The early stages are critical; lawyers have a key role investigating and gathering information to avoid future problems. They will ensure that the property is free of liens, and that is not rented out, as the legislation gives certain tenants a right of preferential acquisition. They will also state that the planning situation is legal and the property is free of any debts, either IBI or Community charges, for which the vendor is responsible prior to the sale.
Once the property is selected, several phases will take place, firstly in a private sphere, and finishing with the parties appearing before the Notary. Normally, buyer and seller sign a private document to reserve the property, paying a sum as an advance payment. The seller will then hand over the ownership or build the property, depending on the circumstances. This procedure can have different names depending on their legal consequences: purchase option, deposit contract, etc. It is at this stage where key conditions such as the price, time frames and penalties are established.
The sales contract will be formalized and signed as a title deed, before the Notary. At this point, the balance of the acquisition price has to be paid and keys will be handed over. This instant symbolizes the transfer of the possession of the property. Normally the payment is done by bank cheque, to avoid any complications in connection to money laundering regulations, if the buyers are non-Spanish residents, in which case they will also need to have a Spanish bank account and N.I.E number (Foreigners Identification Number) before meeting with the Notary.
Finally, in order to inscribe the transaction in the Land Registry, acquisition taxes will be paid, ensuring full legal protection.
As most properties are purchased with a mortgage, a bank representative will also attend the meeting to sign the tittle deed before the Notary. A separate deed will be signed at the same moment reflecting the conditions previously agreed between the buyer and the bank. At Triay & Triay we can help you negotiate those conditions with your bank or offer you different options through well-known entities.
This is one of the most important subjects for buyers.
With regards to taxes, the base to calculate the amount to pay will be the price stated in the title deed. If this price is below the real value, the tax authorities will issue a supplementary declaration to cover the difference.
In Andalucia, when the house is not a new construction, the buyer must pay Property Transfer Tax, which is 8% on the sale price up to 400.000 euros, 9% from 400.001 to 700.000 euros and 10% from 700.001. The seller will pay the tax on the increase in value of the land and the amount will depend on the cadastral value of the land and the time since the seller bought the property.
For new constructions, the buyer will pay VAT, which is 10% for homes and attached parking plots and 21% for separate parking plots, as well as 1,5% on the sales price for document duties. The seller will pay the tax on the increase in value, as explained before.
If there is a mortgage, the buyer will also pay document duties (1,5% on the amount of the capital, interests and fees)
The buyer will pay Notary fees and registration expenses, and each party will pay their respective lawyers.
It is important to consider that there are more expenses once the purchase is concluded. The new owner will be responsible for the Property Tax (I.B.I.), municipal and service charges, and non-resident tax in case they don´t reside in Spain.
If you need more information, please contact us.