Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
Spain Buying Guide Thank you for contacting Livingstone Estates! This brief introduction is designed to help you understand a little more about Spain and a lot more about how the property purchase process works. You may be a regular visitor to Spain – in which case some of this information will be familiar to you - or you may be a first timer! Whichever camp you fall into, please remember that we are here to help.
Why Choose Spain? Spain is one of Europe’s favourite holiday and relocation destinations with hundreds of thousands of foreign residents buying property here over the last half century. 5.5 million foreigners now reside in Spain accounting for 12% of the population, according to figures released in June 2009 by the National Institute of Statistics (INE). European nationals represent 40.5% of total foreign residents in Spain Spain’s breathtaking landscape and comprehensive leisure infrastructure caters for a huge range of lifestyle and investment options; luxury villas on the beach overlooking the Mediterranean Sea, frontline to one of the many golf courses, holiday property in the heart of Spain’s many cosmopolitan areas and rural country fincas in one of the traditional white villages where one can enjoy the simpler pleasures of life. www.livingstone-estates.com guide@livingstone-estates.com
With the recent correction in the Spanish property market, investors and second home buyers are now flocking to take advantage of general reductions in resale property. Official figures released in June 2009 by Tinsa, a leading multinational in real estate valuation, analysis and consultancy, revealed a year-on-year reduction in property prices of 10.1% for the whole of Spain and a 12.3% reduction for coastal property.
Where to look? A brief guide... The coastal areas of Spain have always been popular. During the past few years, the coastal towns have seen significant improvements in infrastructure and services. International tourism has helped these areas develop extensively. The best known of all the costas, the Costa del Sol, has been particularly popular in its development.
+34 902 424 484
One of the best ways to take the next step towards buying your new home and making that investment is to arrange a personal inspection visit.
We look forward to welcoming you personally to Spain in the coming weeks!
The Costa del Sol Stretching from Nerja in the east to Gibraltar in the west, its warm climate and even warmer people have lured visitors from around the world for the last fifty years. The area offers some of the best golf courses, beach clubs, shopping, wining and dining, and with Málaga as a contender for the title of European Capital of Culture 2016, it is clear that the best is yet to come from the Costa! Just beyond the hills behind the coastal strip are a wealth of traditional white villages – such as Casares and Manilva – just waiting to be discovered. A visit to the Costa del Sol is a must to experience and fully appreciate the diverse and enticing mix of lifestyles and cultures.
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
Buying Your Property How the purchase process works... As with buying property in any country, there are a series of stages that must be followed once you have decided to buy in Spain. Below is an overview of what you can expect. However, it is always recommended that you use a local lawyer who specialises in property law to oversee the purchase.
Buying a Property Off Plan
Buying Resale Property
Once you have chosen your property, you will sign a reservation contract and make a small payment so ensure the property is taken off the market. This will be for a fixed period, normally 30 days in most cases. During this time, legal checks will be made (due diligence) and a contract of sale drawn up (contrato de compraventa). You will also be required to make the first of the agreed payments. These are generally known as stage payments since they become due as construction progresses. Normally, the first payment is for a minimum of 10 percent of the agreed purchase price and is non-refundable.
If the property is a resale, you will pay a reservation fee once your offer is accepted by the vendor. Your lawyer will then carry out the legal searches. Once these have been satisfactorily completed, you will sign a Private Purchase Contract which outlines the details of the sale; agreed price, what is included, the deposit paid (usually 10 percent), when the balance is payable and the completion date. If you fail to meet the terms of the contract, you lose your deposit. If the vendor is in breach of contract, you will be refunded the amount of the deposit (in some cases, if it is so agreed in the reservation contract, you can stipulate a penalty of twice the deposit). Once you complete on the sale, the statutory fees and taxes become payable and the sale is then inscribed in the Land Registry.
www.livingstone-estates.com guide@livingstone-estates.com
+34 902 424 484
How much are the costs and fees? As a general rule of thumb, when buying a property in Spain, one should expect to pay between 10 and 12% of the purchase price in various fees and costs. As the buyer, one is liable for: • Legal fees (generally between 1% and 2%) • IVA (Spain’s equivalent of VAT) at around 7% • Stamp duty of 1% if the property is new or of 6–7% (variable depending on the location of the property) if the property is a resale or you are purchasing it • Property registration and Notary fees of approx. 1% If your chosen property is part of a complex, there will also be maintenance charges. These cover such costs as swimming pool maintenance and gardening.
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
Mortgages Essentially there are two ways of using a mortgage to buy your new home. You may choose to re-mortgage your current home or you may prefer to arrange a mortgage on your Spanish home either through a lender from your country of residence or a Spanish lender. You should be aware that an overseas mortgage may have higher set up charges (generally 3 – 4 percent of the amount borrowed) and that Spanish mortgage brokers will not consider the loan if you have existing loans which exceed 35 per cent of your income. Euro mortgages are tied to the European Central Bank (ECB) rate. These may initially appear attractive, but it must be remembered that, because of the often unpredictable fluctuations in the currency markets, a Euro mortgage may not
www.livingstone-estates.com guide@livingstone-estates.com
be suited to many who would find payments harder to meet if the currencies swung against them. In most cases, the self-employed are unable to qualify for a euro mortgage, since most lenders are unwilling to accept self-certification of income. Since exchange control is complicated, you should also seek professional advice before deciding to apply for a mortgage in a foreign currency. Often, re-mortgaging is the simpler option. If you can release equity on your current home, then you can buy your Spanish home for cash, without needing another mortgage. This may only be an option, however, for those who own their current home outright.
+34 902 424 484
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
The Tax Situation In Spain, there are three tiers of government: central government, autonomous regional governments and local municipalities all of whom levy taxes. The Spanish tax system is complex and we strongly recommend that you consult a professional who will advise you in respect of your particular circumstances.
Personal taxation: non residents
Personal taxation: residents
Local taxes
Non-residents are taxed at a flat rate of 24 per cent on any income earned in Spain. For example, if you rent out your Spanish property, run a business in Spain or earn interest on money deposited in a Spanish bank.
If you spend more than 183 days per tax year in Spain you will be classed as a resident for tax purposes whether or not you have a residence card (see the section: Passports, visas and residency).
If you own a Spanish property which is for your own personal use and you have no other source of income in Spain you will pay imputed income tax, which is aversion of income tax calculated on the property’s rateable value (valor catastral). Even though you do not earn a direct income from the property the authorities judge that you derive a benefit from owning it and that you should, therefore, be taxed. Non-residents are also liable to pay patrimonio (wealth tax) on their Spanish assets, and, if you sell your Spanish property at a profit, 18% capital gains tax.
As a resident you would pay income tax in banded rates, which currently stand between 15 and 45 per cent. You would also get a break on capital gains tax with the ceiling being only 18 per cent (applicable also to non-residents).
The local municipality in which your Spanish property is located levies an annual tax - the Impuesto Sobre Bienes Inmuebles (IBI) - which is used to fund local services. Just like the imputed taxes outlined above, this is calculated on the cadastral value of the property (valor catastral) and, as such varies from property to property. Some owners might pay as little as 100 euros per year if their property is a small country home, but a luxury villa in Marbella may well receive a bill of as much as 3,000 euros per year.
www.livingstone-estates.com guide@livingstone-estates.com
Residents also have to pay imputed income tax on property other than their principal residence if there is no other declared income. They are also liable to pay Patrimonio, but enjoy a number of deductions. Any other worldwide assets are subject to inheritance and gift tax.
+34 902 424 484
Important: Regardless of all the information provided herein, Spanish legislation is subject to modification. Therefore, we strongly recommend that you consult a professional who can assist you in your personal situation.
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
Currency & Documentation
Currency Issues
Residency Status
In 2002, Spain switched from the peseta to the euro. There is no limit on the import and export of local currency, although the export of amounts over 6.010 euros per person, per journey must be declared to the authorities, whatever the currency. In the Spanish cities and tourist areas travellers cheques are readily accepted. However, to avoid additional exchange charges, it is best to ensure that these are euros travellers cheques.
All residents and non-resident foreigners with financial affairs in Spain (regardless of whether they are EU citizens or from a non-EU country) must have a foreigners tax identification number or NIE (Número de Identificación de Extranjero). This is the equivalent of a Spaniards Número de Identificación Fiscal (NIF) which serves as a fiscal identification number. An NIE is essential for any fiscal transactions in Spain where money will be paid to the Spanish inland revenue office (Ministerio de Hacienda). The NIE number should be quoted on all dealings with tax authorities.
Every town and city, as well as most villages will have banks and ATM’s, and you will find Bureaux de Change in most larger towns and cities and in all the tourist areas. You will have no problem using your credit and debit cards throughout Spain.
Passports & Visas If you are an EU passport holder visiting Spain for business or pleasure you do not need a visa if you are staying for less than 90 days.
www.livingstone-estates.com guide@livingstone-estates.com
An NIE number is needed to: * Open a bank account
* Be paid for employment
* Buy, sell or insure property
* Apply for a business permit
* Arrange credit terms or a mortgage
* Register with social services
* Pay taxes
* Apply for a driver’s licence
+34 902 424 484
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
And finally... Here are a few tips to help make it easier: • Make sure that you have the support of your family. • Do your research! Select the area which most appeals and then spend some time there getting to know the place better. • Having selected the location and the property you are thinking of buying, crunch the numbers and make sure you have the funds in place. Remember to factor in other costs such as the cost of moving your possessions to Spain. • Don’t rush into a decision, and don’t allow yourself to be pushed. Never sign anything until you are completely ready. If you are a pensioner check that there isn’t a problem having your pension paid directly into a Spanish bank. Ensure that your health insurance is arranged. • Cover yourself in the event that your circumstances change. For reasons which may not be apparent today, you may want to move back to your home country. Before you commit to your new home, make sure you have the funds to do so. www.livingstone-estates.com guide@livingstone-estates.com
+34 902 424 484
Your International Property Partner Based In Spain Spain • Turkey • Bulgaria
If you have any queries regarding buying property in Spain, we are here to help you. Call us on +34 902 424 484 Or 0870 8000 877 from the UK Email us at guide@livingstone-estates.com
Why Livingstone Estates? We offer all our clients:
• • • • • • •
www.livingstone-estates.com guide@livingstone-estates.com
Consolidated experience Qualified property portfolio Investment opportunities Up-to-date market knowledge Tailor made ‘Try it before you buy it’ Professional legal advice Locations for all preferences
+34 902 424 484