Preparing to buy:
In order to ensure you are in a strong position to proceed when you find the property of your dreams preparation with regard to finances is key to agreeing a property purchase. Part of the consideration for the vendor is not just the asking price but the position of the purchaser to complete promptly. If you need a mortgage to purchase then it is best to get approval in principle prior to viewing properties, we will be pleased to put you in contact with mortgage brokers who can help you with this.
Choose your lawyer as they will guide you through the process of buying in Spain. It is important to get a good lawyer as their efficient handling of the purchase will ensure that everything goes smoothly. Often lawyers in Spain provide a post purchase service also in terms of tax etc., so it is best to get a lawyer you wish to continue to work with. We will be pleased to give you several recommendations. Do not sign up with a bank for a repossessed property without speaking to a lawyer as you may find yourself with very unfavourable terms and a contract you cannot escape from.
Choose your real estate agent wisely. We would recommend buying from an agent with an office, who has an impressive website, who is able to offer a good selection of properties and give you valuable advice at the time of purchase and offer after purchase support. This may sound like stating the obvious but you would be surprised to hear that many people meet someone in a bar who knows of some houses for sale, they don´t represent a company, have no website and not even a business card yet next day they are taking buyers around to view properties.
Costs:
Traditionally the buyer pays the following although this can be negotiated differently:
1. Transfer Tax, known as I.T.P. (Impuestos de Transmisiones Patrimoniales). This applies to the purchase of previously owned homes from private vendors and is charged at between 8% to 10% depending on the purchase price of the property.
2. I.V.A.(Impuestos sobre Valor Añadido) at 10% plus Stamp Duty at 1.5% is charged on new homes from Developers.
3. Notary Fees and Property Registry Inscription Fees. Notary fees will vary according to the number of pages or complexity of the title deed, typically you may expect to pay around 600 euros. Other factors such as how many people are named on the deed and whether there is a mortgage required for the purchase will affect the Property Registry Inscription fees. Your lawyer will be able to advise you on this. The costs are likely to be 300+ euros.
4. Lawyers Fees. Your chosen lawyer will provide a quotation upon request. Typically you should anticipate paying 1% or the purchase price in legal fees. There may be some additional costs such as arrange for N.I.E. (Numero de Identificacion de Extranjero) and Power of Attorney if required.
In summary, the above are the one off costs involved in the purchase of a property.
Other annual costs:
I.B.I. (Impuesto sobre Bienes Inmuebles). This is the local municipal real estate tax or council tax as it may be known. When buying a property it is important that your lawyer check this has been fully paid up to date. We recommend you ensure that your Lawyer arranges direct payment from your bank account which will safe guard against over looking this tax in future years as failure to pay on time will incur a surcharge.
Basura.This is a tax for your refuse collection. The bill looks similar to that of the I.B.I. When buying a property it is important that your lawyer check this has been fully paid up to date. We recommend you ensure that your Lawyer arranges direct payment from your bank account which will safe guard against over looking this tax in future years as failure to pay on time
Community Fees.The payment schedule varies in each community so it is important you contact the Administrator of your community and establish how you will pay and at what intervals. Often you can obtain a discount if you pay the 12 months bill in advance, otherwise you will have the option of paying quarterly or even monthly in some communities.
Wealth Tax(Impuestos sobre el Patrimonio): Fiscal Residents are liable to pay Wealth Tax on their world wide net assets, whilst non-residents are taxed only on their net assets located on Spanish territory. This tax is set by the Andalucian regional government and is liable to change. There is no tax payable if the assets are valued at less than 700,000 euros. We would recommend that you use the services of your lawyer or a Fiscal Advisor to ensure you submit the correct paperwork and make the appropriate payment in time.
Income Tax. This breaks down into two categories; Residents (IRPF) and Non-Residents (IRNR). Residents in Spain must submit a tax return on all income. Non residents are liable to pay tax on their property in Spain if they rent it (24% on net income) and if they do not rent it they are required to pay tax on the derived benefit on own use of the property. The tax returns can be handled by your lawyer or a Fiscal Advisor.