You will have a number of costs and fees to consider:
• Lawyer Fees are usually between 1% and 1.5% of the purchase price, plus IVA (VAT) at 18%.
• Notary Fees are fixed by law and are usually between 300 and 1,200 euros.
• The Registry Fee is about 80% of the Notary fees.
• The Transfer Tax amounts to 7% of the purchase price for a resale
(second-hand) property, and in the case of a new development you pay 7%
in IVA, as well as 0.5% in stamp duty.
• ‘Plus Valia’ Tax is based on the increase in the value of the land
since the last time the property was bought and sold. The exact amount
can be discovered at the local town hall (ayuntamiento).
• Local Council Taxes fall into three categories:
-Impuesto sobre la renta de las personas fisicas (IRPF) relates to
everyone who is non-resident, and is charged on the rateable value (or
catastral) of your property. The local town hall calculates that you
earn 2% of the catastral value of your property as rental income
(whether or not you do) per annum, and then charge you 25% of this
calculated amount.
-Impuesto bienes sobre inmuebles (IBI) tax is like the UK Council Tax
and can include rubbish collection, although this could be charged
separately. It varies from about 150 euros a year in rural areas to over
1,500 euros in more exclusive areas.
-Impuesto sobre patrimonio (Wealth Tax) is charged to non-residents
on any property and other assets in Spain. For total assets less than
160,000 euros, the tax is 0.2%.
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• Estate Agents' Commissions average around 5%.
• Capital Gains Tax is charged on any profit made when you sell and
due to recent EU legislation has now been changed to 18% for
non-residents and residents alike. If you are resident, aged over 65,
and have lived in your property for at least three years, you are exempt
from Capital Gains Tax. What’s more if you are 60 or more and have
lived in your property for at least three years, you can bequeath your
property to your spouse or children and avoid paying inheritance tax on
95% of the valuation. The inheritor must also be a resident of Spain and
agree not to sell the property for at least 10 years.
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Once
you have decided on the property you wish to purchase, make a verbal
offer through your sales agent. If this is below the asking price,
negotiations will proceed until a final price is agreed, then you should
appoint a lawyer (abogado) to formalise the agreement.
Normally the first check is to obtain from the property registry a ‘nota
simple’ which identifies the registered owner and provide details of
any mortgages or charges (embargos) on the property.
The seller should provide you with receipts for payment of IBI
(impuestos sobre bienes inmuebles) the annual real estate tax, which
show the ‘valor catastral’, the assessed value of the property on which
your property income tax will be based.
If you are buying a new property ask to see the ‘declaracion de obra
nueva’, a statement that shows this is a new-build home, and the
‘declaracion de alteracion de bienes naturaleza urbana’, which certifies
that the property has been altered.
If the property is located within a community or an urbanization,
contact the president or administrator and ask for receipts for
community charges and minutes of community meetings to identify any
problems.
After the price is agreed and the ‘nota simple’ has been checked, you
will have to pay a small holding deposit to take the property off the
market and reserve it until you can reach completion. Your lawyer will
prepare a formal offer and agreement contract for this purpose.
The exchange of private contracts or the signing of an option to buy
would normally take place about two weeks after the formal acceptance of
an offer, when the lawyer would have completed his searches. The
contract would set out all the agreed terms and set a date for
completion. It is usual for the buyer to pay a 10% deposit at this
stage.
The law states that if the buyer withdraws from the purchase after
signing the agreement, any deposit paid is lost. If the seller changes
their mind, in some cases, twice the amount of the deposit has to be
paid to the buyer, depending on the wording of the agreement.
On the assigned day, the buyer and seller (or their authorised
representatives) will attend the office of the Notary, to sign the
‘escritura de compraventa’ (the title deed), which should state that the
property is sold free of charges, mortgages and tenants. The Notary
does not check the terms, but solely certifies that the parties have
agreed them. At this point the balance of the payment is made and
possession passes to the buyer.
Your lawyer will arrange payment of taxes and fees, and register your
title deed at the property registry. This should be done promptly. All
property in Spain is registered in the ‘Registro de Propriedad’ that
denotes who owns the property, its exact size and if there are any
mortgages on it. Only the people named on the title deed have the right
to sell the property. Don't forget to have the property insured.
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A Spanish mortgage will usually fund up to 70% of the value of your property on a capital repayment basis, usually over a maximum term of 20 years. However, mortgage funding is varied and each case is individual.
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You
are liable to Spanish income tax on any income arising from rental of
your property in Spain. If you are resident, you should declare your
rental income as part of your earnings and you will be taxed at your
normal income tax rate. If you are a non-resident, you are subject to
tax on income arising in Spain at the flat rate of 25%. There is a
‘double taxation’ agreement with the UK, which means you are liable only
to one set of taxes. You should always get advice from an expert in
that particular tax jurisdiction.
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The seller of a resale (second-hand) home should provide the following:
• Title deed (escritura) of the property
• Receipt of payment of IBI, the real estate tax, for the last year
• Receipt of payment of the IRPF tax, on the increased value (valor catastral) of the land.
• Statement to show that any community charges have been paid up to date (you will be liable for them otherwise).
• Latest copies of domestic utilities bills such as electricity and water so that you can take over the services.
In the case of a new property, the seller or developer should provide you with:
• Deed of declaration of new construction
• Occupancy permit
• Certificate of rateable value of the property
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Buyers
are always advised to make a Spanish will because the Spanish
authorities do not recognise a will made in the UK for inheritance
purposes.
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