Buyer´s Guide
Acquisition of property is one of the most significant spending of your life. Therefore, you should be familiar with all the information that will enable you to become the owner of a property that meets your needs and possibilities.
To achieve all this, we have prepared you a guide. This guide provides you with the necessary information about the process of buying targeted property.
Some of the most relevant criteria when it comes to choosing a property are:
Position and setting: properties located in the centre of a town or, for example, on a golf resort or close to the sea are those with values most likely to rise in the future.
Type of property: apartment, penthouse, town house, semi-detached or detached house: there are countless options according to your needs and budget.
Orientation and location of the property within the urbanization.
Choose between a new or second-hand build, depending on the degree of urgency involved in moving, as well as the budget, since newly-built properties usually cost less.
Area and internal layout of the property: number of bedrooms, sun terraces, potential for creating a storage area, garage, etc.
Quality of materials used, finishing and state of preservation.
Además del precio en si de la vivienda, es importante saber que tendrá que hacer frente a los siguientes gastos:
If the house is new: IVA, IAJD, Notary, Registro and gestor.
If the house is preowned: ITP, Notary, Registro and gestor.
If it is a parcel of land, an industrial unit or shop or garage which is not connected to a house, you will have to pay IVA (VAT) and Legal transactions Documented to 18% + 1,2%.
V.A.T. (I.V.A.)
Tax On Value added:
For any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader for BRAND NEW PROPERTIES – 4%.
For PARCELS OF LAND, COMMERCIAL PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader or a company. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories – 18%.
STUMP DUTY (I.A.J.D.)
Tax on documented Legal transactions, 1,2%.
TRANSFER TAX (I.T.P.)
Scaled at 8%, 9% & 10% Payable by the buyer for the purchase of any Real Estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties.
8% is applicable up to the amount of 400,000€ or 30,000€ in the case of garages except those belonging to the dwelling and with a maximum of two; 9% is applicable to the amount between 400,000€ and 700,000€ or between 30,000€ and 50,000€ for garages; 10% is applicable to the amount exceeding 700,000€ or 50,000€ for garages.
NOTARY
The costs of the Notary so that the document can be inscribed in the Registry of Land etc.The price is determined by the value of the transaction, also can influence the extension of the writing, number of folios, if it has mortgage, etc… The orientative cost is of 0.3% plus VAT.
PROPERTY REGISTRY FEES
The costs of the Recorder who verifies the legality of the document and register it in the Registry of the Property. The cost is of around the 0.2 € plus VAT.
LAWYERS
The costs vary according to the value of the sale price usually 1% approx of the buying price.
MUNICIPAL ADDED VALUE TAX (PLUSVALIA)
This is a tax relating to the increase in the value of the land only, and is calculated and applied by the local town hall according to the increase in value between the present purchase and previous sale, the value or size of the building does not affect this tax. The vendor normally pays this tax, unless otherwise agreed by both parties.
PROCESS OF BUYING THE PROPERTY:
Our real estate agent carries out all the necessary checks in the process of acquiring property:
- Property owner: to request a statement of the property, in order to make sure that the property is registered on the name of seller.
- The legal status of property: to make sure that taxes have been paid, there is no mortgage and that the property is not rented.
- No debts for utilities: to ask a certificate for paid utility bills.
- Preparation of deed at the notary.
- Checking the payments of electricity, water, gas and telephone services.
- Verification of property registration in the Property Registry.
One should ask for in the case of a new house:
The developer who builds the properties must provide the following data:
- Registration of the name or business name of the developer in the Corporate Register.
- Obtain work licence.
- First Occupancy or final qualifying Licence.
- Conditions of use and maintenance.
- Registration of the property in the Register of Newly-Built Properties.
- Guarantee of all sums paid on account. In the event of construction not being completed, the developer will have to return all amounts paid on account.
- Damage and latent defect insurance as referred to in the law.
- Total price, method of payment, detailed plans of the property.
Once the property has been chosen, and its situation verified, several documents will have to be signed in order to implement its purchase, among which the most common are:
Deposit document:
Before the property comes into your hands you would normally deposit a sum of money on account with the aim of guaranteeing the right of purchase, this being a Deposit Contract. When the contract is signed, the vendor is obliged to hold the property back until the sale actually goes through.
Note: this sum will be forfeit should the sale not proceed.
Option to buy:
This document entails the retention of a property on behalf of the purchaser during the agreement period, so that if the purchase does not proceed during the time period and under the agreed conditions, the retention and price of the option are lost.
This document is usually signed where there is a Rental Agreement with Option to buy.
Private contract of sale:
This is a private contract between vendor and purchaser in which the property features and sale conditions are outlined.
This contract should include:
- Identification of the vendor and purchaser (Name, NIF or Fiscal Identification Number, residence,...)
- Property location, plans, extensions (garage, storage room,...).
- Total price and taxes.
- Built and net floor area.
- Delivery deadline.
- Reference number in the Registry and state of charges (mortgages, impounding(s),...)
- Form of financing and guarantee of any quantities paid on account.
Notarised Contract of sale and purchase:
- The sale contract should be effected in the presence of a public notary, and the property registered in the Property Register.
- The signing of the title deeds usually occurs when the property is handed over and the full sum paid for it.
- The agreed conditions in the contract are only amended if it is the express wish of both parties.
- The cost of the notary depends on the type of property and, should there be one, a mortgage.
Certain administrative steps need to be taken including:
- Opening of accounts with suppliers of water, electricity and telephone. The developer will already have done this but an account number will have to be allocated to arrange direct debiting with the service companies.
- Examination of the property for any defects. Small flaws are normal although the better the quality of the property, the fewer the flaws there should be. The list of defects should subsequently be handed to the developer for them to be rectified.
- Communication of personal details to the president of the Community of Owners if one is already duly constituted.
- Registering of property and title deeds with the Property Register (should your property have been purchased with a mortgage, the bank will bear the responsibility for carrying out these arrangements as well as the payment of any taxes).
- Informing the land registry office of the property purchase for any possible variations in the municipal real estate tax.
Is is a tax relating to the increase in the value of the land only, and is calculated and applied by the local town hall according to the increase in value between the present purchase and previous sale, the value or size of the building does not affect this tax. The vendor normally pays this tax, unless otherwise agreed by both parties.