A house with three bedrooms, close to the sea in the region of Valencia in Spain, put on sale at 100,000 euros … the value of a studio in Nice.
Since 2008, housing prices have fallen dramatically in Spain, which is why the foreign clientele is very fond of buying real estate in spain. Why not take this opportunity to find a bargain property for sale in Spain? Find in this article all the steps by which you will pass if you decide to buy a property in spain
If you wish to buy a property in spain, you will first need to apply for your foreign identification number called NIE. The NIE corresponds to the identification number assigned to any individual who is not a Spanish citizen. Both European and non-European citizens receive a NIE consisting of the letter “X” or “Y” and a sequence of 8 digits.
The NIE request is made to the Spanish administrative services and several documents must be drawn up and completed in Spain. Several trips may be required and an official proof of the need to obtain a NIE is requested.
In order to avoid several trips to Spain and administrative procedures that may prove to be complex, TAS Consultoria can take charge of soliciting your NIE and all the necessary steps to obtain it. With its experience and its presence in Barcelona, TAS Consultoria generally manages to get your NIE in one day
If you decide to buy a property in spain, it is imperative that you ask the seller for certain documents to attest to the legality of the dwelling prior to sale such as the building permit, a certificate of registration of the property Property, first occupation license, housing certificate, administrative authorizations, and electricity, gas and water bills.
The Spanish Ministry advises to claim the last property tax form, a formal confirmation and an official document proving that the accommodation is not rented. The same recommends to check the status of housing with the Office of the Registry of Property, a state agency whose officials provide you with information free of charge and provide through the site the requested documents. Finally, it is essential to study the privileges of mortgages by addressing the bank; And to seek, if necessary, the opinion of a notary. Of course, once you own a dwelling in Spain, it is up to you to take the necessary steps to register with the Registry
Once an ideal real estate has been chosen, the first step is to make a verbal offer. Once the parties have reached a verbal agreement, the next step will be to formalize the terms of the offer by drafting a sales agreement.
The compromise of sale is very rarely signed before-notary in Spain. Yet, although this compromise is a private deed, it has the force of law between the parties and it will be very difficult (unless the seller agrees) to revert to its clauses at the time of the reiteration of the sale before the notary. It is especially at the time of signing the compromise that we must be vigilant in negotiating and drafting any conditions precedent (obtaining a loan, purging servitudes or charges on the property, etc.).
There is no law concerning the reservation fees but generally amounts to 10% of the selling price of the property. Payment of the booking deposit guarantees that the property is withdrawn from the market and is reserved for you for the price granted. It is important to determine the means of payment for these 10%. The practice of checks in Spain is non-existent and very often the real estate agency will ask you to pay in cash. It is advisable to pay only by bank check or to carry out a sequestration of the deposit on a notary’s account, practice however unusual in Spain but not impossible. It is a somewhat more complicated and lengthy process, but it is sometimes necessary to do so in order to safeguard the best interests of the purchasers.
Upon acceptance of the offer by the owner, the next step in the process is to sign a call option. This usually happens within two weeks of the formal acceptance of the offer.
The professional firm with which you work will have completed its research and investigations on the property and will have organized with the seller owner the procedure for the cancellation of the debts. It is essential to know that the Spanish notaries have in no case the same role as the French notaries who carry out all the legal and urbanistic checks on the property before the sale. Such verifications in Spain must be carried out upstream by the buyer or, where appropriate, by his professional firm, which must ensure that the national, regional and local legal, administrative and planning rules have been respected.
The private contract of sale shall contain all the general conditions of the offer and sale and shall indicate in particular the date of the execution of the authentic instrument before a notary. At this point in the negotiations, the buyer generally makes a 10% down payment of the purchase price that is not refundable.
It is also common to override this step and pass directly the genuine deed if the buyer has the money available and is not dependent on a mortgage.
Please note that the consulting and accounting firm TAS Consultoria can advise you and accompany you in these legal procedures and proceed with the revision of the sales contract
A sale is officially completed in Spain when the authentic deed of purchase is signed before-notary, the final payment is made and the possession is conferred on the buyer. On the day fixed, the buyer and the seller (or their agents) will go to the notarial study to sign the authentic act of purchase-sale called “Escritura de Compraventa”. It is at this point that payment of the remaining balance (90%) is made and possession is transferred to the buyer with the handing over of the keys.
Once this authentic deed is signed, the notary will fax a copy of the deed to the local land register. The professional firm with which you work will organize the payment of the transfer taxes associated with the purchase and will manage the formalities of registration in the register of your title deed. It takes up to two months for the final registration of your title to be carried out. Similarly, your professional firm will manage the transfer of accounts with local utility suppliers such as water and electricity, and organize their payment through a local bank.
Once the purchase of the property has been formalized, you will have to pay the property transfer tax called “Impuesto sobre Transmisiones Patrimoniales” if the property is not new. This tax is between 8 and 10% of the selling price. In case the property is new, you will have to pay the VAT in Spanish called “IVA”, which amounts to 10%.
In terms of the charges and taxes you have to pay, what are they? If you decide to buy a bargain apartment in Spain, you will have to pay the annual property tax called “IBI” in Spain. This tax is paid annually and is calculated on the basis of the cadastral assessment or the taxable value of the land assigned by the Spanish tax authorities. The cadastral assessment takes into account the value of the land plus the value of the construction according to the type, the situation and the use.
You will have to pay monthly community charges that generally include janitor’s wages, community garden maintenance, elevator maintenance, community unit repairs, garbage pick-up, water for the community Watering community gardens, electricity for lighting common areas, insurance, security and management fees. In general, the Community of Co-owners is a legal entity formed exclusively by the owners of the apartments of a building or villas of a subdivision. The purpose of the Community is to ensure the maintenance of the common elements belonging to it in the building or subdivision in question, each owner being obliged to participate in the expenses incurred in the maintenance of community areas and services according to a system Between the different owners. The percentage of costs to an owner is usually set based on the size of the apartment or land in relation to the total area of all apartments or land. The annual community fee budget is presented to the annual general meeting of the owners, who, in person or by their authorized representatives, will have to approve the budget by majority vote of the persons attending the meeting. Spanish law requires that the President of the Community own a property in the complex and that he be elected by voting by the other co-owners. The President does not receive any remuneration for this role
It should be emphasized that in an apartment building the Community of Owners is obliged to insure the building at its reconstruction value. The apartment’s individual insurance policy should not therefore ensure the full value of the apartment, otherwise only the damage caused to the apartment, its contents and liability to third parties. It is also advisable to insure the building at the first risk if the Community does not have combined insurance. Income tax in Spain It is also necessary to pay annual income tax in Spain, whether you are a Spanish resident or not. “Non-residents owning real estate in Spain must submit the Non-Resident Income Tax (IRNR) as they must report the annuities obtained as a result of their ownership.” There are two types of taxation in respect of real property annuities: – The rent obtained from the letting of immovable property: 24% on the profit obtained from the leasing of the property (revenue minus expenditure). – Income tax on real estate income derived from own use of immovable property: 24% on 1.1% of the Cadastral Value of the Immovable Property. If you are a Spanish resident, you will have to submit your Personal Income Tax Return (IRPF) and declare your income, regardless of their source. Fiscally speaking, if a person resides in Spain for more than 183 days per natural year, they are considered resident, although they are not officially resident.
Tax on capital gains and retentions
The tax on capital gains for non-residents is fixed at 21% for 2012 and 2013, payable on the realized gains on the difference between the value of the real property between the year of acquisition (purchase price plus Expenses) and the year of sale (selling price less costs). The capital gains tax for residents for 2012 and 2013 is set at 21% on the first 6,000 € of profit, 25% on the amounts between 6,001 € and 24,000 € of profit, and 27% on amounts starting from 24,001 € of profit.
As regards the sale of immovable property owned by tax residents in Spain, where the immovable property is the usual dwelling, the funds collected from the sale may be used for the purchase of another habitual residence during the two previous years And after the sale of the first house. If the total amount of the sale is reinvested in the new dwelling, the tax obtained for the sale of the previous dwelling will be totally exempt. However, if only a portion of the amount obtained for the previous sale is reinvested, the tax payable will be reduced in proportion to the amount actually reinvested.
Under the new law, all non-resident sellers, irrespective of the date on which they acquired the immovable property, are subject to a 3% retention of the sale price, which is paid by the buyer on behalf of Seller to the tax authorities and which applies against the tax on the capital gains of the seller.
Know how to differentiate constructed square meters from real square meters
You have to know that in Spain there is a difference between the square meters built and the real square meters. We advise you to check the actual square meters of the property you wish to acquire because there are often misunderstandings. A Spanish vendor will argue that the surface of the property is 60 square meters built when in reality the square meter area of the property is 48 square meters real.