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Jávea
The
best location on the Costa Blanca
Buying
Property In Spain
The Purchase
Once you have decided to buy a property in Spain, you should follow the
two Golden Rules:
1. Choose an estate agent.
2. Find a lawyer to advise and assist you.
The Estate Agent
Once you have chosen the right estate agent with experience and
knowledge of the property market, he will help you to find a suitable
property. The agent will show the finest selection of properties
advising as to the best areas in which to invest, comparing prices and
qualities.
You should ask for details of the outgoing costs payable every year to
maintain the property, namely the Annual Real Estate Tax
(IBI), the community fees, the charges for rubbish collection.
When you have made a decision as to the property you want to buy, you
will be asked to make immediate payment of a reservation deposit,
thereby ensuring that the property is not sold to another purchaser. You
will then have a period of between 10 and 15 days to exchange contracts
but, before doing so, you should seek proper legal advice.
Legal Advice and Assistance
Prevention is always better than cure. From now on until and after
completion of the purchase, the lawyer will take care and assist you in
all the different steps involved in the transaction. There are many
excellent English-speaking Spanish lawyers in Spain. Choosing the right
lawyer is your guarantee that Spanish legal requirements are met, that
the property is registered in the vendor’s name and that it is free of
any mortgages,
charges, encumbrances, debts
or other liabilities. Your lawyer will negotiate and discuss the
purchase terms with the seller’s lawyer. The terms should not be
limited solely to price but should cover in detail all your requirements
like the completion date,
the form of payment...etc. Once you have appointed your chosen law firm
they will explain the procedure involved in buying in Spain and the
associated costs. The next step after paying the reservation deposit is
to examine and witness the terms of purchase in writing. At this stage
the lawyers will draw up the private contract. It is customary to pay a
deposit of ten per cent of the price on exchange of contracts, which is
not normally refundable if the purchaser defaults. Conversely, if the
vendor fails to perform his obligations, you will be entitled to rescind
the contract and claim damages. Before your lawyer exchanges contracts,
he will have completed his searches and investigations in respect of the
property.
Finally, on the day fixed for completion your lawyer will go to the
Notary Public to sign the title deed, making the final payment to the
vendor who will simultaneously pass over possession of the property to
you, handing you the keys. At this stage the sale is completed.
Immediately after completion, the notary will fax details of the title
deed to the local land registry to inform them of the identity of the
new owner, to prevent the property being sold twice. In this way the
notary and the Land Registry act together to protect and guarantee your
interests. You will then have to pay the relevant taxes and have the
original title deed submitted to the Land Registry for registration of
your title. Your lawyer can also arrange for the transfer to your name
of utilities and services such as water and electricity and organise
their payment through a local bank.
The purchase of the property will involve the
following expenses.
The Fees
• Notary, who charges according to a fixed scale. His charges may
range from € 340 for a property price of € 120.202 to € 601 for a property
price of € 601.012.
• Land Registry, as a rule of thumb, is 40% of what the notary
charges.
The Taxes
• If you are buying a re-sale property you are obliged to pay Transfer
Tax
(ITP) at 7%.
• If you are buying a new property or a property in the course of
construction from a promoter, developer or habitual trader, then you
should pay VAT (IVA) at 7% plus Stamp Duty at 1%.
• The VAT (IVA) rate increases to 16% if you are purchasing plots of
land, commercial premises or garage spaces.
• Plusvalía is a tax levied by the local Town Hall based on the
particular area where the property is located, on the surface area of
the land, on the catastral value and on the date of the previous title
deed. This tax may range from a few hundred euros to as much as several
thousand euros on larger properties with a lot of land. By law the
vendor is obliged to pay this tax but it is common practice for the
parties to negotiate on who is to assume this liability.
• Finally, bear in mind that your lawyer will charge fees for his
professional services normally between 1% and 2% of the price plus VAT
(currently at 16%).
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