What you have to know as buyers.

• When you have decided that you are going to buy a property, it is important that you make an option contract (Contrato privado de opcion de compraventa) with an appropriate deposit with the owner.

• As a rule, the deposit is usually 5 to10% of the purchase price (depending on the amount).

• The option contract is a formal agreement between the buyer and the seller to contract to sell the property at the agreed price within an agreed period.

• Before the notarial execution of the sale/purchase contract, it is necessary to have arranged a bank account in Tenerife because the purchase money must be transferred within Tenerife. Direct debits will also need to be set up for other charges and taxes payable later. You should also have applied for and obtained a tax identification number too.

• As a matter of principle, we recommend that you enter into a notarial sale/purchase contract (Escritura Publica) for the acquisition of a property in Tenerife. You will then be certain that your interest as the new owner has been registered in the land register.

• A valid passport and or national identity card are necessary for the notarial sale/purchase contract and other official matters. 

• At the conclusion of a notarial sale/purchase contract you must pay a land transfer tax (Impuesto sobre Transmissiones Patrimoniales) of approximately 6.5% of the declared value of the property.

• In addition, a progressive ad valorem tax (Plusvalia) is also due, which, according to Spanish law, should be settled by the seller. However, it is usual for the buyer to assume 99% of these costs. This tax cannot be accurately pre-determined as it is calculated by the land registry. 

• The additional costs for a property purchase amount to between 8 -10%.

• The agency fee is 5% and is included in the selling price of the property and is paid by the seller.
   

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