Second Hand Property
Most vendors will require from 10 % to 20 % of the purchase price to be paid at exchange of contracts and balance at completion.
Before exchange of private contract your lawyer will have completed searches and investigations on the property being sold and will secure it is sold free of charges and encumbrances and up to date in its tax obligations. The private contract will set out the legal description of the property, price, terms of payment and the obligations of both parties.
Security of your investment
Most properties are registered at the Land Property Registry which will allow us to confirm on completion that the property is sold free of charges and encumbrances and that it is bought from the owner.
Final completion and formalization in public document
When the building has been finalized or the agreed date of completion comes, the sale will be formally completed before a Public Notary. A Public Title Deed will then be granted by the vendor in favour pf the purchaser against final payment and handing over of keys.
The Title Deed is faxed to the Registrar, who will register the purchase at the Land Registry. We will also pay on your behalf taxes and all relevant fees due to the notary, and will handle the formalities of registration of your Title Deed. Similarly, we may contract relevant supplies of utility services such as water and electricity and organize their payment through a local bank by standing orders.
Costs of acquiring second hand property
- The buyer will have to pay 8% Transfer Tax up to 400,000 €, any excess of this is subject to 9% up to 700,000 Eur and excess of this is subject to 10% on the purchase price, which must be paid within a month from completion and prior to the registry of the Title Deed.
- Plusvalia is a single yearly payment on the increase in value of the
land on which the property is built since the last recorded transfer of ownership. It is based on the rate value of the land. The vendor is the subject to this tax.
- Legal fees.
- Notary and Land Registry fees These are set by law and the scale for the notary will range from €500 to €2,500. Land Registry fees are also set by law and are approximately 50% of those of the notary.
- Provision should also be made for bank charges when transferring monies abroad.
So, in summary, the buyer has to allow for an additional 11% of the purchase price to meet the transfer costs involved in the transaction.
Financing your purchase
Spanish banks will offer to finance up to 60% of acquisition price through a mortgage for non- residents. We will be able to advise on costs and taxes regarding these facilities and make applications on your behalf. Some developments already have mortgage facilities for their products, which are worthwhile as they usually have good market conditions and are cheaper in cost. We will be able to help you in the application for any loan.
Once the property has been purchased the owner will have to pay: community fees, rates, rubbish collection, Income and Wealth Tax (see our fiscal link), which as a guideline will be approximately 1,5% of the purchase price per year (considering a property with a price of €180,000). Water, electricity and insurance costs should also be budgeted.