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November 17, 2023

Quick course in real estate Spanish

Escritura, Nota Simple, IBI, comunidad. Whether you are in the Spanish property world as a buyer or a seller, there are a number of Spanish words and concepts that are useful to know. Today, Felicity Estates offers a simple guide to the most important expressions that you should be aware of. 

This is the deed - a physical and legal document that shows the transfer of ownership from a seller to the new owner purchaser. In other words, it certifies the rights and obligations of a person buying, inheriting or acquiring a property. It is one of the documents required to sell a house in Spain. In case you do not have the deed, it is possible to obtain a copy from the notary's office where it was signed.

Nota simple
The nota simple is the document in which different circumstances of the legal situation of a specific property are recorded. It is a summary of the data in the Land Registry. It specifies who is the owner of the property, its surface area or if it has encumbrances, among other aspects. It is not compulsory, but it is recommended. It is requested at the Land Registry.

Número de finca
The finca number is a unique number assigned to each finca or real estate property in the land register. The finca number is mainly used in legal transactions and official records relating to property.

Referencia catastral
The cadastral reference is the official and obligatory identifier of real estate. It consists of an alphanumeric code that is assigned by the Land Registry so that every property have a unique cadastral reference that allows it to be located unequivocally in the cadastral cartography.

Certificado de eficiencia energética
Certificate that specifies the energy consumption of the property under normal conditions. The rating is marked in letters between G (lowest efficiency) and A (highest efficiency). It is compulsory for the property to have an energy efficiency certificate in order to be able to sell. The certificate is issued by an architect or engineer, registered with the regional authority and is valid for 10 years.

Licencia de Primera Ocupación
The licence of first occupation is a document issued by the townhall after verifying that a construction or dwelling has been carried out in accordance with the technical construction project presented to the townhall. It is a way of accrediting that the work has been carried out according to the conditions for which the building licence and permits were granted, without altering anything and in compliance with urban planning regulations. Always ask for a copy of this document before buying a property. In the case of older properties, this document is often missing, although it is sometimes possible to request it retroactively from the town hall. If this is not possible, you can ask the town hall for a certificate of “no infracción urbanística”.

Impuesto de Bienes Inmuebles (IBI)
The IBI is a municipal property tax that is levied on the ownership of any right over urban, rustic or special property located in each municipality. The last IBI receipt is another of the documents that must be presented in order to sell a house in Spain. It also reflects the cadastral value of the land.

The urban waste collection tax, also known as the rubbish tax, is a local public tax associated with the rubbish collection service. The municipality can manage this service, although sometimes it is entrusted to companies to carry it out.

Certificado de la comunidad
"Certificado de que se está al corriente de pago de las cuotas de la comunidad" is a certificate from the property owners' association that a buyer of a property should always ask the seller for prior to a property transaction. The certificate certifies that the current owner has no debts to the community. The document is issued by the property manager (administrador de fincas).

Comunidad de propietarios
A property owners' association or community is a legal entity made up of all the owners of homes, car parks and sometimes commercial premises in the same building, governed by the rules and regulations they have jointly agreed. Although it is not an independent legal entity, it has many of its characteristics, making it a kind of hybrid with the capacity to carry out certain legal transactions. Communities of owners in Spain are mainly governed by the Horizontal Property Law (Ley de Propiedad Horizontal), except in Catalonia, where the applicable law is the Civil Code of Catalonia.

Administrador de fincas
A property administrator is a professional who is in charge of managing, at the request of the owners of rural or urban properties, or by decision of a board of owners, the financial, legal and technical matters necessary for the maintenance and economic management of the property.

Mortgage. When selling a property with a mortgage registered in the Land Registry, the seller must ask the bank for a certificate of zero debt (certificado de deuda cero) before signing at the notary's office.

Facturas de luz y agua
Electricity and water bills. Before selling a property in Spain, the agent, buyer or their lawyer always asks for these invoices in order to carry out the change of ownership with the respective companies.

Documento de reserva
A document by which the buyer reserves the property in exchange for a deposit, which is later deducted from the price. This is usually a small sum, for example between €3,000 and €6,000, which is sometimes deposited in a neutral account (with the lawyer or estate agent) until the buyer or his legal representative has studied the property documentation or while he is investigating the possibilities of financing. Sometimes the reservation is subject to some condition, such as financing, in which case it is usually refundable.

Contrato de arras
A private purchase contract which is normally more comprehensive and more legally binding than the reservation document. It is also signed to guarantee the purchase of the property and a larger deposit is paid, usually 10% of the purchase price. There are different types of purchase contracts that carry different obligations and rights. The most common model is the one called 'arras penitenciales', which involves a commitment to buy and sell, but which can be broken. If the buyer does so, he loses the money paid and if it is the seller, he has to pay back double the amount of the deposit.

DNI, pasaporte & NIE
Both sellers and buyers are required to provide a valid identity document for the property transaction at the notary's office. For a Spanish citizen it is the DNI (Documento nacional de identidad) and for a non-Spanish citizen it is the passport (pasaporte) and the NIE (número de identidad de extranjero - Spanish ID number for foreigners).

Impuesto sobre Transmisiones Patrimoniales
ITP is a transfer tax that you must pay when you carry out transactions involving the purchase/sale of movable or immovable property. The percentage of ITP is regulated by the regional authority and in Andalusia this tax is 7% of the purchase price of the property. It is the buyer who pays this tax.

Impuesto de Actos Jurídicos Documentados (AJD)
The tax on documented acts or AJD is a tax levied on the formalisation of certain transactions through public documents (notarial acts), including real estate transactions. When a property is sold, this tax is levied on both the deed of sale and the mortgage deed. In the case of mortgage loans, since 2018, the AJD is paid by the lender. In the case of new construction, the AJD is paid by the buyer. In Andalusia, the AJD is 1.2%. The AJD on the deed of sale of a secondary residence is a lower fixed fee paid per document.

Impuesto sobre el Valor Añadido (IVA)
VAT (value added tax) is a tax paid by the final consumer on the purchase of goods and services. The applicable rate or percentage depends on the goods or services provided. In the case of new construction, the applicable rate is 10% of the sales value or 4% in the case of subsidised housing (VPO).

Plusvalía is a local capital gains tax applied to the increase in value of urban land when ownership is transferred, either by donation or sale. The amount payable depends on the rateable value of the land at the time of donation or purchase and the number of years the seller, donor or grantor has owned the land. The tax is levied by the townhall where the property being transferred is located.

Impuesto sobre la Renta de las Personas Físicas
Personal income tax (IRPF) is a personal and direct tax levied on individuals' income based on their personal and family circumstances. The sale of a property is taxed as a capital gain or capital loss at a rate of between 19% and 28% depending on the amount. When the seller is not tax resident in Spain, the law stipulates that the buyer should withhold 3% of the purchase price and deposit this amount with the tax authority (Agencia Estatal de Administración Tributaria) to ensure that the tax is collected.

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