Buyer Guide – How buy a property in Spain
BUYING, SELLING & OWNING PROPERTY IN SPAIN
CONVEYANCING IN SPAIN
Basic notions for foreign people:
· Habitual Residence in Spain; Legally it is considered to be a habitual resident in Spain when the person remains more than 183 days per year in Spanish territory or that the main core or basis of his/her activities or economic interests are in Spain in a direct or indirect way.
. N.I.E. In Spain each person (being resident or not) has assigned a number of fiscal identification that must be recorded in the income taxes declarations and in any communication addressed to the Tributary Administration.
It is obligatory for the purchase
Nowadays obtaining the NIE takes between 3 or 4 weeks; it is necessary to apply for it as soon as possible; we advise hat you visit a Notary in order to obtain an attested photocopy of your passport, indispensable requirement to be able to later request the correspondent N.I.E. You can also go directly to a police station.
It is also possible to apply for the NIE in the Spanish embassy of your native country and generally the process is easier.
All those non European citizens will need to justify their crossing of the border, namely, in the frontier position the document should be rubber-stamped.
1. Choice of the property.
We advise to visit well reputed real state agencies
2. Private Contract.
Once the property has been chosen, apart from the advising that Barleigh Ellis , can supply – Barleigh Ellis, will provide apply for all the juridical information, (property deed, registrar document, I.B.I. etc), the buyer can contact an attorney specialised in real-estate topics for his/her major tranquility if he/she considers it necessary.
3. The property can be acquired:
a) Directly through public Deed granted by a notary.
b) By means of private of buy and sale (deposit); this contract is ruled by the will of the parts. Normally there is no transmission of the possession and the buyer delivers a quantity of money on account. There are two types of deposit contract: penitential or confirmatory deposit.
The first case is known as the arras of 1454 of the civil code, which means that the parts agree that if the buy and sale Deed is not carried out because of the buyer’s fault, he or she will lose the delivered quantity of money and if it is the seller’s fault, he or she will have to return the money received plus will have to pay to the buyer, as penalty, another amount equal to the one received.
In of the confirmatory case the contract has to be executed by both parts unless in agreement between them, the buyer and the seller have agreed on a penalty.
c) There is also the possibility of a call option. In this supposition the seller cannot, during the period of the option, sell to third parties; it has a fiscal incidence since the price of the option pays 1 %.
4. Inscription in the Record of the Property
In Spain, it is fundamental to record the title of the property of the building in the Record of the Property, since it is public, and from the moment of its registration, has juridical effects opposite to third persons. This information has great importance, since, if we do not register our property in the Record, seizures or another type of charges can relapse into the above mentioned property, being the said property still addressed to the seller, and later the buyer might become deprived of his/her asset, on having had been executed due to debts of the seller (without prejudice of the juridical actions that later could protect the buyer).
The term of inscription is one month.
In the moment of issuing the Deed we need to have:
– Buyer’s NIE
– Receipt of the IBI
– Certificate of the owners’ community if it is the case issued less than eight days before, specifying has paid all his/her feed with the community and if there are pending works to carry out (if they have been agreed by the Board the corresponding part should be paid by the seller) – – Receipt of payment or subrogation agreement if there is a mortgage
– The payment has to be proved which means that the amounts of money given on account must have a slip of transfer or check with origin of the account
– To have the last receipts of water, electricity to be able to carry out the change of titleholder.
– Local property certificate Cedula de Habitabilidad. This is a document from the local government that certifies that the property has met the requirements to be officially lived in.
Note: From 1/6/2013 it is compulsory that all properties have a CEE – Certificado de Eficiencia Energética, simply it is the property’s energy efficiency rating. The purpose of this document shows a buyer the property’s potential running costs.
Generally, the inherent expenses in a purchase are the following:
· Value-added tax: In Spain, if the seller is a businessman, the operation of dealing is submitted to the Value-added tax. In the dealings of housings of new construction, nowadays it is applied a limited type of 10% on the price of the said housing. The Value-added tax regarding dealings of lots and premises is 21%
If this Tax is not applicable or if the seller is not a businessman (he/she is an individual), then the dealing (of housing, lot or premises) will have to pay for Tax on Patrimonial Transmissions which is established nowadays in 10%.
· Notary fees: They are established in proportion to the value of the building, and are applied according to duties previously established
· Tax on Patrimonial Transmissions: Nowadays the tax rate is 10% on the price that appears in the public Deed.
· Transfer Tax and stamp duty: If I.V.A. have been paid in conformity with the explained in the previous point referred to this Tax, the buyer pay in addition the Transfer Tax and stamp duty, whose rate in force in Catalonia is of 1,5 % of the price of dealing.
· Municipal Tax on the Increase of the Value of the Areas of Urban Nature (known as Plus Valia Bonus): As its own name explains, it is a Tax that it is paid at municipal level namely in the Town Hall where the asset is placed. “This Tax burdens the increase of the value of the land. For its calculation the number of years passed between the date in which the seller acquired the asset, and the date of the current transmission are taken into account. There takes as a base For its calculation it is taken as basis the value of the land that appears in the receipt of the Tax of Real estate, and every Town Hall applies, later, their own scales.
In accordance with the laws in force, the above mentioned Tax must be paid by the Seller in Catalonia.
• Record of the Property Fees: The Record of the Property receives duties for the inscription of the Deed of dealing, duties that change by virtue of the value of the property.
6. Taxes and annual payments for the ownership of the property.
After seeing the steps and payments that are necessary for the acquisition of the property, the non resident owner will have to pay three types of annual Taxes. Just as mere information, the above mentioned Taxes are:
a) Tax on Real Estate: it is a municipal Tax (to be paid to the Town Hall where the asset is located). Both residents and non residents must pay it. It is calculated on the basis of the value that the Town Hall grants to the property (property value), and each Town hall applies its own particular coefficient.
b) Income tax for Non Residents.
– Depending on the destination of the building, the revenues submitted to charge are the following:
1. Revenues imputed of urban real estate of OWNER’S USE: The performance to declare will be the quantity of applying 1,1 % to the property value that appears in the receipt of Tax on Real estate (I.B.I.), if this value has been checked before January 1st, 1994 (something that is usual in the immense majority of the cases); Otherwise it is necessary to apply 2 %. On the resultant quantity the tax rate of 24 %, must be applied which will give the quota to pay.
2. Revenues obtained of HIRED real estate: The performance to declaring is the complete amount paid by the lessee, without deducing any expense. The above mentioned quantity is burdened by 24 %.
c) Tax on the Heritage of Not Residents. Suppressed.
7. Earnings derived from the sale of Real estate in Spain.
Normally, the profit will be decided by the difference between the values of acquisition and of transmission.
The value of acquisition will be calculated taking as a base the real amount for which the building object of the transmission was acquired, to which the amount of the expenses and taxes inherent in the acquisition will be added, excluding the interests, that had been paid for the current person who undertakes the transmission. Depending on the year of acquisition, this value will be corrected by means of the application of a few coefficients of update that are established, each year, in the Law of General Budgets of the State.
The value of transmission will be the amount appearing in the public Deed of sale, to which it is necessary to deduct the amount of the expenses and taxes inherent in the transmission that have been paid by current seller (for example fees of the Real-estate Agency). By virtue of the date of acquisition several reductions in the Tax on the Heritage can be applied (if the property that now is transmitted was acquired before 31.12.96).
The fee that burden the benefit calculated according to the explained previously is 19 %.
But for years 2012 and 2013 the imposition is 21%
8. Retention on account of the benefit for the sale of a building.
When the seller is a natural or juridical not resident person in Spain, the buyer, independently from being a resident or not, will have to withold 3 % of the price that appears in the public Deed of dealing, and will have to deposit it, in the term of one month (from the date of issuing the above mentioned Deed) in the Tributary Agency.
This retention has for the seller the character of payment on account of the tax that he should pay for the benefit obtained on having sold his/her building. Therefore, the buyer will have to deliver the 211 Form, to the seller; this form proves that 3 % has really been deposited in the Tributary Agency, so that this way the seller could deduce the above mentioned quantity from the amount that he should pay for the benefit obtained in the sale of the building if the quantity retained and deposited in the Tributary Agency (3 %) is superior to the quantity that should be deposited with a view to the obtained profit.
This document is purely informative; under no circumstance is it binding and subjected to review specially in its fiscal paragraph having into account the changes in this matter