payments already made previously by means of a copy of the transfers made as part of the purchase price.

Important: It is advisable for buyers to open a bank account in Spain in order to be able to direct debit their payments. With the opening of the bank account it is equally important to take out an insurance policy to cover the purchased property against any possible risk.

3.- The purchasing process

There are 3 steps to buying a home:

1. - The first phase is RESERVE. Once we have found the desired property, we proceed to the reservation and subsequent withdrawal from the market. At this stage, a reservation fee of 3.000, 6.000 or 10.000 € is usually paid depending on the agreement and price of the property or 1% of the value of the property in the case of luxury properties.


2. - Signing of the deposit contract By signing the deposit contract (Contrato de Arras), both the buyer and the seller express their willingness to carry out the transaction and undertake to complete it within a certain period of time. In turn, the buyer gives a sum of money, usually 10% of the sale price as part of the price, in order to secure the sale transaction.

   The really important thing about the signing of the deposit contract is that there are legal consequences for non-compliance.
   The document to be signed must contain the price, the terms and the penalties in case of withdrawal, so that there is no doubt about the scope of the transaction.

   An important aspect to bear in mind is who signs for the selling party:

   • If a company is selling, the duly identified administrator or attorney-in-fact usually signs.
   • If the sale and purchase transaction is between private individuals, all the owners must sign, either by themselves or through their legal representatives.

   In all these cases, the deposit contract can be signed by the parties remotely, by digital means or by post. This private document contains all the terms negotiated, the price, the deadline for signing before a notary, the description of the property including furniture and household appliances, the responsibilities and the expenses derived from the transaction.

3. - Signing of the public deed of sale.

   This is the last step in the purchase of the property and takes place before a notary, in the presence of all the parties or their legal representatives. At this signing, the agreed price is paid in full, deducting the amount paid as a deposit in the signed contract.

   The purchasers have the right to choose their notary, as they bear the costs arising from the formalisation of the deed.

   Both the possession of the property and the rights and obligations derived from the transferred property are transferred to the buyer with the signing of the deed.

4.- What to do once the property has been signed at the notary?

Once the buyer acquires ownership of the property after signing the public deed before a notary, it is imperative to pay and present the taxes within 30 days of signing, as well as registering the deed in the public registers or notifying the change of ownership of the property.

Land Registry
Immediately after the signing of the public deed, the notary will send a certified copy of the deed electronically for registration in the corresponding Land Registry. Once the digital copy of the deed has been received, the Land Registry will open a filing entry, which will be valid for 60 days.

Payment of taxes
The signing of the deed entails the buyer's obligation to pay the associated taxes: Transfer Tax (in the case of a second-hand property) or VAT and Stamp Duty (for new buildings or land).

Change of ownership at the Land Registry Office
Once the taxes have been paid, the buyer must present the original title deed to the Land Registry to change the ownership of the property within two months of signing the title deed.