Important: The information on this page is only for general advice. No rights can be claimed. We highly recommend you ask your lawyer for the exact costs of your particular purchase.
The whole process of buying any type of property or land in Spain is strictly regulated. Here are a few tipsâ€¦.
- Location, Location, Location!
- The Property Brief:
The better the brief the better our service. In other words the better you can describe your requirements the quicker and more accurate we can find the perfect property for sale for you. . Details such as bedrooms and bathrooms are obvious but small details such as orientation (north or south), views, privacy, design (contemporary or Spanish), etc. are also critical in delivering to your needs.
- Your budget:
Three key points to mention:
Know your budget. Know what you can spend on a down payment and purchase costs as well as monthly expenditures (maintenance, insurance, property taxes, community charges, monthly mortgage payment, utilities, parking, etc). Down payments or deposits are usually 10% of purchase price and purchase costs can range from 8% to 10% of the purchase price.
Fully understand the speed at which you can access funds. Obtain mortgage pre-approval from your lender and/or bank. Fully understand what amount you are qualified to borrow.
Understand the value of the market so you can confidently assess the relative value of property.
These points are obvious but it will be helpful for a real estate agent to know exactly where you stand, when it comes to a final decision.
Services offered to Golden Visa clients buying a propertyÂ through Noll & Partners
- Hotel accommodation at Almenara Hotel for up to 7Â nights, for you and a family member.
- Airport pick-up/drop-off with transfers to your accommodation.
- Noll & PartnersÂ to guide you aroundÂ Sotogrande.
- Noll & PartnersÂ toÂ find the right property, for you and your family.
- Introduction of external lawyer and other independent professionals for any legal or fiscal service.
- When you purchased the property on signing aÂ private contract, and all legal matters concerning Golden Visa is completed, we will refund you the entire cost of the hotel room, if your entire purchase is made throughÂ Noll & Partners.
THIS IS THE FIRST STEP IN THE STANDARD PROCEDURE:
- You start up the procedure, by download and filling out this applicationÂ Schengen Visa appl
- Remember to apply for a business visa.
- Initially you should just send it to us as a draft along with a copy of your passport.
- Once you know the date for arrival and departures in Spain we will help you to fill in the rest if anything have to be corrected.
- In addition to the application should be submitted an invitation letter from the lawyer you are assigned, and who will take care of the Golden Visa procedure in Spain.
4. Choose a lawyer, WHY HAVE A LAWYER?
A Spanish lawyer’s job entails the following:
He has to undertake searches at the property registry to check:
– Details of the property and its ownership;
– If there are any mortgages on the property (and if there are that they will be discharged on completion);
– If the property is burdened with rights of occupation (Rented on a long term base);
– If there are any rights of way;
– If there are any town planning requirements or impositions.
This is all done at the property registry.
He will search at the Town Hall to ascertain:
– That the property described at the Town Hall is the same as the one at the property registry.
– That the annual local property tax (IBI) is up to date.
– That public fees and rates are also up to date.
– That an occupier’s first license has been issued in respect of the property.
He will ensure from the seller and from any Residents’ Association that:
– The correct persons will be signing the sale deed;
– The property has adequate planning;
– That the property has a Residents Association with community statues. This is important to ensure the ongoing repair and maintenance of the property;
– The service charges are up to date;
The lawyer will negotiate the details of the transaction including responsibility for payment of costs of the transaction. These can be either on the basis of normal practice (law), or by other mutual agreement;
The lawyer will also carry out the following checks:
– Public Works department to check whether the property is subject to or affected by within any compulsory purchase plans for possible construction of roads, bridges and other public works;
– To check for any public rights of way affect the property such as drover’s routes;
– At the Water Authority to check whether the property has any obligations for rights in respect of aqueducts;
– Check that there is a valuation on the property so that a mortgage can be obtained. This takes two weeks.
Thereafter the lawyer will prepare purchase deed and any mortgage deed if necessary and will organize for completion including the discharge of any existing mortgage.
After completion, which involves an attendance at the Notary, the lawyer will arrange for payment of taxes:
– For new properties (houses, apartments, townhouses) 10% VAT
– For plots from Developer or Company owned land- 21% VAT
– For re-sale properties (houses, apartments, townhouses, plots) for under 400,000â‚¬ the transmission tax is 8%
– For re-sale properties (houses, apartments, townhouses, plots) for 400,000 up to 700,000â‚¬ the transmission tax is 9%.
– For re-sale properties (houses, apartments, townhouses, plots) for over 700,000 â‚¬ the transmission tax is 10%.
– Tax on capital gains on the property
– Property tax
(These tax rates are correct when the website was published, and can vary. Please check with your lawyer for current rates for the particular property you may be interested in buying)
He will pay for the registration of the purchase at the land registry and notary fees.
Taxes payable as a result of property ownership are:
– Property Tax – this is 35% of 2% of the value of the property;
– IBI (municipal local tax).
- Property surveys:
Qualified surveyors, structural engineer or architects, can provide you with an independent house buyer’s survey report. We strongly advise that you pay for this service.
- Cost of Purchase:
Transfer tax: (I.T.P.) of 8% (up to 400.000 â‚¬), 9% (for any amount over 400.000 â‚¬ up to 700.000 â‚¬) and 10% (for any amount over 700.000 euros)By law, this tax is payable by the buyer. It is a tax applied for the purchase of a property. The tax is calculated on the higher amount of the following, the purchase price, the “Fiscal value” of the property, (the rate-able value multiplied by a multiple set by the Town Hall) or the “Bank Valuation” of the property if the property is being purchased with a mortgage and the valuation is included in the mortgage deed, it is therefore important to check what value the I.T.P is likely to be calculated on before committing to a purchase.
I.V.A (VAT) is applied to the sales price of properties owned and being sold by developers instead of I.T.P. Usually when this is the first time the property in its current state is being sold. I.V.A on constructed properties is 10% of the purchase price plus 1.5% Stamp duty (Actos JurĂdicos Documentados). Check that the entity that is selling the property can apply I.V.A to the sale before you pay the I.V.A, if they are not entitled to charge I.V.A on the transaction you could still also be liable for the I.T.P.
Note – For plots of land, commercial premises or commercial garage spaces owned by a developer, promoter or juridical entity, the tax to be paid is V.A.T. (21%), plus Stamp Duty of (1.5%) (Actos JurĂdicos Documentados).
Notary Fees – By law, the first copy of the title deed is payable by vendor. The cost (no more than 0.5%) increases according to the number of pages and complexity of the title deed and the value of the property.
Registry Fees – By law, this is payable by the buyer. These are calculated on the same basis as the notary fees explained above and are at most 0.5%.
Lawyer’s Fees – Lawyer’s fees are in the order of 1% of the selling price, more or less, depending on the lawyer and the price of the property.
- Further Points to Note
The Private ContractThere are different types of private contracts:
– Deposit contract,
– Contract of purchase and sale,
– Option contract, etc, whereby the purchaser pay a deposit, normally 10% and the vendors agree to sell the property.
The completion of the transaction is fixed within a particular time scale, usually four weeks when the balance of the purchase consideration is paid and the Title Deeds of the Property is executed and signed by the parties in the presence of a Public Notary.
The choice of the type of contract is something to be assessed by your lawyer taking into account the circumstances of his client and the terms of the negotiations with seller.
There are serious consequences on both parties should they default on the private contract.
– The seller may pull out of the transaction paying compensation, usually double of the deposit paid to the Purchaser. This may be avoided if properly negotiated by your lawyer.
– If the Purchaser fails to complete the contract on the agreed completion date, the deposit or option price paid shall be forfeited.
Foreign Company RegistrationThere has been a tendency to use Foreign Companies as a vehicle to register property being purchased by non-resident buyers in order to avoid the payment of Transfer Tax and Death Duty. These taxes are avoided when shares are exchanged abroad and the Spanish authorities would not know when the property had changing ownership. We strongly recommend you get legal advice before you engage in this practice. The Spanish Tax Authorities reacted and passed a law whereby Non Resident Companies owning Real Estate in Spain must pay annually a tax consisting of 3% on the Value of the Property for Rates Purposes (Valor Catastral).
Spanish WillFor those who purchase property in Spain it is strongly advisable to execute a Spanish Will confined to their Spanish Assets as this will avoid blockage to their heirs upon their death. It will allow the heirs to simultaneous wind up the foreign and the Spanish Estates left by the deceased.
Disclaimer: The content of this document is provided for guidance only, and while every effort has been made by Noll and Partners SL to ensure the accuracy of the information and translations contained, no liability can be accepted for any errors omissions and inaccuracies, or for the opinions expressed herein.