Spanish Properties Purchasing Process
THE NORMAL FINANCIAL PURCHASING PROCESS
The purchase process can vary from property to property and be adapted to suit individual circumstances, but the following can be used as a typical illustration.
When you have found the property you want to buy, you will have to pay a holding deposit of usually £2000 when you sign the purchase contract either with the builder or the vendor of the resale property.
If you are purchasing a new property that is completed and ready for occupation normally you will normally pay a 25% deposit and the balance at completion of the sale,
This could be within a few weeks. If you purchase a new
property with an extended delivery, say six months or more, then you will be required to make additional stage payments:
1. 25% of the purchase price within 30 days of signing the purchase contract
2. A further 25% of the purchase price within 90 days of signing the purchase contract
3. Occasionally the builder may require a further payment before completion
4. Finally, when the property is completed and ready for occupation, the final payment of the purchase price will be made.
If you are purchasing a resale (second-hand) property, then you will be generally required to make the following payments:
1. £2000 deposit when you sign the purchase contract
2. 10% of purchase price within 30 days
3. No further payment until you complete the purchase
Completion time will vary depending on your instructions to
your solicitor or if the vendor is living in Spain or has issued
powers of attorney to someone in Spain or if there are any complicated legal issues to settle. Normally the average time to complete is six to eight weeks.
PURCHASING SPANISH PROPERTIES
Generally, the total expense incurred in buying a property in
Spain is about 10% of the value of the property you are purchasing, made up as follows:
For example, a property valued at £100.000
IVA (Spanish equivalent of VAT at 7%)........................£7000
Stamp duty (On New Properties at 1%)........................£1000
Legal fees ( Spanish Lawyers fees at 1%)............. .......£1000
Notaries fees (Approx 0,5%).......................................£500
Land Registry & Gestoria fees (Approx 0.5%).................£500
Total.....................................................................£10000
There are some items not always applicable to every purchase
such as plus value tax, a local government tax on the increase
of the value of the land since the last sale (usually £40).
Connection charges for water and electricity on new properties are approx. £ 300
ANNUAL RUNNING COSTS - NON- RESIDENT PROPERTY OWNER
Wealth and Income Tax are payable once a year and are calculated as a percentage of the property value.
Wealth Tax = 0.2% of property value.
Income Tax = 0.5% of rateable property value.
Local rates are payable between August and October
£30 - £150 per year.
Fiscal fees are payable yearly at £75.
Community (Urbanisation fee) is usually paid in one or two payments per year £250 - £350.
Electricity bills come every two months and the minimum charge is around £15.
Water bill will arrive every three months and the minimum charge is about £10.
House Insurance is due once a year depending on the date of your purchase contract. The cost depends on size and value of the property - say £300.
It is recommended you deposit about £750 per year in your bank account to cover these charges.
If you are not in the country at the time payment is due; your fiscal representative (Gestor) will pay them on your behalf.
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