COM_MINITEKLIVESEARCH_Properties

PSP Guide

EXPENSES WHEN BUYING A PROPERTY

Once you have found your perfect property and decided to proceed with the purchase, the buying process will begin. Before you sign anything or pay any deposit you should take advice from a legal adviser. You can use either a lawyer or an asesoria/gestor.

The asesoria/gestor or lawyer is your best friend and he/she will advise and assist you through every stage of the buying process by:

• Obtaining Power of Attorney on your behalf if you are not here for completion.

• Helping you to obtain an NIE number

• Verifying that the purchase contract is correct and covers your interests

• Carrying out the necessary searches

• Payment of deposits

• Preparing all necessary documentation for the visit to the Notary

• Accompanying you to the Notary for the signing of the title deed and translating documents for you

• Registering the new title deed

• Arranging for utilities to be transferred into your name

Once you have completed the purchase of your new home, he/she will then be available to help you with all your needs, whether it be:

• Help you make an annual tax declaration on your behalf

• Prepare your Spanish will

• Transfer car ownership and registration if needed

• Make an application for residency if you decide to live here permanently

• Help you obtain a certificate from the Valencian tourist board which authorises you to rent your property as a holiday let legally.

We can recommend lawyers and asesorias/gestors whose services we have used and whom we have found to be efficient, reliable and highly professional. None of these people are connected to our business in any way, so if you do not have your own legal adviser, then we can confidently recommend the services of these people.

Obtaining your N.I.E. Number (foreigner´s identification number)

In order to purchase a property in Spain, you need an N.I.E. number which is obtained from the local police station, "Comisaría de Policia". You will need this certificate prior to completion of your purchase, so please do leave enough time to obtain it (min 2 weeks and possibly longer during the summer months). Your asesoria/gestor can apply for this for you but you need to accompany him/her to the police station. You will need to take your passport and a copy of it. The N.I.E. number is a very important part of Spanish life and you will be asked for it time and time again.

Spanish Bank Account

You will need to open a bank account in Spain and you need both your passport and your N.I.E. number in order to do this. The money you need to complete the purchase will be deposited into this account and withdrawn in the form of a bank certified cheque – the normal method of exchanging money at the Notary's office. Your utility bills will also be paid by direct debit from this account. We work closely with a few Spanish banks and can assist you in opening a bank account and also applying for a mortgage.

Mortgages

Eligibility

Should you require a mortgage to complete on your purchase, the process is straightforward and similar to that in the UK. We can assist you with a mortgage in Spain as we have a great relationship with a few bank managers in some of the best known banks in Spain.

A mortgage can be arranged either in Spain or in the UK. Both Spanish and UK banks have the same requirements for lending money on a property in Spain and all require proof of income and regular outgoings. The level of mortgage offered is directly dependent on your financial status and also the declared value of the property you wish to purchase.

Terms

Spanish banks will generally lend 60% if you are a non resident in Spain and 70 to 80% of the value of the property if you are a resident. Banks will require the mortgage to be fully repaid by the age of 70 normally over a repayment period of 25 years but this is dependent on age. Before the bank can make a decision about your application, the property will have to be valued by the bank valuer (tasador). A reply to your mortgage application, after all documents required have been submitted, can normally take 5 to 7 days, depending on circumstances.

Costs

The cost of arranging a mortgage is likely to add about 1-2% to your overall buying costs. If the sellers of the property you are buying already have a mortgage on the house, then it is sometimes possible to transfer the existing mortgage from the seller to the buyer which might reduce the mortgage set up costs. Normally an early repayment,cancellation fee is set at 1%. The valuer cost varies between 350€ and 500€ and bank notary and registration fees can vary between 1,000€ and 1,200€.

Purchase Contract

In Spain the purchase contract is called the "Contrato de Compraventa". Usually the purchase contract will be prepared by your legal adviser and must be agreed by both the buyer and the seller. You can seek to include any clauses which you consider to be important or to safeguard your position. You should consider issues such as the results of searches, mortgage applications and any other agreements between the buyer and the seller.

A typical purchase contract will include:

• Description and address of the property

• Purchase price

• Amount of the deposit

• Form of payment

• Penalty clauses

• Any additional requested clauses

• What is included in the purchase price (e.g. furniture, etc)

• Completion date

Before you sign this contract, please be absolutely sure that this is the house for you. The contract is binding for both the buyer and the seller and there will be penalty clauses should either party rescind the contract.

Deposit payment

Holding Deposit

Once the terms of the purchase have been agreed with the sellers, the buyer will normally be required to pay a holding deposit of between 2,500€ to 3,000€ which will remove the property from the market for a fixed period of time and enable the buyer's legal adviser to ensure that the documentation for the property is correct.

10% Deposit

When both parties have agreed the contents of the purchase contract, they sign it and a deposit of 10% of the purchase price (less the holding deposit) is then paid by the buyer within a certain agreed time limit. This is a non-refundable payment and will only be reimbursed in the event of a specific clause in the contract not being fulfilled.

Before the signing of the title deed in front of the Notary, your asesoria/gestor or lawyer will carry out searches and obtain a Nota Simple. This document confirms that the seller is the registered owner of the property and that all taxes have been paid. The asesoria/gestor or lawyer will also check to see whether any debts or charges exist on the property and that clear title can be obtained. Prior to completion, all of the bills relating to the property, such as electricity, water, telephone and council tax, must be proven to have been paid up to date. These paid bills must be made available to the Notary at the time of completion.

If the property you are buying does not already have a registered title deed, this does not necessarily mean that you should not buy it. This is a situation very similar to a first registration in the UK. The property may have been in the same family for many years and now that it is being sold, the registration can be done. Your asesoria/gestor or lawyer will still carry out searches, but instead of the Nota Simples, he/she will contact the Catastro Office for a certificate relating to the property. Completion of the purchase and obtaining the new title deed will generally take longer as your asesoria/gestor or lawyer will need to gather all of the documentation relating to the property. If it is found that it is not possible to obtain the new title deed, the purchase cannot continue and your deposit will be refunded.

Expenses

We advise you add between 12% and 13% to the purchase price of the property to cover the taxes and expenses that will arise during the purchasing process. The costs involved include:

• Notary Expenses

This is an amount you have to pay for registering and preparing the "escritura", the title deeds, and will depend on the purchase price declared.

• Resale Purchase Tax (I.T.P. "Impuesto de transferencia de propiedad")

When you purchase a resale property you are required to pay 10% for the transfer tax.

• Value Added Tax (I.V.A. "Impuesto sobre Valor Añadido) for new properties only

If you have bought a new home (with a garage) you must pay to the builder 10% I.V.A. on the price declared on the title deed. This is payable as part of the payment structure or on completion, as detailed in the contract.

• Stamp Duty (A.J.D. Actos Juridicos Documentados)

If you have bought a re-sale property or a plot of land you will have to pay 7% tax based on the price that appears in the title deed. If you have bought a newly constructed property and have already paid the I.V.A. you must also pay 1% tax based on the price that appears on the title deed.

• Land Registry Fees

The amount you will have to pay depends on the purchase price declared on the title deed.

• Land Value Tax (Plusvalía)

This tax is levied by the local town hall and it is paid once the property has been sold. It is calculated on the increase in the value of the land since it was last sold. This tax is usually paid by the seller but on new properties it is paid by the purchaser.

• Legal Fees

You will need to pay for the services of your asesoria/gestor or lawyer who will be happy to tell you in advance how much these costs are likely to be.

Completion

The completion date is agreed between the buyers and the sellers though 4-8 weeks is normal. However, depending on the outcome of the searches, it can take anywhere between 3 weeks and 3 months between signing the contract and completion.

Completion takes place at the office of the Notary who is an officer of the state whose job it is to ensure that all the legalities are completed correctly. Both the buyer and the seller will be required to appear before the Notary in person and at the same time. If you are unable to attend in person, you must obtain a power of attorney for someone else (often your legal adviser) to sign on your behalf. This is best done in Spain with the help of your asesoria/gestor or lawyer.

All transactions at the office of the Notary are conducted in Spanish but we will be present to assist you with the translation. The final payment will be made in front of the Notary usually by banker's draft or banker's cheque. You will then sign the title deed and be handed the keys to your new home.

Property registration

Your asesoria/gestor or lawyer will now send the new title deed to the Land Registry for registration. It should be returned within approx 3 months

Insurance

The insurance of the property becomes your responsibility once completion has taken place at the Notary's office. We can assist you in obtaining a very competitive quote. The process is similar to that in the UK and to obtain a quote, you will need to have the following information:

• Your full name and NIE or passport number

• The full address of the property

• Estimated cost to re-build the property

• Size of the property

• Value of the contents to be insured

• Your bank details as the payment will be made via a direct debit

If you do not live in Spain permanently, the insurance company will probably also need to know how many doors and windows the property has and whether they have metal security grills (rejas) or security glass .

Residency

The law states that anyone who spends more than 6 months of the year in Spain must obtain a Certificate of Residency and declare their income tax in Spain. Your asesoria/gestor or lawyer can obtain this certificate for you and help you with your income tax declaration. It is possible to apply for your residence certificate yourself:

You will need to complete an application form which is available from the local police station ( Comisaría de Policia) and present the original form plus a copy along with 3 passport type photographs, your passport and a copy of your passport at the police station. You will also have to have either health insurance or an S1 form that states you are entitled to free health care here in Spain. Other documents may be required depending on your circumstances, including proof that you are able to support yourself here in Spain. A list of documents required can be obtained from the police station or your asesoria/gestor will be able to advise you on what is required. Once you have presented all of the documentation, you will be told how long the process is likely to take, usually 7 to 10 days.

Our service to you

• Monitor the progress of the purchase of your property for you

• Keep you informed at every stage

• Answer any questions you may have at any stage of the process

• Liaise regularly with your legal representative

• Accompany you to the Notary office for the signing of the title deed

• Be there for you after completion – see our after sales services information below

EXPENSES WHEN SELLING A PROPERTY

When you sell your house you will need to pay tax to the Hacienda or tax office for the profits you will have made on the sale of your house. The amount you pay and how you pay them will depend on which of the following categories you fall into.

Foreign non-residents

You are required to pay 19% on the profit from the sale of your house (the difference between what you declared when you bought the house and what you will declare when you sell the house).

On the day that you complete on the sale you will be charged a flat rate of 3% on the full amount of the declared sale price (the amount shown in the escritura or title deed). This amount will be deducted from the final money you will receive when you visit the Notary to complete on the sale of the property. (Buyers from non-resident sellers are required to withhold 3% of the total purchase price and pay it directly to the Spanish Tax Agency, usually through their lawyer or asesoria).

This 3% paid on the day of completion is a part payment of the amount of 19% to be paid on the profit made on the sale. You will be required to pay the remaining amount of the 19% on the profit when asked to by the tax office.

All non-residents are required to pay a 3% retention on the day of completion.

If the 19% on the profit works out to be less than the 3% on the full amount, it might be a good idea to ask your lawyer or asesoria to make an application to pay the 19% and then he can claim back the 3% already paid and just pay the lesser amount of 19%. A form 210H will need to be completed. This should be submitted within three months of the sale along with the last four years of non resident income tax. From the date that it is submitted you should allow around a year to receive the refund.

Foreign residents

To qualify and be treated as a Spanish resident requires you to have been living in Spain for 3 or more years and to be able to prove this, by providing the previous 3 years’ tax returns, an escritura in your name that is more than 3 years old or a certificate from your local town hall to say that you have been registered as living there for more than 3 years. You will also need to prove that you intend to continue to live in Spain by providing a contract to purchase a new home or a rental contract for at least 6 months. Your lawyer or asesoria will apply for a certificate from the tax office to say that you qualify to be exempt from the normal retention of 3%.

In this situation you must pay 19% tax on the profits from the sale. This amount is not paid on completion of the sale, but is declared in your following year’s tax declaration. If within 2 years of the sale you invest all of the proceeds from the sale into another primary home, you will not have to pay this tax. If you do not, then you will pay 19% on what is not spent on your next home.

If you are selling a second Spanish home, you will be required to pay 19% on the profit. Rollover credit is not available for any other house than your primary residence.

Foreign residents who are aged 65 and over:

If you are selling your primary residence you are not liable to pay capital gains tax. Again you will need to prove that you have lived in Spain for 3 years or more and intend to continue living here. If you intend to go back to your home country you pay 3% tax on the full declared price on completion and then in your next years tax declaration you can claim this money back from the tax office.

If you haven't quite made the three year threshold and there is a compelling reason why you have to sell, the Spanish Tax Authority will take this into account, for example, if you have become disabled and can no longer manage to live in a high rise property or if you have to move because of work related reasons.

Plusvaliá Tax

In addition to capital gains tax, the plusvalía tax is also paid by the vendor in this area.

The plusvalía tax is based on the increase in the value of your land from the date you bought it to the date you sell it and it is calculated by your local Town Hall.

Each Town Hall determines the amount of plusvalía to be levied on each house sale. The original purchase price and the sale price of the property do not have any effect on the plusvalía tax.

The plusvalía tax is calculated according to the rateable value of the land and the number of years it has been in the ownership of the vendor.

For an indication of the amount of plusvalía tax you are likely to have to pay, you need to go your local Town Hall with your Escritura and an IBI receipt for your property. They will be able to tell you the tax accrued if the property was to be sold on that date.

Mortgage Cancellation Fees

Banks will charge you a mortgage cancellation fee and this can vary from 0.5% and 2% which will be paid on the remaining balance of the outstanding mortgage. Please also remember that the mortgage should be cancelled at the notary and also at the land registry office. Fees for cancellation vary.

PRESTIGE SPANISH PROPERTIES AFTER SALES SERVICES

At Prestige Spanish Properties, our company ethos is all about customer service. We offer a friendly, reliable and professional service where we guide our buyers through the whole process from beginning to end. We never pressurise anyone into buying anything and we never abandon anyone one that has bought a property - once a client always a client.

Our comprehensive after sales service is very important to us. We know how hard it is to deal with the practicalities of setting up a new home in a foreign country where everything seems to be done differently from the systems we are used to. If you have bought a holiday home, then you may not be here in Spain for much of the time and you will need a reliable source of advice and practical help. This is something we pride ourselves on and, over the years, we have dealt with all sorts of requests from clients who have bought a property through us weeks, months or even years after completion.

Our after sales service includes:

• Giving you information on the connection of a telephone (where possible)

• Giving you information on a broadband internet connection (where possible)

• Registration with the local town hall - "empadronamiento"

• Assistance with the opening and operating of a bank account

• We will help you in financing the purchase of your new property, whether it be in obtaining a mortgage to arranging 100% mortgages that are available on properties in certain areas of the Costa Blanca

• Assistance with the opening of a post office box if your house is located out of town

• Assistance with the transfer of the gas contract or arranging a new one

• Assistance in finding competitive house insurance

• We work closely with a family run removals company with over 20 years experience, who will professionally move you to your new home, whether it be here in Spain or back to your country.

• Help in finding reliable builders and tradesmen for all services, from the simple job of changing locks to building you an extension, also landscaping, painting and decorating. We have tradesmen for every service you require

• Property Maintenance, Cleaning services, Key Holding & Rental of your property through a very reputable & legal Management Team

• The Best Foreign Currency Exchange available

• Furniture Packs to suit every possible taste

• Our own interior designer who will transform your new property into your very own dream home

• Anything else you can think off

 

Choose your perfect home


New

Re-sales

Bank Properties

Contact us

Featured New Build Properties

Featured Re-Sale Properties

Premier homes in the sun -
Prestige Spanish Properties

We specialise in providing family friendly holiday homes in the beautiful Costa Blanca & Costa Calida.

Whatever you are looking for in your dream home, we are dedicated to helping you find the perfect property. Talk to one of our team today to start the move of a lifetime.

Our Testimonials

The Service You Deserve From People You Can Trust