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The first step after deciding to purchase your
property is to make a verbal offer to the vendor, which we will carry out for you. When a
verbal price has been agreed, the Spanish lawyer is appointed to commence formalising the
agreement.
The lawyer, who will be fluent in English, will carry out the
necessary checks on the property, and once he is satisfied that everything is in order,
will complete the legal requirements to formalise the sale.
The first, and most important, check that the lawyer will make is to
obtain a "Nota Simple" from the Property Registry. This will identify the registered
owner of the property, and will provide details of any mortgages or charges on the
property.
When a new property is being purchased, the solicitor will ask to see
the "Declaracion de Obra Nueva" and the "Declaracion de Alteracion de Bienes Naturaleza
Urbana", which are declarations required for new builds.
Receipts need to be obtained from the vendor for payment of IBI
(Impuestos sobre Bienes Inmuebles), which is the annual real estate tax. These will show
the assessed value of the property, which is called "Valor Catastral". It is on this
assessed value that your property income tax will be based.
If property is being purchased in a communal environment, it is
advisable to have sight of receipts for community charges, and also to see minutes of
recent community meetings, to identify any problems. A talk with the neighbours can also
be very helpful.
After the price is agreed and the "Nota Simple" has been obtained and
checked by the solicitor, it is advisable to pay a small holding deposit, which will be
held by the solicitor. This will ensure that the property is reserved until completion is
made. The lawyer will make a formal offer and agreement for this purpose. |
Approximately two weeks after this formal acceptance
of an offer, exchange of private contracts, or the signing of an option to buy on a new
property, will take place. By this time, the lawyer will have completed the searches. All
the agreed terms will be included in the contract and a completion date will be set. At
this point, the purchaser is normally required to pay a 10% deposit, which is
non-refundable.
On the assigned completion date, vendor and purchaser
(or their authorised representatives) sign the "Escritura de Compraventa" (the title
deed) at the notary's office. The deed states that the property passes from vendor to
purchaser free of any charges or mortgages and free of tenants. The notary does not check
the terms of the deed, as his obligation is merely to certify that the parties have
agreed the terms. The balance of payment is made to finalise the passing of title and
possession passes to the buyer.
NIE
The NIE (Foreigners Identity Number) is given
to all non-residents buying a property in Spain. The Lawyer acting for the purchaser will
obtain the number on behalf of his client.
Taxes
This is a brief guide on taxes payable
which was correct at the time of writing but would need to be checked with your
lawyer
TRANSFER TAX : All resale property bears a 7% Transfer Tax but is
exempt from VAT. The Transfer Tax is paid to the Notary who receives these funds on
behalf of Hacienda (Transfer Tax is not paid on new property although a duty of 0.5% is
imposed when a newly built property is declared on a plot). |
VAT : VAT is known as IVA in Spain and is applicable
to the sale of all new property. There are different ratings which are as follows:
Plot only 16% VAT. Plot with construction *7% VAT New ready-built
properties 7% VAT Resale properties are not subject to VAT. * Assuming that the landowner
and the developer are one and the same.
Plus Valia
Plus Valia is a local tax calculated
as a percentage of the difference in the increased value of the property from when it was
last sold. The calculations are based on the Rateable Value (not on the real value) of
the property and are a one-off payment charged when property changes hands and due within
a month of purchase.
Each Town Hall defines the percentage and it varies according to
municipality. It is customary that the vendor accepts responsibility for the payment of
this tax.
Capital Gains Tax
Although this is not a tax that
purchasers need to pay at the moment of purchase, it is nevertheless something that they
should be aware of.
When the vendor is a non-resident, the purchaser is obliged to retain
5% of the registered purchase price and lodge the amount with the Notary who will pay the
Hacienda on account of the vendor's Capital Gains Tax.
The Capital Gains Tax will be calculated and the vendor will either
have to make up or claim the difference from the 5% deposited. If overpayment has been
made, Hacienda is obliged to return the difference to the vendor within 6 months.
The rate of tax is 35% (for non-residents) of the gain made
although a reduction is made if the vendor has owned the property for more than 2
years. |
