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| Buyers Guide: Spain |
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With over 500,000 British citizens already owning property
in Spain for holiday or investment purposes, and research
by the Spanish institute for foreign investment forecasting
a positive outlook for the next ten years, it is crucial
for those investors to receive the best possible guidance
for acquiring a property in Spain.
Searching for the Right Property
With T.O.P. Network, finding the ideal property in Spain
should not be any harder than in the UK, however there will
be additional challenges such as the obvious language barrier
and legal and tax concepts which are very different to the
UK system. The first thing a potential buyer must consider
is the area in which to acquire a property. This can be
done by the buyers own knowledge and by help from T.O.P. Network.
Prior to Viewing
A Reservation Sum must be paid when buying a property. If
the buyer does not have sufficient funds immediately available
there is a risk that a property can be lost to someone who
has the capital. The amount of the Sum will obviously vary,
but will be around 6000 Euros. It can be paid using a Cheque
or Cash, however the buyer must be aware that when paying
by cheque drawn from a foreign bank it may take up to 10 days
to clear, and remember the best plots always go first.
Non residents of Spain are free to obtain a mortgage or loan,
however there are certain requirements needed before purchasing
real estate:
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A copy of income tax returns |
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A breakdown of assets and liabilities |
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A bank reference with last three months' bank statements |
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Three months' salary slips, and if self employed a full statement of accounts |
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Lawyer (Abogado)
We always recommend that buyers of real estate appoint a lawyer(abogado). It is crucial that they are specialist in property transactions who consider the tax implications for UK clients. They must also be registered with the Spanish local law society (Colegio de Abogados), and regulated by the law society or council of the bar if they practice in England.
When using lawyers and solicitors in England and Scotland,
it is important they are qualified to advise the client in
property law and tax, and they must be registered as a European
lawyer in the Spanish law society. To save you time we have
partnered with one of the Costa del Sols leading law firms,
with offices in Marbella, Madrid and London. They offer a
full range of professional services. Click
here for more information.
Negotiation
Negotiating the purchase with the seller is a key consideration for the buyer. There will be many aspects to consider, including the sale subject to mortgage approval or method of payment.
The terms of the purchase must be discussed with the senior sales person within the real estate company. It can be the most important stage of the purchase and it is therefore important to have someone competent in negotiations of purchase.
The appointed lawyer can also assist with any difficulties the estate agent and purchaser may have with the contract.
Agreements
The sale of the property will go through initially by preliminary agreements. Made between the vendor and the purchaser, the agreement is at first an expressed interest by both parties to draw up a contract for a property. As long as no payment has been made, the purchaser is not legally bound or obliged to buy.
When the first payment has been made, the preliminary arrangement acts as a final and legally binding contract.
When using lawyers and solicitors in England and Scotland, it is important that they are qualified to advise the client in property law and tax, and they must be registered as a European lawyer in the Spanish law society.
Private Purchase Contract
After the preliminary agreements, the actual contractual partnership begins when the price has been agreed by both parties on the desired property. It is important that both parties fully understand the contract, again lawyers can help at this stage.
Unlike in the UK, there will be no need for a witness to be present during the signing of a private contract.
Guarantees
When buying off-plan the purchaser must ensure bank guarantees or insurance policies are in place. There is a set of laws and provisions for developers and agents which guarantee the payments on account for properties in the process of being completed.
Statutory provisions are also in place to guarantee properties against defects which are found up to ten years after the building completion date.
Public Deed and Registration
The sale of a property can only be finally completed after
the public deed (Escritura de Compraventa) has been signed.
The only person who can issue a public deed is the public
notary(Notario), when issued it is to be signed and can
be registered in the land registry. It is important to note
that this can take up to two months to complete.
There are also other companies and trusts used in the purchasing
of a property in Spain. One way of utilising this option
is to use a Spanish Limited Company (Sociedad Limitada,
SL) or a public one (Sociedad Anomia, SA). UK limited companies
may also be used. The buyers lawyer will pay all relevant
transfer taxes associated with the purchase.
Costs, Fees and Taxes
The buyer of a Spanish property must be aware that there are certain costs and fees involved in purchasing a property. These extra costs will roughly amount to around 10% of the final purchase price.
Legal fees will amount to 1200-1800 Euros or 1% of the purchase price, whichever is greater. This fee is also subject to value tax (IVA) currently charged at 16%.
The Notary fees discussed previously are fixed by law, and
depending on the sale price of the property may range from
300 - 840 Euros.
The fee for the Property Registry will be around 60% of what the notary charges.
Transfer Tax (ITP) will also be applicable and will be charged at 7%.
Other taxes that need to be considered by the legal team include, Income and Wealth Tax, Capital Gains Tax, Council Tax, Inheritance and Gift Tax and Social Security.
For any queries you may have on legal and tax issues when
purchasing Spanish property click
here. |
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