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Buying Process

purchasing process


Two important points  to remember – to purchase a property in Italy you will need to obtain an Italian Tax Code ( which can either be done in Italy through the Tax Office ( Agenzia delle Entrate – which is completely free ) you will need to bring with you a photocopy of your passport and fill in the application. If you are not in Italy, no panic, this can be done through your local Italian Consulate in person or online in your country of residence.

The second is you will need to open an Italian Bank Account.

Once you have found the property you wish to purchase you should make an official offer (Purchase Proposal)

Usually this offer is valid for 10 days and involves the payment of a small deposit to the Estate Agent or Vendor. If the offer is accepted then both parties are informed that the transaction has become official and the small deposit then becomes your official deposit (caparra confirmatorio). Once the offer has been accepted by the seller then you can proceed to the preparation and signing of the Preliminary Contract (Compromesso).

The Preliminary contract is the most important agreement in the purchasing process as both parties are binding each other to complete the purchase. At this stage you will have to pay a larger down payment (of anything between 10 to 30% of the sale price usually), at this point if either parties after the signing of the preliminary agreement withdraw from the sale then there are penalties to pay, if the vendor withdraws he must pay the purchaser double the deposit (caparra confirmatorio) and must refund any deposits or staged payments made, if the Purchaser should withdraw he forfeits the deposit made ( caparra confirmatorio) any staged payments made in the case of an off plan project should be returned.

This contract contains some important clauses; here we have listed some of them:

  • Sale price indicating the amounts paid at signature and all the payments to be made up to the final sale.
  • Name of the seller and buyer, place, date of birth and nationality, tax identification number (Codice fiscale).
  • Identification of the location of the property you’re buying.
  • Full description of the property as stated from the Land registry.
  • Verification of the Seller title
  • A date of the signing of the Deed of sale (Rogito).
  • Building licenses.
  • Identification of all servitudes that might affect the property (roads, water pipelines, etc) and those from which the property should benefit (right of way, access, etc)
  • Map of the building or land (both parties are required to sign it).
  • On off plan developments a copy of the bank or insurance guarantees. ( These are best if they are what we call prima richiesta).

You might make the completion of the purchase contingent upon your mortgage application being accepted, or you could make your purchase contingent on planning permission being granted for a swimming pool; or make your purchase contingent upon a successful survey on the building, and so on. The final stage in buying a property is the completion of the Title Deed (Rogito).

This contract must be signed and finalized in the presence of the Public Notary (Notaio): the notary is an executive ( independent and impartial!) officer who performs the vital task of registering the sale at the Land Registry Office (Conservatoria dei Registri Immobiliari) which transfers the ownership to the buyer. He is legally responsible for the transfer of the property and for the preparation of the deed as well as checking and searching any defects or back taxes.

The Notary also makes sure that the sale is carried out correctly by doing local searches, checking planning permission, investigating in relation to the vendor’s title, checking that no mortgage or charge exists over the property etc…

At this stage the purchaser pays the Notary the remaining monies for purchasing the property in the form of a bankers draft ( assegno circolare), the notary fee*(fees range from 2%to 3.5% ) the registration and purchasing taxes (see below). For completion the buyer will need to have a tax code (Codice Fiscale), a bank account and must provide a copy of a valid passport.


Property purchases on an off plan project have a legal requirement to be covered by either a bank or insurance warranty which guarantees the deposit or staged payments made to the builder, this warranty then needs to be returned to the builder upon completion of the purchase. Once the property is constructed even if the property is new and still in completion phase internally, it’s no longer a requirement for the builder to issue any financial warranties, unless specifically requested by the purchaser.

A copy of the approved plans and approved building concessions will be quoted in the preliminary contract and a copy of both supplied at the time of the signing of the preliminary contracts.

A ten year insurance policy is then issued at the time of completion guaranteeing any visible or invisible building defects. This policy is paid and supplied by the builder. After the 10 years it can be renewed at the home owners cost. If however, this is not provided at the time of the sale for whatever reason, a copy of the same will be available from the company that manages the residence.

On completion of a new build the builder will need to provide the necessary certifications for all the electrical and plumbing plants by the professionals that inserted them as well as provide a copy of the community regulations.

When the residence is completed the council will then send an official to check the works carried out are compliant with the concessions provided in order to make the final approval.  The builder will apply for the habitability certificate which is then granted automatically after 60 days from the time of the application.

Additional costs with purchasing a new build apart from the property taxes ( that are listed below ) are the connection fees, which is a forfeit cost that the builder charges for the advanced payment made by him regarding utilities such as electricity, water, gas, telephone, sewerage this forfeit sum also includes the cost for the land registry plans and the initial costs for the laying out of the community regulations.

As well as your utility bills to consider gas, electric and water you will need to consider the following payments in the upkeep of your property:-

  1. Community Management Fees ( if the apartment is part of a residence )
  2. Tares + Tari – ( refuse tax ) which is paid twice a year, once in March and once in October to the local council
  3. Property rates ( IMU) this is paid twice a year once in June and once in December and is calculated on the surface square meters of the property and divided by the number of owners that the property has.
  4. Home insurance


Dreamhomes charge a  fee of  between 4 – 5% (plus VAT) for their services, based on the agreed purchase price due upon the signing of the preliminary contracts, as per Italian law for licensed realtors

Extra Services Offered

Fees Applied

€ 500 Set up fees to open an Italian Bank Account and Italian Tax Code ( Codice Fiscale ). If clients purchase through Dreamhomes this amount is waivered and is to be considered free and part of the service.

€ 500 Set up of Utilities ( electricity, gas, water, council taxes, insurance ) –  If clients purchase through Dreamhomes this amount is waivered and is to be considered free and part of the service.

Translation fees – this is a separate service and the fees are calculated subject to the requested documental translations.


The property taxes that you will need to add to your purchase are the following:-

Purchasing a New Build Property

Non-residents pay 10% Vat on the agreed purchase price

Residents pay 4% Vat on the agreed purchase price

Connection Fees are between € 1500 – 4000 for ( gas, electricity, water, sewerage, telephone).

Notary fees any where between – 2 to 3.5%

Agency fees between 3 to 5% + VAT

Purchasing a pre-owned property

Non-residents will pay 9% stamp duty on the agreed purchase price based on the land registry value of the property. Your agent will calculate this for you.

Residents will pay 2% stamp duty on the agreed purchase price based on the land registry value of the property.

Notary fees any where between – 2 to 3.5%

Agency fees between 3 to 5% + VAT

Registering the contract with the local authorities

Under the new laws it is necessary to register all preliminary contracts and purchase proposals, this must be done enter 20 days from the signing of each contract. If in the eventuality of a late registration a fine will be applied. The purchaser is responsible for the payment of these fees. This registration safe guards your purchase.

The registration fees are currently the following:

  • € 200.00 Fixed registration fee
  • € 16.00 government stamp (1 every 4 pages on both copies )
  • € 2.00 government stamp (for plans)
  • 0.50% tax due on the confirmed deposit (caparra confirmatorio)
  • 3% tax due on any down payments made thereafter for purchases not subject to VAT


Additional costs to take into consideration in the case that a purchaser does not speak Italian will be the eventual translations of contracts, if requested and/or the cost of a power of attorney by a bilingual professional to sign the final completion deed on behalf of the purchaser.

Although most citizens from most countries can purchase a property in Italy it is necessary that your country of origin has a reciprocal agreement with Italy. In the case that your country does not but you have dual citizenship and a passport with a reciprocal country then the purchase is still possible.

For Italian citizens and their families who are resident abroad and who do not have a residence in Italy, providing they are registered with A.I.R.E. ( Anagrafe degli Italiani Residenti al Estero )  are entitled to first time purchasers taxes, if they wish to purchase a property in Italy. A copy of the A.I.R.E certificate will be necessary to complete the purchase.

It is important to have clear from the outset the real costs you will face when you buy property in Spain. It is equally important to be clear about the ongoing costs you will face as a property owner in Spain.
When buying property in Spain, always keep digital and hard copies of all invoices related to your purchase. Likewise, if you ever do building work on the property once you own it, keep copies of all licences and invoices. You may be able to offset these expenses against capital gains when you sell, and so reduce your Spanish capital gains tax on property sales
It is your responsibility to be informed and do your own numbers, rather than rely on the claims of others. Here we explain all the different types of costs, but bear in mind that the actual cost will depend on your particular circumstances.
Costs of buying property in Spain
As a buyer of property in Spain there are a number of costs and taxes over and above the property price that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax. The different cases are explained below, along with the other costs and taxes that are common to both cases.
VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)
These taxes apply for residential properties being sold for the first time (never previously occupied), or for commercial properties and plots of land. This is a national tax, so VAT is the same wherever the property is located (with the exception of the Canaries, which have their own version of VAT).
At present VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land.
VAT on new homes in the Canaries is known as IGIC (Impuesto General Indirecto Canario), and currently stands at 4.5%
VAT on newly-built homes rose from 4% to 10% on 01/01/2012.
The Stamp duty (known as AJD) is 1% of the price of the purchase, but might go up in some regions, so be sure to check on the latest rate. Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit. In this scenario there is no transfer tax to pay.
Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)
This tax applies if the property is deemed to be a second or posterior transfer (i.e. not the first time a newly built home is bought), and is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to ITP pro rata. However the full amount of ITP still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.
The Transfer Tax rate is ceded to the autonomous regions, who can choose to apply the general rate, or their own rate.
The general (national) rule of ITP is 7%, but many of the autonomous regions have applied higher local rates. The rate you pay depends upon the autonomous region where you buy (for more information see Transfer tax on resale homes – Impuesto de Transmisiones Patrimoniales (ITP))
Income Tax Provision When Buying From Non-residents
If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.
Costs that affect both new build and resale property purchases
Agency Fees
Estate agency fees or commissions are paid by the seller, unless otherwise agreed. If the buyer uses a search agency then search fees are paid by the buyer.
Despite the ability of the internet to bring together buyers and sellers without the need for an agent most people still use agents to find property in Spain. However you should be aware that agents charge between 2% and 15% of the sale price, depending upon the region and type of property. Unless the buyer has specifically agreed to pay the agent’s fee this cost will be built into the sale price.
Legal Fees
You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).
A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees. Be warned that some lawyers charge 1.5% or more of the sale price, which is a rip off. Even 1% can be unreasonably high given the work that is involved in a straightforward purchase of an expensive property with no legal complications. Your best option is to try and find a good lawyer who is prepared to charge on an hourly basis. Legal fees for a purchase without any complications and charged on an hourly basis should be in the region of 1.000 to 2.500 Euros.
Mortgage costs
If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.
Notary Expenses
Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate Notary fees as being 1% of the purchase price declared in the deeds of sale. In many cases however Notary fees are more like 0.5% (or less) of the price declared in the deeds.
Property Registry Inscription Fees
Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.
Other Costs
Bear in mind that it may be prudent to carry out a survey of the property and that this will have a cost.
In Summary, allow for up to 20% of the purchase price in taxes and other costs.
If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved. In this case transaction costs might reach between 10% and 12% of the value of the property purchased.
Banking Costs
To pay for the property, you will more than likely need to write a banker’s cheque. In order to do that, you will need to open an account in a Spanish bank and transfer money from the bank in your country. The cost of transferring the money can go up to 0,4% of the amount transferred. The banker’s cheque will most likely cost 0,5% of its amount.
Furniture Costs
Once you own a property you will need to furnish it. The cost of furnishing a property depends entirely upon what you want. However as a very general rule of thumb a 2 bedroom apartment will cost around 10,000 to 15,000 Euros to furnish nicely if you buy everything new. Of course there is no limit to how much you can spend, though you can also get away with less than 10,000 if you are on a tight budget (all from IKEA, for example).
Plusvalía Municipal Tax
This is normally paid by the vendor, but it can become a problem for the buyer if the vendor fails to pay it. Buyers have to be particularly careful with this tax when the vendor does not live in Spain. See the section below on costs to bear in mind when selling property in Spain for more information.

There will of course be costs associated with owning a property in Spain. Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills, rubbish collection, and so on. These will be determined by the size and type of the property you buy. Obviously a large villa with a garden and pool will require much more effort and cost to maintain than a small apartment. For cleaning a figure of 10 Euros an hour is fairly typical throughout Spain.
Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Spain face.
Property Ownership Tax (Impuesto Sobre Bienes Inmuebles – IBI)
A local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall the tax rate goes from 0.4% – 1.1% of the valor catastral depending on the Spanish region.
Annual Wealth Tax (Impuesto Sobre Patrimonio)
This tax has been changed several times in recent years. For the latest situation see Spanish Wealth Tax (Patrimonio)
Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR)
Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.
Not rented out
Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 25% of 2% of the valor catastral of the property.
The tax on a property with a cadastral value of 700,000 Euros would be as follows:
Property value for tax purposes = 700,000 Euros
Taxable base (2%) = 14,000 Euros
Tax (25%) = 3,500 Euros
Rented out
If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident). In many cases non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain.
Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.
Community Fees
Owners of property that is part of any development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the community of owners, know as the Comunidad de Propietarios. This will entail paying community fees for the upkeep of the common areas, and any other services that the community vote for. The fees will vary according to the magnitude of the common areas, the costs of maintaining them, and the services that the community vote for. A budget for annual community expenses is approved by majority vote of all owners (or representatives) who are present at the annual general meeting of the Comunidad de Propietarios.
Household insurance will vary according to the circumstances of the owner and the type of property. However it should be born in mind as a cost that all property owners will face.
NOTE: Costs to bear in mind when selling a property in Spain.
Plusvalia municipal tax
A special reference should be made to the local/municipal capital gains tax – known as Plusvalía. This is a local / municipal tax that only applies to the increase in value of the land upon which urban properties are built, and that is levied at the time of transfer of such properties. It is calculated on the basis of the valor cadastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount to be paid will depend on how long the seller has owned the property: the longer the period of time during which the seller has owned the property, the higher the amount of tax.
This Plusvalía Municipal tax is usually paid by the vendor, but sometimes the buyer agrees to pay it – it’s part of the negotiation process. Be warned that if the vendor fails to pay it, the buyer then becomes liable for the unpaid tax, with interest!. Also, the town hall might not register the property for local real estate tax (IBI) purposes, until the Plusvalía is settled. That means the new owners starts accumulating unpaid IBI tax bills (without notification), plus penalties and interest, all without knowing it.
When the vendor is a non-resident, the law states the buyer is liable for this tax, even if the parties have agreed that the vendor will pay. So when you buy a property in Spain, especially from a non-resident vendor, make sure you or your lawyer checks that the Plusvalía Municipal has been paid by the vendor within 30 days of the sale.
The safest way to play this, from a buyer point of view, is to agree to pay this tax using funds deducted from the agreed sale price. That way the buyer can be sure the Plusvalía has been paid. This is particularly relevant when buying from a vendor who does not live in Spain (non-resident).
Capital gains tax
Spanish capital gains tax rates on property and other assets.
If the vendor is a non-resident, there is also a Spanish withholding tax retention, which the buyer pays directly to the tax authorities, to cover the vendor’s capital gains liability