© Powered by SiteSpirit
BUYING A PROPERTY IN SPAIN WITH VILLAS AND FINCAS
Once you've chosen a suitable property, the price and conditions will need to be agreed. Villas and Fincas will prepare a reservation contract and it will be signed by both parties and an agreed reservation deposit paid (normally in the region of 5000 euros). If you haven't already appointed a lawyer now would be a good time to do so.
What to expect from your Spanish lawyer
As well as giving legal advice at each stage of the process, your lawyer will check the property registry to investigate any encumbrances or debts registered against the property. If anything untoward is discovered he will advise on how best to deal with it and whether you should, in fact, proceed at all. When completion takes place your lawyer will lodge the title deed with the land registry and then take care of any remaining formalities such as opening accounts with local utility companies in your name and the payment of any transfer taxes
Exchange contracts
With the offer accepted and the reservation deposit paid, the next step is to exchange private contracts, 'Contrato privado de compraventa', which states the agreed price and what is to be included in the sale. This usually happens within two weeks from the offer being accepted and is where your lawyer really starts to earn his money by conducting property searches and making sure that there are no outstanding debts attached to the property, for which you may be liable. This is confirmed in a document called a Nota Simple. In most cases you will now be required to pay a non-refundable deposit of around 10%.
Final completion and registration of the title deed
Final completion takes place when the title deeds are signed before a notary and you pay the balance of the purchase price. The signed deed is lodged with the land registry and your lawyer will take care of the remaining formalities such as payment of the relevant transfer taxes.
In addition to the purchase price of your new property, you will also need to pay transfer tax.
When you purchase a new property, you need to register the deeds in your name, which requires a small fee. For all miscellaneous charges (including the above), it is normally recommended that a buyer should budget to pay 10% on top of the value of the property.
Each year, owners of Real Estate must pay IBI, which is a tax issued by the local council for all owners of property. If you are purchasing a second hand property, ensure that you are given copies of previous receipts as proof of past payments.
The final tax to mention is a wealth tax, which is charged annually in connection with the value of the property you own.
Conclusion
It is important to prepare for the purchase as much as possible in advance, and choosing the right professionals to handle the sale is essential. Knowing all of the costs and taxes in advance for buying the property is particularly recommended in order to avoid unexpected costs after the purchase, especially in terms of Capital Gains Tax. The following is rough breakdown of the costs for the buyer:-
Transfer Tax – 7% of purchase price
Legal Fees – approximately 1% of the purchase price
Notary & Registration Fees – approximately 1% of purchase price
Municipal ´Plusvalia´ Tax Tax paid every time a property is transferred and based on the increase of the value of the land during the time that the seller has owned the property and calculated in accordance with the rateable values, it does not depend on the selling price. This payment is subject to negotiation between vendor and purchaser and is stated in one of the clauses of the private contract as to who is responsible for this cost.
THIS IS A GUIDE ONLY AND NOT TO BE TAKEN AS READ PLEASE CONSULT A LAWYER
SELLING A PROPERTY IN SPAIN WITH VILLAS AND FINCAS
Villas and Fincas has good knowledge of the local area and market, worked with several bank valuers and property surveyors and is therefore able to provide a accurate valuation on your property. We provide a clear and simple sales commission agreement, giving a description of the property and specifying the total selling price and commission for the completion of the sale. If the price is "negotiable" the seller should state clearly to us the offer that he is prepared to accept. Any furniture, paintings or fittings included in (or excluded from) the selling price should be clearly described to prevent misunderstandings at the time of sale.
When seller and buyer have reached a verbal agreement, Villas and Fincas will prepare a reservation contract which will be signed by both parties and an agreed reservation deposit will be paid (normally in the region of 5000 euros). With the offer accepted and the reservation deposit paid, the next step is to exchange private contracts drafted and negotiated by respective lawyers and monitored by Villas and Fincas. This usually happens within two weeks from the offer being accepted. In the private contract (contrato de compraventa) the parties, the property, the price, the method of payment, and the date of completion are the most important items and must be specified and described clearly and in detail. The completion normally takes place at a public notary when the possession is handed over to the purchaser and the balance of the purchase price is received by the vendor.
The Vendors Costs
Estate Agent's Commission 5% plus 16% IVA. And can be deducted when calculating Capital Gains Tax
Legal Fees Normally a standard lawyer's fee is 1% plus 16% IVA and can be deducted when calculating Capital Gains Tax.
Impuesto sobre el Incremento Patrimonial (Capital Gains tax): 18 % on the difference between the original purchase and current selling price. CGT Residents and non-residents both have two allowances they can claim:
(1) there is an annual allowance available to adjust the original purchase price to allow for inflation – so for example, if you bought the property in 1996 and sold it in 2000 you are allowed to inflate the purchase price by this coeficiente de actualización (inflation factor) – which in this case is 1.08;
(2) expenses of purchase, including transfer tax or VAT, plusvalía, and the notary, lawyer, registration and other fees.
Withholding Tax: when the vendor is a non-resident in Spain the purchasers lawyer will withhold 3% of the purchase price and pay it directly to the Tax Office within a month as a payment in advance on account of Capital Gains Tax.
Residents have three other allowances not available to non-residents, which mean that they can avoid CGT:
(1) most importantly, if a resident is aged over 65, he is exempt from CGT completely;
(2) the proceeds of the sale of a principal residence are also exempt from tax if they are used to purchase another main home;
(3) the maximum rate of tax is 20% if the gain has been generated over more than 2 years. A resident has his capital gain added to his income and taxed at his marginal rate. Normally, this starts at 15% and rises to 40% - but tax on the gain (if earned over more than 2 years) is limited to a maximum of 20%.
Municipal 'Plusvalia' Tax paid every time a property is transferred and based on the increase of the value of the land during the time that the seller has owned the property and calculated in accordance with the rateable values, it does not depend on the selling price. This payment is subject to negotiation between buyer and seller and should be stated in one of the clauses of the private contract as to who is responsible for this cost.
Notary Fees It is normal that the buyer pays the total notary fees but this can also be paid by both buyer and seller with the seller paying for the "matriz" and the buyer paying for the notarised copy of the deed of sale.
Conclusion
It is important to prepare for the sale in advance, and checking the title and relevant documents to make it easier for the potential buyer and to make the process itself faster and smoother. Choosing the right professionals to handle the sale is essential. Knowing all of the costs and taxes in advance for selling the property is particularly recommended in order to avoid unexpected costs after the sale, especially in terms of Capital Gains Tax. It is also extremely helpful to have the following prepared:
- Make sure any home improvements, updates, extensions have
been registered.
- Copies of most recent water, electricity and telephone bills and
IBI bills.
- Rates, garbage collection, community of owners rules, alarm
contract, insurance policy, building plans and administrative
licenses
- Title Deeds (Escritura)
- Indication of Plus Valía Tax from the townhall
- Certificate from the Community of Owners
THIS IS A GUIDE ONLY AND NOT TO BE TAKEN AS READ PLEASE CONSULT A LAWYER
Villas & Fincas: Ctra de Casares Puerto Lugar 5, 29690 Casares Malaga SPAIN
Phone: + 34. 952 89 5139, Mobile: +34. 636546796 E-mail: info@villasfincas.com
Andalucia Country house villa property finca cortijo for sale, Rural, Inland, Spain, Casares, Celima, Gaucin, Estepona, Ronda, Sotogrande
BUYERS AND SELLERS GUIDE
HOW TO GET YOUR HOUSE READY TO SELL
CONTACT INFORMATION
Luxury Real Estate
the LPA