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Nautical club Valencia city
Purchasing A Property
We will show you properties advising you about the locations, comparing prices and qualities of different properties in that area.
We will also provide 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, the water rates, the electricity charges and the Property Income and Wealth Tax, in respect of the property you wish to buy.
Between the seller and the buyer there has to be a preliminary purchase contract in place until the public deed of purchase is ready. It's usually a simple document in which the seller expresses their intent to transfer the property to the buyer, and the buyer expresses their intent to buy at the price and conditions agreed upon. At this time, the buyer also gives to the seller a percentage of the agreed-upon price. The typical agreement in Spain (called arras) is if the buyer backs out of the contract, they lose the deposit; if the seller backs out, they have to pay double. Of course, the buyer and seller may choose another type of agreement if they prefer
Legal Advice and Assistance
We make sure that the property is registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. Once you have appointed your chosen law firm they will explain the procedure involved in buying in Spain and the associated costs. In Spain, debts are attached to the property, not the person, so ensure that your lawyer obtains proof that the vendor has paid all his obligations, including community fees if the property is on an urbanisation, and all utilities, electricity, water, IBI and taxes. Also ensure that the property is free of mortgages.
Before signing with the notary you will need a NIF or NIE number. It is the Tax Identification Number required for signature. In the case of nonresident is the Foreigner Identification Number, which is mandatory for any foreigner who wants to buy a property in Spain. Your lawyer can get the application and obtain the NIE.
After you have made the payment of the reservation deposit, as non resident in Spain, you need to open a Spanish bank account to complete the sale transaction. When sufficient funds have been transferred and paid into your Spanish bank account, the bank will issue a check to be delivered to the seller at the notary on the day of signing the deed. Utility companies will only connect you to the services if they can set up a direct debit with a Spanish bank for payment. Ensure your chosen bank has at least one English speaking member of staff. Some banks may also produce statements in English on request.
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. We can also arrange for the transfer to your name of utilities and services such as water and electricity and organize their payment through a local bank.
As an example, the purchase of the property will involve the following expenses for the buyer based on a purchase Price of 130.000 € and a mortgage of 70.000 €.
No mortgage Costs of a mortgage Total with mortgage Valuation 500 500 Notary 500 200 700 Registry, can vary between regions 130 100 230 Bank gestoria (accountant who assists at notary and registry) 300 300 600 Property transfer tax 10 % (ITP, impuesto traspaso patrimoniales) 13000 0 13000 Stamp duty (tax) 500 1800 2300 House insurance (5 years) and life insurance (Approx depends on age) 1000 1000 Mortgage admin fee (1%, minimum fee 800 euros) 800 800 Our fee 1,5 per cent 1.950 1950 Total costs without mortgage 16380 Total costs with a mortgage 4700 21080
Not included in the above:
* The VAT (IVA) or ITP (Property transfer tax) rate increases to 21% 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, if you want to employ a lawyer, bear in mind that they will charge fees for his professional services normally between 1% and 2% of the price plus VAT (currently at 21%).