"Ten aspects you should know before buying a home in Spain"
This article tries to offer a few guidelines to those people residing abroad who want to acquire a property in Spain. I will focus on the sale of real estate, excluding other forms of property acquisition, for example, inheritance, donations, embargoes, contribution to companies, etc.
Currently, the purchase of properties in Spain is booming, mainly, houses and tourist apartments in the coast of the country. Canary Islands are an important reference over it.
Therefore, the foreigner who wants to acquire a property in Spain must know the following aspects.
Currently, the purchase of properties in Spain is booming, mainly, houses and tourist apartments in the coast of the country. Canary Islands are an important reference over it.
Therefore, the foreigner who wants to acquire a property in Spain must know the following aspects.
I. Verify that the seller is the real owner of the property
Normally, it can be easily verified by requesting a simple informative note to the Registry of the property where the real state is located. However, these issues can present legal complications, for example, when the seller did not register the real state in the registry nor the person who sold him. This would require the initiation of previous processes of registration (or even judicial) so that the foreign buyer can have the guarantee of acquiring the property and registering it in the Register of the property.
II. Debts with the community of owners
If the property is located in a community of owners, the buyer must require to the seller for a certificate issued by the secretary or administrator of the building, stating that the property has NO debts (article 9.e) Law 49/1960, of 21 Of July, on horizontal property). If this certificate is not requested, the community of owners may claim to the buyer the debt of the year in which he acquires the property, plus the previous three years.
III. Tax Debts
In the practice, it is not usually provided with a certificate stating that the real estate has no debts to the public treasury. However, it is very important to request this information because if the seller has debts with any of the Spanish tax authorities, the property that the foreign buyer acquires could be affected by the payment of these tax debts as jointly responsible, subsidiary, or by legal condition. For example, local taxes in the municipality where the property is located (IBI, Municipal Tax on the Increase of Land of Urban Nature, etc.), taxes that are managed by the autonomous administration (for example, Inheritance and Donation Tax, patrimonial transmissions, etc.) or state taxes (for example, IRPF).
IV. Other debt
The seller may have debts with other public administrations (Social Security, Data Protection Agency, etc.) or legal relationships with other people. Controlling this situation is complex. The foreign buyer will have the guarantee of the third party in good faith (with legal limitations in some cases). For that reason, the best clues can be found in the examination of the information note we requested in the Register of the property. We can also see if there are embargoes, preventive embargo records, etc. Likewise, we must request (usually, does the Notary) another information note the same day of the signature or, the day before, to verify that an embargo has not been registered after the last information note we requested.
We can also check if the seller has debts in the water and electricity services for requirement of the debt certificates.
We can also check if the seller has debts in the water and electricity services for requirement of the debt certificates.
V. Urban Problems
It may happen that the real state that the foreign buyer want to buy has been built in an illegal zone and that the competent administration has ordered the shooting down; Or the forced expropriation of the property has been decreed for legal purposes; Or the use of that property can only be destined to tourist exploitation; etc. In these cases, the foreign buyer may be the victim of a fraud or felony offense and lose all or part of their money.
For all this, it is necessary that the seller request in the competent administration a certificate stating that the real state has no urban conditions or problems. Some conditions can also be found in the simple note of the Land Registry.
For all this, it is necessary that the seller request in the competent administration a certificate stating that the real state has no urban conditions or problems. Some conditions can also be found in the simple note of the Land Registry.
VI. Situation of the owners community
If the property is located in a community of owners, it’s very convenient to examine what kind of collective the foreign buyer will belong to. For example, if it is a very conflictive environment, if there are statutes and what limits it regulates, if they are frequently the approval of spills or extraordinary expenses that force to make excessive payments very often, etc. So, it is necessary to examine, at least the assembly minutes of the last two or three years and other additional information that was necessary to know.
VII. Seller taxes affecting foreign buyer
When the seller is not resident in Spain, the foreign buyer must take greater precautions fundamentally regarding the taxes.
In these cases, the foreign buyer is required to withhold 3% of the amount of the sale to be paid out in the public treasury (article 25.2 and 31 of Royal Legislative Decree 5/2004, dated March 5, approving the Consolidated text of the Non-Resident Income Tax Law of 14 of Royal Decree 1776/2004, of July 30, which approves the Regulation of Income Tax of non-Residents). If the buyer was not doing it, the buyer might have to pay this amount to the Spanish tax authorities in the future, without prejudice to possible penalties, surcharges and interest. Therefore, it is necessary that the seller provides a certificate of residence in Spain.
On the other hand, these transactions of sale of immovable property oblige the seller to liquidate and pay the Municipal Tax on the Increase of Urban Land (Article 104 et seq. Of Royal Legislative Decree 2/2004 of March 5, Which approves the consolidated text of the Local Finance Regulatory Law), known as municipal surplus value. However, it may happen that the non-resident seller does not comply with that tax obligation. In such case, it could happen that the municipal administration claims the foreign buyer to pay such tax as jointly liable. This may suggest the possibility of withholding an amount as guarantee from the municipal tax payment to avoid future problems.
In these cases, the foreign buyer is required to withhold 3% of the amount of the sale to be paid out in the public treasury (article 25.2 and 31 of Royal Legislative Decree 5/2004, dated March 5, approving the Consolidated text of the Non-Resident Income Tax Law of 14 of Royal Decree 1776/2004, of July 30, which approves the Regulation of Income Tax of non-Residents). If the buyer was not doing it, the buyer might have to pay this amount to the Spanish tax authorities in the future, without prejudice to possible penalties, surcharges and interest. Therefore, it is necessary that the seller provides a certificate of residence in Spain.
On the other hand, these transactions of sale of immovable property oblige the seller to liquidate and pay the Municipal Tax on the Increase of Urban Land (Article 104 et seq. Of Royal Legislative Decree 2/2004 of March 5, Which approves the consolidated text of the Local Finance Regulatory Law), known as municipal surplus value. However, it may happen that the non-resident seller does not comply with that tax obligation. In such case, it could happen that the municipal administration claims the foreign buyer to pay such tax as jointly liable. This may suggest the possibility of withholding an amount as guarantee from the municipal tax payment to avoid future problems.
VIII. Taxes to be paid by the foreign buyer when buying the house
The purchase and sale of real estate in Spain will be affected by the Tax on Real Estate Transfer (6.5% over the transaction amount) and Documented Legal Acts (0.30 euros per spread or 0.15 euros per folio, at the choice of the Notary), if the seller is an individual person; Or, by the VAT (10%, in general, on the amount of transaction), if the transaction is made in Spain, except in the Canary Islands; Or IGIC (exempt from taxation in the cases provided for in Article 50.one.22 of Law 4/2012, of 25 June, of the Autonomous Community of the Canary Islands, administrative and fiscal measures), if the transaction is carried out in the Canary Islands. The application of taxes has some exceptions.
It will also be necessary to add the notary expenses, fees of the registration of the property, management for their new owner status (model 901), etc.
It will also be necessary to add the notary expenses, fees of the registration of the property, management for their new owner status (model 901), etc.
IX. Energy Certificate
Royal Decree 235/2013 (which comes from Directive 2010/31 / EU of the European Parliament and of the Council of 19 May 2010) requires the seller to provide the energy certificate in the rental and sale of real estate. Failure to comply with this obligation can be punished with fines of between 300 and 600 €. Said certificate must be presented and attached to the notarial deed of sale by the seller.
X. Appearance to sign the deed of sale, identification and seizure of a third party
Notarial legislation requires the direct intervention of the parties (seller and buyer) at the time of signing the sale. Then, the foreign buyer must come from his country of residence to Spain to formalize with the seller and the Notary the contract of sale. Before, the foreign buyer must also obtain the NIE (Foreign Identification Number, according to Organic Law 4/2000, on the rights and freedoms of foreigners in Spain and their social integration and Royal Decree 557/2011, of April 20th).
However, there is an option that the foreign buyer DOES NOT have the obligation to come to Spain to formalize the sale transaction (Annex III of the Decree of June 2, 1944, which approves the Notarial Regulation in accordance with the provisions In articles 11 and 734 of the Civil Code and the international treaties) by granting a power of attorney, for that purpose, to a person who can represent and sign the notarial deed in Spain, in the office of the nearest Spanish Consulate in its country of residence. The foreign buyer may also obtain a provisional NIE in the consular office.
However, there is an option that the foreign buyer DOES NOT have the obligation to come to Spain to formalize the sale transaction (Annex III of the Decree of June 2, 1944, which approves the Notarial Regulation in accordance with the provisions In articles 11 and 734 of the Civil Code and the international treaties) by granting a power of attorney, for that purpose, to a person who can represent and sign the notarial deed in Spain, in the office of the nearest Spanish Consulate in its country of residence. The foreign buyer may also obtain a provisional NIE in the consular office.
What can the foreign buyer do to protect their interests, comply with legal requirements and avoid deception and problems?
Contract a lawyer is always the best and safest option. Attorney can advise you over all the legal aspects. Lawyer is a qualified professional with liability insurance.
May I help you, please contact me in the following contact form.
May I help you, please contact me in the following contact form.
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