Selling

SELLING YOUR SPANISH PROPERTY

1.- Chose a Real Estate.

Get an estate agent,  and let them handle the showing of the place and dealing with prospects, our law firm will set up an agreemnt with Real Estate to stipulate:

-         selling price.

-         Comission.

-          Inventory.

-         Legal cost involved.

Necesary documents:

Title deeds copy, last rates & utiletees paid, comunity owners details, NIE number.

2.- Price Agreed.

On this satge, buyer have to pay a deposit into your favour, aproximatley Euros 1,000 to 10,000

This deposit takes your property off the market and holds it while the buyer assembles the full amount of the purchase price, either from his own resources or by obtaining a mortgage.

If the buyer does not complete the sale, he lose his deposit. If you, the Seller, accept a higher offer in the meantime, you have to return double the amount of the deposit.

3. Exchange private contract:

Once than search have been completed,  we will exchange private contract into your names receiving up to 20 % purchase price.

4.- Completion.

When the two parties are ready to complete the sale, we will appear in front of a Notary Public and sign the sales contract at his office, receiving oustanding up to total price. The contract can also be signed by proxy. This often happens with an absentee Seller. So we can act into your names with a power of attorney, This poder empowers the attorney to sign in to your names. A seller who does not wish to return to Spain can even malee this proxy at the Spanish consulate in his own country.

5.- Cash buyer.

If your buyer has the cash ready and you have your title deed clear, there is no reason why we cannot go directly to the Notary and complete the sale immediately.

6.- Cost and Taxes.-

Capital gain, plusvalia & lawyer fees.

Sellers should be aware, however, that they are subject to  spanish capital gains tax on the profits from their sale, whether they are resident or non-resident.

The Spanish Tax Agency requires that someone buying property from a non-resident withhold 3 per cent of the price and pay it directly to the tax agency.

Non-residents pay capital gains tax works at a flat rate of 21 per cent on their profit from the sale.

Your gain can be reduced by:

-      Real estate Invoice.

-         Lawyers, notary Invoices.

-         Formal improivements on your property fully registered.

Residents pay a maximum of 21 per cent, with the tax calculated as part of their income tax. They are not subject to the withholding of 3 per cent.

-You may be exempt from capital gains in the following three cases:

-You originally bought your property before 1987.

-You are 65 years old, a resident, and you have lived in your home for a mínimum of three years.

-You are resident and you use the full purchase price to buy another principal residente in Spain.

 

plus valía, a sort of artificial capital gains tax charged by the Town Hall on the increase in an official set of values for the property.

The plus valía varíes widely, depending on the amount of time that has passed between sales, as we mentioned earlier.

Lawyer fees:

The majority of property transfers are quite clear-cut and no problems arise. Some are more complicated and a few are very, complicated. So, lawyer’s fees vary widely. You can take one per cent of the purchase price as a guideline for a standard property transfer.

Note than some buyers they can force to agreed than a percentage of Notary Fees must be paid by vendors.

7.- PRICE DECLARED AT COMPLETION

lf you want to know exactly how much Hacienda thinks your I)roperty is worth, you can find out by asking at your regional Oficina liquidadora. They will give you the amount listed in tlreir own tables. Any attempt to declare a value under that ligure will probably bring you a notice to pay more.

Furthermore, if Hacienda reckons that the under-declaration exceeds 20 per cent of their calculated value of the property, they can bill you, the seller, for an unjustified capital gain, which draws tax at 21 per cent for the non-resident.

That is, if you declare the sale at €90,000 but Hacienda cnlculates the market value of the property at €120,000, they will charge the seller 21 per cent of €30,000. Inaddition, they can assume the buyer has received a Kilt worth €30,000 and assess gift tax on him of about €6,000.

It was formerly a common practice in Spain to declare a property sale at much lower than its real price in order to save money on transfer tax and wealth tax later. Now is completly illegal by “Laudry Money” Law. This practice has largely ceased.

If Hacienda believes that your sale is undervalued – and they have their own tables of market values – they may send you a notice that your sale has been re-assessed by them, along with a bill for how much extra tax you owe.

Today, most contracts are declared at their real value. Furthermore, as buyers become more sophisticated, they have realised that a low declaration now means that they will show a larger profit on paper when they go to sell later, making them

Furthermore, if Hacienda reckons that the under-declaration exceeds 20 per cent of their calculated value of the property, they can bill you, the seller, for an unjustified capital gain, which draws tax at 21 per cent for the non-resident.

Rates:

Your receipt for the paid-up Impuesto sobre Bienes Inmuebles, the Real Estate Tax, is an important ítem.

The IBI receipt  show the amount of the valor catastral, the official assessed vague of the property for tax purposes. This value is almost always less than the real market value, but they are gradually being raised.

Income tax declaration: If you are resident and so not

Subject to the retention of three per cent of the price, you will be required to present a “tax Certificate” to probe your most recent income tax declaration

If you are a non residents, you must hold your last 4-5 Current form 214 – 210 which you declare each year for the same property owner´s income tax as well as Spanish wealth tax. Non­

Non-residents should be warned that any  unpaid property owner’s income tax or wealth tax can be taken by the tax man from the three per cent retention.