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Investing in Spanish Property
Investing in property overseas is always a step which must be given the
utmost consideration. At Villadelsol, we offer a broad range of professional
services to assist you if your decision is to purchase property in Spain
and particularly if you have chosen the Andalusian region of southern
Spain.
After familiarising yourself with the general region and the local property
market, and having chosen the type of property you want to buy, we have
set out a number of logical steps to act as a guideline to make your purchase
run as smoothly as possible.
1. |
Appoint
a local agent |
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A reputable agent will provide an invaluable
guide to the local property market as well as assist with negotiations
with vendors and dealings with lawyers. Be wary of agents who make
a charge for their services, as fees should be derived from the
sales commission they receive. |
2. |
The
decision to buy |
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Once you have found the property you
want, you can make an offer on the property, either direct to the
vendor or through the agent. Once the price has been agreed, you
will need to consult a lawyer. |
5. |
Appointing
a lawyer |
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It is absolutely essential to appoint
a lawyer to handle the legal side of the purchase transaction. Even
if you are fluent in Spanish (and of course this helps) appoint
a lawyer who is fluent in English. Be guided by your lawyer as there
are a series of steps to be taken which must be completed in the
right order and in the right way. |
4. |
The
Deposit |
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Your lawyer will recommend the payment
of a deposit in order to secure the property and to take it off
the market. This takes place once the legal processes have been
started. Your lawyer will draft a formal agreement for this purpose. |
5. |
Exchanging
Contracts |
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Exchanging contracts will take place
about two weeks after the acceptance of the offer, after the lawyer
has completed all the searches. A date for completion will be agreed
and, if not already having been paid, the deposit will be paid.
Remember that the deposit is non-refundable so it starts to get
expensive to change your mind after this point. |
6. |
Completion |
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On the day of completion, the buyer
and the vendor sign the title deed of the property (Escriyura de
Compraventa) which will also itemise the legal state of the property
upon transfer. This takes place at the office of the Notary. This
process does not check the terms of the agreement, simply that the
parties have agreed to complete on the terms as stipulated in the
document. At this point, your lawyer will effect the payment of
taxes and due fees. He will also register the title to the property
at the Property Register. From this point, ownership is transferred. |
7. |
The
Costs |
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There are a number of fees and taxes
to be paid in the purchase of the property.
Firstly there will be professional fees from your lawyer, the
Notary and the Property Registry. Lawyers generally charge 1% of
the purchase price of the property plus IVA (VAT). The Notary fees
are fixed by statute and generally range from between €300
to €1200, depending on the value of the property. The registry
fees tend to be about 40% of the Notary fees.
The main taxes that have to be considered are Transfer Tax (ITP)
and "Plus Valia".
Transfer tax is paid when buying a used property from a current
owner. The tax is set at 6% of the purchase price however, if the
property is being purchased from a property developer, this is replaced
by an IVA levy at 7% of the purchase price plus 0.5% stamp duty.
Plus Valia is a local council tax based on an assessment of the
increase in the value of the property from the last time it was
on the market. This can obviously vary from a few hundred Euros
to several thousands. The local town hall keeps records which can
be easily viewed. |
8. |
Who Pays
What? |
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Within most transactions, the buyer
will be responsible for all the above fees and taxes with the exception
of the "Plus Valia". However, these can be negotiable
so it is up to you and your lawyer to get the best deal. The vendor
will be responsible for capital gains tax and his agent's fees. |
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