Selling a Property in Spain
We would recommend that a contract be prepared even though it is possible to proceed directly to completion with the signing of the escritura (title deed) on payment of the full purchase price. The latter option is only advisable in rare circumstances. Having a prior contract allows a date for completion to be specified and requires the buyer to pay a deposit and thus become “locked in” to the transaction. It can stipulate who is to pay the fees and taxes on completion and provides certainty for both parties.
Mortgages
If the property is mortgaged then the buyer, unless he is to take on the seller's mortgage, will want the mortgage to be cancelled before the property is registered in his name. However, it is not sufficient simply to pay the balance of a mortgage debt to a Spanish mortgagee bank and be satisfied with a mere receipt of payment. Just as a mortgage has to be signed before a Notary and registered at the Land Registry, so must a deed of cancellation of a mortgage be signed before a Notary by the Spanish Bank and subsequently registered at the Land Registry. This deed will attract stamp duty (AJD tax) and Land Registry fees as well as the fees of the Spanish Notary.
NIE Numbers
Whether you are buying a property, selling a property, opening a bank account, inheriting an asset in Spain or otherwise transferring a Spanish asset, you will need to obtain an NIE number (numero de identificacion de extranjeros) or Foreigner's Identity number. This number is required by Spanish law and can be obtained in person from the Spanish police or from the Spanish consulate in London. In some regions NIE numbers can be obtained by a third party holding a valid power of attorney on your behalf and we would be happy to advise you as to what steps and documentation are required on a case-to-case basis.
Completion
Completion on a Spanish purchase takes place on the signing of an 'Escritura' (title deed). Escrituras have to be signed by the buyers/sellers in person or by their duly appointed Attorney. If you do not wish to travel to Spain to complete in person then we can arrange for completion to take place with one of our agent lawyers signing on your behalf under a Power of Attorney.
Fees and taxes payable on completion
In addition to the purchase price there will be a number of extra fees to pay. These include:
i) Land Registry fees, which are usually paid by the buyer.
ii) Transfer tax or VAT. The percentage of tax charged varies between some regions (5% / 7%) and the buyer pays this tax.
iii) Spanish Notary's fees for drafting the new escritura are again usually paid by the buyer.
iv) Stamp Duty (AJD tax) may be charged, particularly where a mortgage is financing the purchase and is paid by the buyer.
v) Plusvalia tax is a type of municipal capital gains tax charged by the local Town Hall. This tax can be negotiated between the buyer and the seller as to who pays it.
vi) Capital Gains tax. This is payable by the seller and the rate and method of collection depends on whether the seller is resident or non resident in Spain for tax purposes. If the seller is resident in Spain then we will advise on a case-to-case basis as to the liability to this tax. If the seller is non-resident then the buyer will pay 3% of the purchase price to Hacienda (Spanish Inland Revenue) on account of the seller's capital gains tax liability. The buyer will then only pay 97% of the purchase price (or balance thereof) to the seller on completion. The seller then has the right to apply for a refund of any balance of the deposited monies that may be due to him after deduction of tax.