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Spain - Finance
If you allow an additional 9% - 10 % of the purchase price
it should cover everything in the initial purchase
of your property.
Abogado (Lawyer), Notario and Registry fees:
Abogado fee: around 1%.
Notario fee: allow 0.2 - 0.3%
Registry of property ownership approx. 0.2%
New property: the purchase attracts IVA (VAT)
of 7% + Stamp Duty of 1%
Other costs.
NIE number: You will need an NIE Number (fiscal identity
number). It's handy to have one even if you are not a property
owner. This attracts a relatively small cost and your Abogado
will apply for this for you.
Urbanisation and Community fees: Properties on an Urbanisation
or in a Community will have to pay community fees, covering
the running and maintenance costs of shared facilities. Your
agent will advise you of the Community fees applying to a
particular property.
Non resident property owner tax: Non residents have
to pay property owners income tax. It is 25% of the income
from your property whether or not you have a real income.
The income is assessed as 1.1% - 2% of the Valor Catastral.
This tax is low, especially if you purchase for rental income.
(There are some great advantages to become a Resident, ask
your Abogado).
If you are not resident in Spain, you are legally required
to have a fiscal representative, who is an Assessor fiscal
and will take care of everything and keep you 100% legal for
a small monthly fee.
IBI: Owned Property is subject IBI tax Impuesto Sobre
Bienes Inmuebles. This local tax is based on approx. 0.4%
of the Catastral value (Valor Catastral) of the property,
depending on the area it is in.
Basura: In some areas you will have to pay the Basura
which is very small (for rubbish disposal) separately, in
other areas it is included in the IBI.
Resale Property on its second and subsequent transmission
attracts transfer tax called Impuesto de Transmisiones
Patrimoniales.
Patrimonio: All non residents have to pay wealth tax,
Patrimonio based on the amount on the Escritura Publica or
the Catastral value (Valor Catastral), which ever is the highest
value. Your Abogado will be able to identify how much you
need to pay. It really is only a wealth tax.
Plus Valia: Plus Valia is based on the increase in
value of the property since the last time the ownership changed,
this tax is applied to the increase in value that the vendor
has enjoyed and should be paid by the vendor although some
vendors do ask that the purchaser pays the Plus Valia as part
of the deal.
Your Abogado will be able to find out from the Ayuntamiento
(Town Hall) the amount payable.
Useful Information:
Banks: Most Spanish banks and Cajas (similar to UK
savings banks) are very good, and some have excellent online
banking in English. All the Utilities can be paid direct form
your Bank Account.
Transferring Money: When you are transferring currency
abroad, buying Euros in your home country is not the only
option. Most people do not realise the commissions and fees
charged by Banks are higher than other vehicles such as dedicated
Currency Transfer companies.
There are some very good companies that offer much better
exchange rates than the high street banks, and they even allow
you to pre book currency at a set exchange rate for the future,
this is particularly important for off plan purchasers wishing
to protect themselves from adverse currency movements. We
are pleased to recommend Global Currency Exchange Network
click
here for more information.
Spanish Will: It makes great sense to make a Spanish
will, and the cost is comparatively small. Property in Spain
is subject to Spanish laws above foreign Wills. Talk to your
lawyer about the differences between what you can will in
your own country as opposed to here.
Inheritance Tax: Ask your lawyer or tax consultant
about inheritance tax and how to minimize it. Get advice before
you decide in whose name or names the property is to be registered
in, especially if you are in your Golden Years.
If you are non resident you should also make provision to
pay inheritance tax on the property (or 50% of the property)
that you inherit as this can be a shock for a poor widow or
widower.
Conclusion: Buying a property abroad is an exciting
experience, please do not have the impression that you will
encounter many problems, in Spain we all enjoy more personal
freedoms, which is one of the reasons Espana is such a great
place to live.
Using an Abogado, and other qualified professionals will protect
your interests, making the purchase of your home here a risk
free and stress free experience.
All of the unfortunate property related stories I have heard
could have been avoided if buyers followed the above guidelines.
The purpose of this article is to provide some general information
for potential buyers, point out the areas where mistakes can
be made, encourage buyers to use professionals, and to reassure
them that buying a property on the Costa del Sol can be enjoyable
and totally stress free.
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