Before you have
decided on a property in Spain it is important to be fully aware of
the legal process and costs involved in your property purchase. The
following is intended as a guide only, and we will obviously go over
the legal aspects of buying with you in more detail.
Appointing
a Fiscal representative, solicitor(abogado)
Easy Property Spain
can act as your solicitor and handle all of the legal aspects of your
purchase at no extra cost, or alternatively you can appoint one of
your choice. We will normally check out any outstanding debts which
exist on the property as well as help with contracts and NIE numbers.
NIE number(Numero
de Identificacion de Extranjeros)
It is essential
to have an NIE number for any financial dealings you may have in Spain.
This is a simple, but sometimes lengthy process which involves filling
in a form with us or your solicitor, you also need to supply a colour
‘passport’ photo, a photocopy of your passport and your passport,
we or the solicitor will then obtain your NIE number from the local
police station. The NIE number can take anything from 4 week to 6
weeks to be obtained and we can automatically request one for you.
Applying
for a Bank Account
We can help you
to open an account at the bank of your choice, although we have a
set of preferred banks, thanks to our fantastic relationship and reputation.
We will also put you in contact with an English speaking representative
at the bank.
Applying
for a Mortgage
You can choose to
apply for a mortgage in Spain or from the UK. Mortgage rates in Spain
tend to be lower than those in the UK currently around 3.5%. Applying
for a mortgage in Spain is a straight forward process, as in the UK.
You will need to prove that you have an income or sufficient funds
to pay the mortgage. The level of mortgage offered is directly dependent
on your financial status and also the declared value of the property
you wish to purchase.
Purchasing
a Property
Once you have decided
on the property you wish to purchase and the terms and conditions
have been negotiated with the vendor then a deposit of 3000 is required
to secure the property and as official confirmation of your intent
to purchase that property. The remaining 90% is payable on the signing
of the title deeds before the Notary.
E.P.S or your appointed
solicitor will then carry out all necessary searches on the property;
to ensure that it is owned by the vendor, it has planning permission,
there are no outstanding debts or charges on the property and other
legal encumbrances.
Once the searches
on the property are satisfactorily completed and the deposit has been
paid in accordance with the terms and conditions of the contract then
the title deeds are signed by both the buyer and the seller before
the Notary.
The Notary
(Notaría)
This is a solicitor
appointed by the Spanish government to witness the signing of all
legal public documents. In this case the title deeds (escritura) of
the property. He represents both the buyer and the seller. The Notary
fees are around 2% of the purchase price of the property and must
be paid at the time of the signing of the deeds. The Original signed
document is retained by the Notary who will apply for a formal change
in the land registry. The purchaser will receive an initial legal
copy of the title deed which is signed and stamped by the Notary.
Taxes
We recommend that
you allow a sum of around 10 - 13 % of the price of the property to
cover payment of purchasing fees e.g. land registry fees, notary fees,
legal fees and taxes.
Transfer
Tax
This is paid by
the purchaser and is a standard 7% tax applied to the declared value
of the property. This tax must be paid within 30 days of signing the
title deed.
Plus Valia
(land/capital gains tax)
This is generally
paid by the owner when they sell the property. Transfer tax is calculated
on the increase in the value of the land from when it was last sold.
The calculation is based on the ratable value of the property and
is a ‘one-off’ payment.
Tax on Rental
income
Britain and Ireland
have a double taxation treaty with Spain. The standard rate of tax
in Spain is 25% and is paid on the declared income from the property.
The minimum declaration is 2% of the value of the property. The rental
income must also be declared to the inspector of taxes in Britain
or Ireland. You can obtain a tax clearance certificate from the Spanish
tax authorities which is then passed to the inspector of taxes in
your country, this can be obtained by your solicitor. You will be
asked to pay full tax on the property in Ireland but the 25% already
paid in Spain will be refunded. It has been law since April 1998 that
residents of the Irish Republic declare all foreign assets.
Rates
This is like the
old English rates system and is based on the declared value of the
property. The average price paid is around 120 Euros per year.
Community
Fees
These are payable
yearly and the average price is 120 Euros per year. These are paid
in respect of services ie. Street lighting, refuse collection, police.
Water
If your property
has a mains supply then there is a standard charge for water which
is approximately 12 - 16 Euros payable every 3 months. The charges
for consumption are in addition to this. If you have a supply from
a balsa, underground store, then the fees are dependent on consumption
and are payable when the water is delivered.
Electricity
This is very dependent
on how much you consume, there is a standard charge of around 12 Euros
payable every 2 months and then a charge for consumption in addition
to this.
Telephone
The standard charge
for a telephone line installation from Telefonica is around 180 Euros.
The line rental and call charges are then payable every 2 months.
