Useful information if you want to buy a house in ibiza
1. The Purchase Process
f you are buying a property in Spain, we advise you first to hire the services of an attorney to handle the legal aspects of the purchase process.
Your lawyer will check for any debts on the property, such as mortgages and loans, and will also verify that the legal owner of the property is the person who has put the property on sale.
Once you have verified that everything is in order, your lawyer will write a Purchase Option Agreement that will stipulate the purchase price, the signal (usually 10%), date of payment, date on which the option to be executed. Purchase and what you consider must be included in the price (eg furniture, facilities) When writing the Purchase Option Agreement, the property is formally reserved for you while you carry out the legal and financial procedures. The sale of a property can be carried out by several real estate agents, for this reason it is very important that you reserve the property when seller and buyer agree a price.
Private purchase agreement
The contract of sale is the one by which one of the contractors is obliged to deliver the property and the other to pay for it a certain price.
At the signing of the private contract of sale of a property, a certain amount can be delivered on account of the price, said payment can be denominated in several ways:
Confirmatory, payment on account or payment and signal.
Failure by either party to authorize the opposing party to choose between enforcing the contract on its own terms or requesting the termination of the contract, entitled to compensation for damages.
Earnest money contract
Is a contract of sale which includes a pact of pledge by which a certain part of the price (10% in general) is given to which the configuration of penitential deposits is given.
Penitential annuities allow either party to withdraw freely from the contract.
If it is the Buyer who desist, he will lose the amount he would have given as a debtor.
On the other hand, if it is the Seller who desists, he will have to return the duplicate trays, which will mean returning the amount he would have received from the buyer and paying the same amount as penance.
They receive the name of criminal prosecution those that are configured as a penal clause, their effects are halfway between confirmatory and penitential debtors: in case of noncompliance, the defaulting party has to pay the other the penalty set, but the party Compliant, in addition to receiving payment of the penalty, may choose between enforcing compliance or requesting the termination of the contract.
Purchase Option Agreement
The purchase option agreement is a contract under which the selling party grants the buyer the power to decide whether or not to enter into a sales contract, within a specific term and conditions.
If the buyer decides not to exercise the option, he will lose the amount delivered as a bonus option. In case the grantor-seller refuses to sell in the agreed terms, the opt-buyer may choose to demand compliance with the contract in its own
Terms or request the termination of the contract, entitled to compensation for damages.
2. Taxes and taxes on the purchase of housing
Approximately 10-13% of the purchase price will be used to pay taxes and fees. After purchasing the apartment, you must pay the following fees and taxes:
Property Transfer Tax or Value Added Tax (VAT), depending on the case: buyers of a home in Spain must pay between 7% and 10% (on a scale ranging from € 350,000 to € 1 million) In the concept of Patrimonial Transfer Tax for houses that are not new construction and a 10% VAT (Value Added Tax) for new housing. However, in case of acquiring land, commercial premises or parking spaces in Spain, the I.V.A. Which must be applied is 21%.
Goodwill: it is a municipal tax that taxes the revaluation of the soil since the last transmission. The City Council is in charge of collecting the tax that is calculated according to a) the area in which the property is located; B) the surface of the lot; C) the cadastral value; D) and the date of the previous Deed. According to the law, this tax must be paid by the seller, although some sellers still ask buyers to pay the tax.
Notary fees are calculated based on a tariff set by the Government. Notary fees vary according to the sale price reflected in Scripture. The notary will send the details of the Deed to the corresponding Property Registry in order to inform about the identity of the new owner. Notary fees and Property Registry fees are approximately 1% of the purchase price.
Attorney’s fees: approximately 1% of the value of the purchase will be used to pay the attorney’s fees.
In the event that the buyer has to apply for a mortgage to make the purchase of the house, he will have to pay some payments for the management and processing of the mortgage.
3. Annual Property / Property Fees
In Spain there are some taxes that tax the ownership and rights over the property. We recommend that you hire the services of a tax advisor or manager to be the person in charge of making and managing the annual tax payments, thus saving you a lot of time and work and also avoiding that you miss the payment deadline , Reason for which could be sanctioned.
The most important annual tax is the IBI (Property Tax)
The base of this tax is the cadastral value of the property and the percentage varies between 0.4% and 1.1% depending on the region in which the property is located. The amount can vary, but ranges from 200 Euros to 2,000 Euros per year depending on the value of the property.
4. Should I hire the services of an attorney to handle the property purchase process?
You do not have the obligation to hire the services of a lawyer although it is highly recommended. That is, it is not mandatory but important. It is essential for you to have the help and advice of a lawyer in order to guarantee a secure purchase process. In Spain, lawyers are in charge of carrying out all the necessary legal checks, for example, check in the Town Hall that a bowling alley or a nightclub right next to the house of your dreams is not about to be built. The lawyer will also deal with issues such as writing a pre-sale contract or request the Foreign Identification Number (Spanish Identity Number required to carry out the purchase process). In addition, he will take care of the necessary procedures to make the payment of the 10% to be paid as a sign (penitential annuity in legal terminology) and will go with you to the notary for the final signature of documents. In addition, the lawyer will inform you in detail of the property taxes that must be paid during and after completing the purchase process. It is also important to mention your main task: you will also be responsible for ensuring that the property you just acquired belongs to you legally, which is what you thought but without its acquisition eventually becoming an immense pile of debts. The lawyer will also be in charge of writing the documents corresponding to the property and inheritances or wills, very important aspects in this whole process. Fundamentally, having the help of a lawyer will allow you to resolve any doubts about the purchase process or ownership rights over the property. Expenses arising from a lawyer’s fees amount to 1% of the purchase price.
The lawyer will make the legal checks (Due Diligence)
– proof of title deed
– consult the property registry
– consult the cadastre of Real Estate (contribution of cadastral descriptive and graphic certification)
– city loaders
– licensing of works
– Chabitability certificate and first occupancy license
– Energy Efficiency Certification
– payment of the Real Estate Tax
– Check that it is free of loads
– common community expenses in payment order (and community charters)
Expenses arising from the purchase agreement
The capital gain we obtain is between 19.5 and 23.5% (the first 6,000 euros, to 19.5%, from 6,000 to 50,000 euros, to 21,5% and the amounts that exceed 50,000 euros, at 23.5%).
If the home is sold for less money than the one purchased, it is considered that there has been an equity loss and, therefore, should not be taxed. In fact, the handicap can be offset by gains made during the next four years.
The law exempts from the payment to the taxpayer that sells his habitual residence and reinvests the gain obtained or part of it in acquiring another house that must also be his habitual residence, not second residence. The exemption is only applied on the part of the profit that is destined to buy another house. The one that is not used should tax.
“The amount of the transfer, the price obtained, not the amount of the profit, must be reinvested. In addition, the reinvestment of the amount obtained in the transmission must be effected only once or successively in a period not exceeding two years, Counted from the date of transmission, whatever the terms or payment modalities stipulated, “explains Ignacio Para Mata, partner of VAbogados.
In any case, it is necessary to state in the declaration that it is intended to benefit from the tax benefit for reinvestment. Whether or not the profit is reinvested, you have to declare it. Tax exemption is also waived for persons over 65 years of age or for dependents.
And what is sold must be the usual home. That is, the one in which the taxpayer resides for a continuous period of three years. “However, it is understood that the dwelling had that character when, despite not having elapsed this period, there are circumstances that necessarily require the change of housing, such as celebration of marriage, separation of marriage, transfer of employment, obtaining a first job or Of employment more advantageous or other analogous, clarifies Ignacio Para.
Municipal Tax on the Increase of the Value of Urban Land (IIVTU)
It is the great forgotten and yet it is present in all sales of homes that are formalized in Spain, and many sellers are aware of their existence through the notary the same day they formalize before him the sale of his home. The Tax on the Increase of the Value of Urban Land (IIVTU) is paid to the corresponding municipality, that is to say, where the dwelling is located.
Commission of the Intermediary Agency is included in the sale price.