Statistical data of buying and selling in Spain
According to the Bank of Spain, housing transactions reflect the upward trend that the real estate sector has been experiencing over the past five years.
Only in 2018, just over 550,000 home sales were recorded in Spain – approximately 10% more than in 2017 – but this is a much lower level than in the years before the economic crisis.
“For example, in annual average, during the period 2004 to 2007 the number of housing transactions in Spain amounted to about 885 thousand and the optimism towards recovery is maintained”, reveals the official body.
Recommendations of conveyancing lawyer in Marbella when selling a property in Spain
Do you want to sell a property in Spain? Read the recommendations of Welex, an independent law firm specialising in advising on real estate transactions in Spain, your conveyancing lawyers in Marbella.
To sell a property in Spain it is important to be well advised – throughout the process – by a trusted professional who knows all the ins and outs of Spanish law and the necessary documentation.
In the opinion of a professional from the Welex Legal and accountancy Firm in Spain, the success or failure of a sale sometimes depends on having the right advice, who knows the real estate market and the taxes to be paid with certainty.
“Expenses and taxes arise from a sale of a property in Spain, so it is necessary that the client at all times knows first what he is facing, so that he knows from the beginning the funds he will have available after the sale and the payment of all taxes and expenses”.
At Welex, a prestigious conveyancing law firm in Marbella and along the Costa del Sol, the experts are in charge of managing all the necessary documentation to facilitate the process of buying and selling in Spain.
“From the beginning of the professional assignment, we ask the client for all the relevant documentation to provide guidance in terms of the taxes that will have to pay; we have to start from the fact that we need to know the agreed sales price to determine the expenses that will arise throughout the process. Here at Welex, your multilingual conveyancing lawyer in Marbella, we are very precise and we like to collect, in a meticulous way, all the documentation in order to be able to provide legal and fiscal advice so that all the aspects of the sale are covered… all the details, from the payment of the client’s taxes to the payment of the fees for the intermediation of a real estate agency”, comments the professional.
In an exclusive interview, the Welex conveyancing lawyer in Marbella explains that a client who wants to sell a property, real estate, must have a series of documents updated to avoid “unexpected surprises” and incidents during the process.
“When we have a client who wants to sell, we check the situation of the property, we make sure that the client complies with all tax obligations and has all the documentation in order to sign the deed of sale in Spain“, he adds.
In a sale of a property in Spain, continues the expert, the seller is obliged to deliver a certain thing and the buyer to pay a stipulated price, then it must be a transaction that involves the advice of a professional.
The sale is completed once the parties have agreed on the object of the contract and the price, even if the thing has not yet been delivered or the price paid. It must be taken into account that the seller has obligations from the very moment the deposit contract has been signed and has received the deposit which is a certain amount of money in advance.
The purchase and sale, says the professional, is mandatory for both when the object and the price have already been agreed upon and in the case that a deposit contract has been signed this contract can be terminated with the detriment that the buyer would lose the amount delivered or the seller would have to return it in duplicate.
“The seller has two obligations in the sale: to put the sold item, the property in Spain in this case in the hands of the buyer and is also obliged to remediate if there are defects in the property”, the specialist points out.
The possession is usually given to the buyer when the deed is signed before a notary. Before this definitive contract, logically is not obliged to hand it over if the buyer has not paid the price.
“With reference to these obligations of the seller of a property in Spain we check the documentation of your property and it is the obligation of the seller to be up to date in the payment of the Property Tax (IBI); of the community expenses and the payment of the capital gain and to obtain a certificate of energy efficiency. This certificate is imperative in order to sell”, adds the expert.
For its part, the Spanish capital gain is paid taking into account the increase in the value of the land and the time that has passed since he bought it, i.e. all the days, months and years that the owner was in possesion of the property; with reference to the IBI, it is a levy that taxes the value of the property and must be paid by the fact of owning a property in Spain.
In addition, the professional specifies that the notaries – prior to the signing of the deed of sale in Spain – request information from the respective Town Hall to ensure that there are no debts: “Therefore, we must bring all this documentation to the signing of the deed of sale in Spain, revised so that an unpaid or long-standing debt does not appear, because if it does, it will not be possible to execute the sale of the property”.
Other obligations in the sale of a property in Spain, by multilingual conveyancing lawyer in Marbella
During the current recovery phase, the Bank of Spain, points out that sales have been mainly supported by “the used housing segment”, while those of new housing show a “trajectory of slight decrease”.
In its analysis of the property market, the central institute notes that since the minimum reached in 2014, the growth of the price of new housing has been slightly higher than the price of used housing, although with some exceptions: “However, the price per square metre of new housing continues to be higher”.
In relation to the sale, another of the obligations that must be covered by the person who is going to sell a property is the payment of the community of owners, which must be reliably proven to be up to date.
“It must be taken into account that there is a credit in favour of the community for the part that is due in the current year in which the sale takes place and the three previous years so that this debt would affect the property that is transferred. If the community is not paid, the debt falls on the property and the buyer would also be responsible for the payment, it is an aspect that must be informed to the client”, says the expert.
Is that included in the document of the sale or is it a surprise that can be faced by the buyer?
-It is included at the moment of signing the deed of sale of the property in Spain and our independent law firm specialised in advising on property transactions in Spain ensures that the community is up to date and paid for and we obtain a certificate issued by the community administrator which must be approved by the president where it is stipulated that no debt exists; or in the event that it does exist, the amount owed must be included so that the parties are aware of it when the deed of sale is signed in Spain.
Also, the professional continues, it is important to take into account the change of ownership of the property after the sale: “It is the obligation of the seller to inform that there has been a change in the ownership of the property if he will not continue to be jointly responsible with the new owner… with the buyer, then we ensure that there is no debt or if there is one we have it quantified and after signing the deed of sale in Spain we communicate the sale to the community of owners so that our client seller will no longer be responsible for payment”.
What other Spanish taxes must be settled?
-Another tax to be taken into account when selling the property in Spain is the capital gain. This tax is levied on the increase in value that the land has had at the time of transfer of the property and the tax payer is the natural or legal person, as it can be an entity, that transfers the land. It should be noted that in the event that this tax payer is an individual and not resident in Spain, the buyer also becomes a substitute tax payer for the seller in the payment of the tax; so it would be responsible and the payment of the tax can be claimed from the buyer.
We, continues the professional, inform the client from the first moment how much the payment of this capital gain will be in order to achieve full knowledge about the expenses that will have on the occasion of the sale of a house in Spain.
“The capital gain that appears regulated by the law of Local Actions in its article 107 indicates the taxable base, and the Constitutional Court has declared unconstitutional the situation when the quota that results to pay of capital gain is greater than the increase that really obtains the seller by reason of the sale. The capital gain tax rate is set by each municipality and may not exceed 30%”, said the advisor.
Another important document that the seller should have prepared is the energy efficiency certificate, this certificate informs about the energy consumption and CO2 emissions of the property being sold.
“And it must be issued by a qualified technician which for this purpose can be an architect, an engineer or a technical architect … there are several professions that can issue the certificate of efficiency and I must say that is mandatory in Spain from 2013 and comes from a European directive, must be processed before signing the deed and submitted to a notary,” says the expert.
And, what happens with the capital gain when selling a property in Spain?
-In general terms, the capital gain on the sale of a property in Spain is the difference between the transfer value of the property and the purchase value, taking into account the price that the person paid at the time of purchase plus the taxes and expenses that arose from the purchase, such as the tax paid when the property was purchased, registration tax, brokerage tax, etc.
Another interesting fact about the behaviour of the real estate market is provided by the Bank of Spain when dealing with the presence of foreigners participating extensively in the purchase and sale of property and other properties.
As regards the nationality of buyers, the increase in home sales is observed both in purchases by foreign nationals of around 16% of the total in 2018, compared with an average of 10% observed during the years 20072013, and in purchases by Spanish residents.
With regard to the purchase of housing in Spain by foreigners, the British are the buyers with the greatest weight over the total (14%), followed by the French and Germans (8% each group) and the Romanians and Moroccans (7% each group).
In the case of the British, there has been a significant reduction since 2017, possibly related to Brexit, as the average observed during the years 20082016 was 19%; and in view of their geographical distribution, home purchases by foreigners have a significantly greater weight in the regions of the Mediterranean arc and in the islands.
How much does a non-resident foreigner pay for the sale of property in Spain?
-The tax rate for non-residents is 19%, which is applied on the capital gain from the sale of a property in Spain. This tax rate is applicable to those non-residents who are tax resident in another EU country. For those who are resident outside the European Union, the 24% tax rate is applied to the capital gain generated at the time of sale of a property in Spain.
Can leased properties be sold?
-Yes. According to the Law there are a series of guarantees for the tenant, who must be informed of the sale at all times; the regulation attempts to give security to the landlord but encourages renting for housing use. To this end, a series of guarantees have been provided, such as the case of extension, and one of these is the exercise of pre-emptive rights and the right of withdrawal; by means of the pre-emptive right, before the sale, I can opt with preference for the purchase of the property. Once the sale has taken place, by means of the right of withdrawal, I can withdraw from the sale; the tenant has to appear and state that he is aware of the transfer, among other things.
If the buyer is aware of this circumstance it can be sold, adds the professional, even if the housing is mortgaged it can also be sold because the mortgage falls on the property.
“We have found situations in which a seller, owner of a property, had a mortgage on his property and the loan was cancelled; there was no longer any debt in favour of the bank, however, the burden of the mortgage still exists on the property until it is cancelled before a notary and the cancellation is registered. We in the office also take care of the entire process of cancellation of that mortgage that has already been paid”, he says.
What happens to a property that is being sold and is the product of an inheritance?
-The heirs must first accept the property, they are awarded the inheritance and become owners with their rights and obligations: the property is registered in their favour in the Land Registry so that they can then sell it. In any case they have to accept it before a notary first…
When is a property not saleable in Spain?
-It is not saleable when the owner does not intend to sell it, when there is a prohibition on…
What if there’s a lien?
-If it can be sold with the lien, we will analyse the reason for the lien… to cancel it. We see why it has been set up, we update the debt and advise the client to proceed and we cancel it on the register so that the property is free of charges.
What happens if someone wants to sell a property for a minimum significant value to a child or a relative?
-It can be considered a fraudulent sale that you want to sell a property to a child at a symbolic price and the authority will realise that the property is not worth that amount.
“In the case that it is a value below what the Treasury Department believes is its fiscal value it can claim the payment of taxes to the parties involved in the sale, both the buyer and the seller of the property. You can draw up a supplementary tax return claiming the payment that should be made taking into account the value that the Tax Office assigns to the property”, he explains.
As for the time delay in the sale of a property, it is usual in practice for the parties to agree to conclude the sale within one month of signing the private contract, but this is a period agreed between the parties, provided that the necessary documentation for the sale is in order and that the buyer has all the funds available for payment of the purchase price.
Sometimes, says the Welex expert, this period is increased if the buyer is taking out a mortgage loan “the period can be extended by agreement” between the parties which must be reflected in the private sales contract.
Can there be any incidents in the process of a sale in Spain?
-It can be delayed when there are burdens on the property so we at Welex make a detailed study of the documentation to solve the incidents that arise and avoid unnecessary delays; our clients are always very satisfied and leave happy.
Do not hesitate to contact our independent conveyancing law firm specialising in advising on property transactions in Spain if you wish to sell a property in Spain.
Purchase and sale of property in Spain
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