Spanish Property Investments in Fuengirola, Costa del Sol
Investing in property overseas is always a step which must be given the utmost consideration. At Frontline Spain, we offer a broad range of professional services to assist you if your decision is to purchase property in Spain and particularly if you have chosen the Andalusian region of southern Spain.
After familiarising yourself with the general region and the local property market, and having chosen the type of property you want to buy, we have set out a number of logical steps to act as a guideline to make your purchase run as smoothly as possible.
- Appoint a local agent
A reputable agent will provide an invaluable guide to the local property market as well as assist with negotiations with vendors and dealings with lawyers. Be wary of agents who make a charge for their services, as fees should be derived from the sales commission they receive.
- The decision to buy
Once you have found the property you want, you can make an offer on the property, either direct to the vendor or through the agent. Once the price has been agreed, you will need to consult a lawyer.
- Appointing a lawyer
It is absolutely essential to appoint a lawyer to handle the legal side of the purchase transaction. Even if you are fluent in Spanish (and of course this helps) appoint a lawyer who is fluent in English. Be guided by your lawyer as there are a series of steps to be taken which must be completed in the right order and in the right way.
- The Deposit
Your lawyer will recommend the payment of a deposit in order to secure the property and to take it off the market. This takes place once the legal processes have been started. Your lawyer will draft a formal agreement for this purpose.
- Exchanging Contracts
Exchanging contracts will take place about two weeks after the acceptance of the offer, after the lawyer has completed all the searches. A date for completion will be agreed and, if not already having been paid, the deposit will be paid. Remember that the deposit is non-refundable so it starts to get expensive to change your mind after this point.
- Completion
On the day of completion, the buyer and the vendor sign the title deed of the property (Escriyura de Compraventa) which will also itemise the legal state of the property upon transfer. This takes place at the office of the Notary. This process does not check the terms of the agreement, simply that the parties have agreed to complete on the terms as stipulated in the document. At this point, your lawyer will effect the payment of taxes and due fees. He will also register the title to the property at the Property Register. From this point, ownership is transferred.
- The Costs
There are a number of fees and taxes to be paid in the purchase of the property.
Firstly there will be professional fees from your lawyer, the Notary and the Property Registry. Lawyers generally charge 1% of the purchase price of the property plus IVA (VAT). The Notary fees are fixed by statute and generally range from between €300 to €1200, depending on the value of the property. The registry fees tend to be about 40% of the Notary fees.
The main taxes that have to be considered are Transfer Tax (ITP) and "Plus Valia".
Transfer tax is paid when buying a used property from a current owner. The tax is set at 6% of the purchase price however, if the property is being purchased from a property developer, this is replaced by an IVA levy at 7% of the purchase price plus 0.5% stamp duty.
Plus Valia is a local council tax based on an assessment of the increase in the value of the property from the last time it was on the market. This can obviously vary from a few hundred Euros to several thousands. The local town hall keeps records which can be easily viewed.
- Who Pays What?
Within most transactions, the buyer will be responsible for all the above fees and taxes with the exception of the "Plus Valia". However, these can be negotiable so it is up to you and your lawyer to get the best deal. The vendor will be responsible for capital gains tax and his agent's fees.
