Buying a house in Spain – practical advice
Buying a property involves a lot of decisions and while you are talking about Spain then you need to understand the market, the laws and tax brackets related to buying, owing or leasing a property.
Also there are many hidden costs involved that one must account for before making any deal. Foreign investors like never before are now buying the Spanish property.
The House are being bought under the control of bank due to default in mortgage payments and the banks are now selling these mortgaged houses at a rate of 60 houses per day.
Do you want to invest in a property abroad? Spain is a great place as it attracts a lot of tourists which makes it easier to keep the house rented out all the time.
Investing in a Spanish property
Foreigners bring all these houses; the data suggest that more than one-fifth of Spanish residential sales go to foreign buyers. These foreign buyers are both private buyers and institutional investors. Most of the buyers are Briton who buys the house as a lifestyle choice with a second home and seeing the financial benefits too. There are number of reasons that support these buying activities of Spanish houses. Let's see them in detail.
Cost associated with buying a property in Spain
New property: If you are buying a new property then you have to pay IVA, which is a tax for first time sale of property. It is a national tax thus it is same all over the country. It is currently 10% for purchase of residential properties and 21% for purchase of commercial properties and plots. There is an additional stamp duty that is to be paid, both the stamp duty and the IVA is to be paid by the buyer when buying a new property. The stamp duty is 1% of the price of purchase. But it may be slightly high in different regions so make sure you check the stamp duty before paying it.
Transfer tax: If one is buying a property, which was previously owned and used, then he is liable for a transfer tax. The transfer tax is different for regions and one should confirm the tax rates. The stamp duty is already included in the transfer tax. The general tax rule is 7% but there are some regions, which charge higher taxes.
Foreign owners: there are many properties in Spain which are owned by foreigners and one plan to buy such property then the buyer has to withheld 3% of the price, this 3% is paid as tax to the authorities. If there is a default in this tax payment then it is subject to capital gain tax liability for the buyer.
Cost other than tax and purchase price:
There are a lot of formalities involved when one is buying a property and you have to make sure that your account for them when you are making a property purchase in Spain.
Agency Fees: these are agents who bring the buyer and seller together. Thus if you making use of any agency or estate agent to find you a house then you have to pay them some percentage of the purchase price. The agents may charge anywhere from 2% to 15% depending upon the area and the type of purchase. This is a part of the purchase price for you, as you will have to bear the cost.
Legal cost: These are not the tax cost. When is buying a property it is always advisable that one involves a lawyer who drafts and reviews the contract. He will explain all the legal implication involved with the buying of the property. Also it is his duty to make sure to check any ownership claims and property permits. He arranges for all required documents and complete the buying process taking care of tax payments, registrations etc. the lawyer charges are based on the service they provide. These vary according to the complexities of the purchase. Many charge around 1% of the purchase price. But there are few lawyers who may even charge more. Make sure that you realize that the charges should not be high if you are making a simple deal and in such cases try and find a good lawyer who can charge you on an hourly basis and gets the paper work done on time.
Mortgage cost: If you are planning to buy with a mortgage then there will be additional cost. There are two type of cost here one is the valuation cost of the property that the buyer will have to pay for and the second is the mortgage cost itself.
Notary expenses
The buyer pays these charges and these are generally 1% of the deed. These charges are many a times .5% or even less but just to be safe they should be calculated on 1% of the purchase price mentioned in the sale deeds while making an estimate.
Other expenses associated with buying a property in Spain
There are other cost related to buying a property, there is banking cost, property registration involves a fess. Also if you buy a house at some point you will have to renovate and refurnish it. You will have to organize removals to Spain from UK of all necessary painting and decorating materials as well as new furniture. You must make all these estimates along with the purchase price when you are making a buy.
The property will then require furniture, carpeting and other such interiors. The cost of cleaning and maintaining the house will also be yours.
For cleaning €10 is fairly typical throughout Spain. If the flat, apartment is a part of any community then you will have to pay the annual and community charges to enjoy the benefits they provide.
Buying property in Spain is involves pretty much the same ordeal like anywhere else, but here you will have to just make yourself aware of the tax laws and other relevant fees as it may wary from region to region.
Otherwise owing a property in Spain is a good idea now that the Euro zone crisis has passed.
The property rates are not expected to fall any lower and thus one can be rest assured about the purchase he is making. And the Spain resident that defaults on the house mortgage makes more number of destitute properties available for sale in the market.