Legal Matters when buying a home in Spain
Most properties in
Spain are in fact
NOT registered.
Most of the
re-sale properties
are sold by
Spanish
....still....
since they earned
about 100€ a year
from selling fruit
and veg they would
certainly not pay
300€ to pay for
their property to
be registered. The
only way someone
may find out if
how many square
meters is legally
theirs to sell is
by investigating
at the Catastral
Department and
Town Hall. If they
have ever declared
that there is a
property at all. A
great deal of
families have
never informed the
Town Hall that a
senior family
member has
deceased and
therefore many
sales take months
to proceed to
completion. There
are many families
with complicated
backgrounds, most
children believe
they actually own
what is and
sometimes what
once was their
parents, sometimes
resulting in an
Expediente Dominio
where there can be no proof of title
at all. A great
deal of the
beautiful villas
you see advertised
are not registered
by the builder and
therefore the
purchaser pays for
the first
registration,
sometimes no
licences have been
issued and the
seller is required
to pay fines to
the Town Hall.
Many many
properties are
then registered
with less than the
actual square
meters of built
area, and a great
many are not
mortgageable.
Most urbanisation
properties now
being built are of
course registered
first because
there is a
compulsory
registration
system in Spain
for new
developments but
this is Urban land
- not countryside.
Most of the old
village properties
have no Title
Deeds.
The seller of a
second-hand home in Spain should provide the
following
documents:
The title deed of
the property
Receipt of payment
of the real estate
tax for the last
year
Receipt of payment
of the tax on the
increased value of
Urban Land
Certificate that
any community
charges (if
applicable) have
been paid up to
date
Latest copies of
domestic bills so
that you can take
over the services
such as
electricity and
water
The seller or
developer of a new
property in Spain should provide you
with:
Deed of
declaration of new
construction
Occupancy permit
Certificate of
rateable value of
the property
Normally, before
the purchase of a
property is made
official, there is
a prior agreement
drawn up between
the buyer and
seller. This
document will
identify the two
parties and set
out the terms of
purchase. You must
seek legal advice
before signing
this and you must
be sure that this
is the property
you want to buy. You can lose
any deposit you have paid if
you pull out of
the purchase and
there is a penalty
clause in the
contract. In the
case of the seller
defaulting then he
has to pay twice
the amount. When
it comes to
signing the
contract, this has
to be before a
notary, in the
form of a public
deed. This ensures
that the details
are entered onto
the public
records.
Insurances for Spanish properties
Fire insurance is compulsory by
law when taking
out a mortgage.
Comprehensive household
insurance is available to
protect your home
and contents. Life
insurance can be taken out
to guarantee
payment of the
loan in the case
of death.
Connected supplies to your new home in Spain
Details about electricity to your home - full feature here
Details about water supplies to your home - full feature here
The cost of
property in Spain - current trends
Official figures
for the Costa del
Sol state that
property prices
will increase this
year (2011) by 12-15%. It
is claimed that an
average new
property with two
bedrooms in a
block now costs
241,000 euros
(around 2,000
euros per square
metre). An average
villa costs
388,100 euros. On
the Costa del Sol
there are around
20,000 homes for
sale, 40% of which
is in the Marbella
area. 75% of home
buyers on the
Costa del Sol are
foreign. The
increase in prices
is leading to an
increase in the
number of smaller,
cheaper
municipalities
springing up, away
from the coast.
Tax advantages for
property owners
If you spend more
than six months a
year in Spain, you
are obliged by law
to apply for a
residents permit.*
This law is
currently being
abolished.
There are however,
several tax
advantages for
residents of Spain
that do not apply
to non-residents.
Inputted
income tax is an annual tax
on an imaginary
income resulting
by virtue of
ownership of a
property and is
charged as 0.5% of
the catastral
value. If you are
a resident you
will not be
charged this on
your principal
home.
Wealth tax is a tax on all
assets in Spain
and is charged at
0.2% of the
catastral value of
any house owned.
For residents the
first 108,000€ is
exempt and for a
joint ownership
this would apply
to each partner.
These two taxes
are paid annually
as long as you own
the property.
Non-residents do
not receive any
relief so
therefore have to
pay 0.7% of the
catastral value
every year.
When you come to
sell the property, capital gains tax will be charged on
any profit you
have made. This is
35% for
non-residents but
only 20% for
residents. A
further concession
for residents is
that if you are
over the age of 65
and have lived in
your property for
at least three
years, you are
totally exempt
from capital gains
tax. Finally, if
you are 60 years
of age or more and
have lived in your
property for at
least three years,
you can bequeath
your property to
your spouse or
children and avoid
paying inheritance
tax on 95% of the
valuation. The
inheritor must
also be a resident
of Spain and agree
not to sell the
property for at
least ten years. |
