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Colegio de Abogados de Málaga
HERRERA Y MORENO ABOGADOS
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Selling and Purchasing a
property in Spain
If your are selling your old
property and buying a new one in Spain we do offer and special package fee
to minimize your total solicitor's fees involved in the overall process of
changing properties in Spain.
This service will qualify you as Premium
Client and you will benefit from special rates if you instruct us in advance.
Obtain an instant Quote for this Premium Service.
Purchasing a property in Spain
Buying a property in Spain may
become a difficult task, especially when it comes to dealing with
unregistered properties, properties with legal problems, rustic properties
not suitable for building purposes or properties with encumbrances or
easements or charges. We shall make the purchase process extremely easy for
you, at a competitive and guaranteed fixed fee, with no hidden extra
charges and with a proactive approach to achieve swift completion of your
sale.
We shall deal with all the other implicated parties in the
transaction through our qualified and reliable property solicitors
that will contact for you the Estate Agents, Banks, Vendor's Solicitor,
Mortgage Brokers, Property Surveyors and any other person part of the
transaction.
Selling your property in Spain
When it comes to selling your property
in Spain, you will find that the Spanish legal system is very different
from the British one, although in some aspects, there are parts that are
similar. The first and most important step is that you should look for
an independent legal advice and never sign anything until
you have been properly advised.
This guide is based on our
experience and knowledge of the Spanish law and has been prepared in
a very simple way so you can understand how the process work.
Price of the property
First, you will have to determine a
price for the property. For this purpose, you have various options:
approach a sales agent and ask him to sell the property for you,
advertise in a local foreign language publications in Spain or advertise
in the newspapers in your home country.
We could also value your
property through an estate agent or through an official valuator.
Usually, the expertice of the former is enough and more cost effective.
Reservation agreement
Once you found a potential buyer, a
reservation agreement is signed on a non refundable base for taking the
property off the market.
From this moment, the vendor and buyer´s
lawyers will start the proper sale process.
Documentation needed
Your lawyer will require the following
documentation related to the property:
a.- Copy of the Title Deeds (escritura). With a copy of the
deeds your lawyer will be able to provide to the buyer´s lawyer a nota
simple registral, which is a document issued by the land registry
where you can find the details of the property, size, owner and any
possible charges on the property.
b.- Copy of the latest Impuesto Sobre Bienes Inmuebles (IBI)
receipt (Real Estate Tax) and refuse collection tax if applicable.
c.-Copy of your last Spanish Income Tax Declaration
(form 214 if non-resident).
d.- Copies of all utility service bills (water, electricity,
gas, telephone…).
e.- Community charges: at the signature at the notary's the
community will have to issue a certificate which estates that the
community fees have been all paid and you are up to date with the
payments.
f.- Copy of the mortgage Title Deeds if you applied for a
mortgage when you bought the property.
If the sale is going to take place in a very short time, within one
month or an equivalent period it could be agreed that you do not sign
any private contract that would be directly submitted to the signature
at the notary's. However, if the sale is going to be delayed, i.e. the
buyer needs financing or a new mortgage, the private contract will be
signed and the terms and conditions of the sale, completion date, price,
penalties, distribution of taxes etc are stipulated.
Completion – signature of the Title Deeds
Once all the checkings on the property
are completed and both parts are satisfied, the lawyers fix a date for
the completion at the notary's.
In many cases, you will find that at the signature of the title deeds,
not only the vendor and the seller are present but also the bank
representatives in case there are mortgages to pay off or to settle up
upon the property. This type of signature procedures are obviously more
complicated and imply a better coordination between the parties.
According to Notarial Rules, the notary has the obligation to check
the registration of the property being sold, before the signing of the
deed. Additionally, he must fax the new title deed immediately to the
property register once the title deeds are signed.
Furthermore, you should be aware of the fact that the Spanish law
states that the real market value must be declared in any new escritura,
and provides for sanctions, in case the authorities find out that the
value was under-declared.
3% Retention
You should also bear in mind that,
unless you have been the registered owner of the property for over 10
years, it is now the buyer's responsibility to lodge 5% of the purchase
price for the Spanish tax authorities on behalf of the Seller. This
responsibility is the same whether the money is paid in Sterling or in
Euros.
The tax authorities retain this deposit until they assess the
taxes, including the capital gains tax, that the seller owes. Once the
Seller's tax position is assessed, any surplus funds are returned to the
Seller. The authorities may take up to a year before returning any money.
Therefore, you should take into consideration the fact that you will
only receive 95% of the agreed price.
Postsale
Once you have sold the property and
signed the title deeds you will have to notify the correspondent
suppliers to transfer the electricity, water and rubbish collection
charges on the name of the new owner. You will also need to notify the
Town Hall that you no longer own the property.
We can assist you
with all of these matters.
Taxes
Finally, you will need to make your
Spanish tax declarations in order to recover, if any, the unused balance
of the retention paid to the Spanish tax authorities.
The tax
cllection system in Spain is very different from the one in force in
other countries.
In Spain, it is your responsibility to obtain a tax form, to complete
the form and to calculate the amount of taxes that you owe to the State
and to submit the form to Hacienda (tax office) with the appropriate
amount of tax payable.
The taxes that you have to take into account are:
Plusvalía Tax (Plusvalía Tax is a
Municipal Tax on the increase of the land value over the years)
This tax may vary from hundreds of euros for small properties
recently purchased to as much as a few thousand euros for larger estates
purchased many years ago. This tax is calculated on the basis of two
variable: ratable value of the property and number of years of ownership
by the vendor. The market value or the sales price does not have an
effect on this tax.
It is recommendable for the seller/legal representative to find out with
the Town Hall the amount of tax to be paid. According to the Spanish law,
the seller is obliged to pay this tax unless the parties agreed on
something different.
Capital Gain Tax
When it comes to selling, the main worry of the seller is to find out
how much s/he would have to pay on the capital gain tax.
A non-resident seller is liable for the payment of a 35% Capital Gain
Tax applied to the profit of the property sale unless it was bought
before January 1st 1987. However, most of the people are not aware that
there are exemptions available for those who have owned their property
since 1994 and before.
In the typical example of a property sale, the prices used to
calculate the tax liability are those declared in the Title Deed.
If you have under-declared the value in your Title Deed when
purchasing a property, you can therefore build up a large and entirely
artificial Capital Gain which will be taxable unless you are
currently taking action to remedy the situation.
A vendor will be able to mitigate his tax exposure by three
different ways:
Tax reductions depending on when the property was purchased
Those who bought a property after the 31st of December of 1994
will not be entitled to any reductions.
Those who bought in or after 1987 will benefit from a reduction
of 11.11% on the net gain for every year they have owned the
property before the 31st of December 1996 without considering the
first two years. This means that the seller starts benefiting from
this reduction, 11.11%, if he bought the property in 1994, 22.22% if
he bought in 1993 and so on.
Those who bought before the 31st of December 1986 won't pay this
tax, as the cut-off point is 1996.
Tax reductions on the inherent costs of the purchase, works
done on the property and others
Costs of the purchase: these would include VAT of Transfer Tax,
Plusvalía Tax (where paid by the buyer), Land registry and Notary
fees, lawyer´s and real estate agent´s fees, where applicable.
Extensions and improvements done on the property
These should not be confused with maintenance and conservation
costs, as these are not deductible. In practice there is no clear-cut
distinction between one and the other.
Tips
Currency
You may fix the
price in any currency you prefer. There are no legal or other
obligations forcing you to establish the sales price in any specific
currency. If payments are made in another currency, they will have to be
calculated at the rate of exchange on the day they are being made, so
that you can be sure to get the agreed value.
Maintenance
To be able to sell a property, it is recommendable to properly
maintain it. If your property has been unoccupied for a long period,
make sure it is cleaned and aired, all fittings function, the garden is
tended, the swimming pool is cleaned and the damaged curtains or
furniture are repaired or changed. A small investment in preparing the
property may make the difference both in the time needed for the sale as
well as the price obtained.
Furnished Property
If you are selling the property furnished, you must prepare a
complete list of furniture and even photos of the most important pieces.
Comentarios/Comments/Enquires
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Última modificación:
02 de July de 2008
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