Shortlist for the Purchase or Acquisition of Real Estate

  • General Information for the Property Registry
    Basic property information can be found in the Registry document.

    • Régimen de tenencia and description of the property.
      La nota registral provides information on the régimen de tenencia as well as a detailed description of said property.
    • Costs
      The Registry document provides information on all types of costs including mortgages, habitation rights, rights of passage, rentals or execution.
    • Territorial Tax Contibution (IBI).
      The seller must show payment of territorial contribution which includes, but is not limited to, IBI and trash collection, by means of an annual invoice.

  • Additional information applicable to real estate promotions.
    Not all information can be found in the Registry document.

    • Constructability.
      If purchasing a parcel of land, the local Municipality will provide parcel classification, percentage constructability, height regulations as applicable to constructions, floors and other limitations.
    • Construction license.
      If such a license exists, it must be determined whether it is still valid, whether it can be extended or modified.

  • Additional information applicable to new promotions.

    • New construction declaration.
      The most important documents are:
      • 1.Construction license,
      • 2.Completion of construction and new construction declaration.
    • A house can only be constructed if a construction license exists. Once construction has been completed, the Municipality provides approval of the building(s). The developer then submits for approval a new construction declaration with the notary to enable him to register it with the Property Registry. If such a document was not previously registered, only the plot of land will be found in the Registry.
    • Cédula y habitabilidad.
      La cédula de habitabilidad is required to establish contractual relationships with local service providers.
    • Construction plans.
    • Plans for electrical installations.
      Required to confirm that all electrical installations were completed according to existing norms and security regulations.

  • Sales/Purchase Contract

    • Purchasing on Reserve
      This type of contract is typically used to reserve a real estate property, plot or house for a short period of time. A small percentage of the purchase price is deposited as a non-refundable guarantee. If the property is purchased, this amount is applied to the purchase price; if it is not purchased, interested party loses this guarantee.
    • Option contract
      This is a contract between Buyer and Seller which assures, for a pre-determined period of time and price, that the Buyer retains the “option” to purchase said property. The Seller is legally obliged to sell the property to the Buyer or holder of the option (“Optionee”) for the agreed-upon period of time. This type of contract is more secure than a “Reserve Purchase” in that it can be annotated with the Property Registry.
      The Buyer will need to pay the Seller an amount equal to 10% of the purchase price. In case of default of purchase, the Buyer is not entitled to a refund. In case the Seller sells the property during the terms governing the option, he shall be obliged to pay double the refund to the Buyer.
    • Private Contract
      In most cases, this type of contract is done prior to visiting a notary. Such a contract contains the type of building or property, the actual price, payment conditions and closing costs. A private contract always results in a closing with a public notary.
    • Public Closing
      Once the private contract has been signed between the parties inb front of a notary, the sale will need to be registered in the property registry. The sale contract includes a detailed property description and the registry number of the cadastre. It is highly recommended to ask for the contract from the notary a few days before the signing to review and approve changes.

  • Closing costs & Taxes

    The only costs in the purchase of a property are generated by the notary, the registry and accountancy. Depending on the value of the property, you should assume costs between 1.5% and 2% of the value of the purchase or sale. Taxes are in addition to these.
    • Purchaser Costs
      • IVA
        If the Seller is a real estate developer, who has built the house or apartment, the IVA is equal to 7%. In case of a first sale of a property with construction permits, the IVA is equal to 16%. In case the Seller of a property with construction permits is a private party, the IVA is equal to 7%. If the sale is for garages, trasteros or commercial property, the IVA is equal to 16%.
      • ITP (Impuestos de Transmisiones)
        In all real estate transactions where IVA does not apply, the ITP Tax is equal to 7% of the transaction value.
      • AJS
        In transactions where the IVA tax applies, the AJS Tax is equal to 1% of the transaction amount (specific to the Balearic Islands).
    • Seller Costs
      • Capital Gains
        The Seller is obliged to pay the Capital Gains governed by the increase in value of the lot or land (not the building erected thereupon) and determined by the Municipality depending on the time the property was held (from 1 year to 20 years). One exception is for rustic land.
        The taxation base is the cadastral value can find in the annual receipts of the city council(IBI).The coefficients depend on the city council which are multiplied with the years.This percentage once calculated is the base of the capital gain.The city council determines the amount of tax;maximum 30%. This tax calculates upon the capital gain and its multiplied by the new cadastral value. ii.Impuestos sobre las renta de las personas físicas IRPF. Sobre el beneficio se tiene que pagar IRPF, la cantidad depende si la persona es residente y por ello fiscal ilimitada o no-residente y fiscal limitada.
        • Limitless public prosecutor.
          The IRPF is not determined by a fixed tax,in fact is oriented to a type of “lost-gain”.
        • In case that the salesman has the property for more than 10 years it does not have to pay IRPF.In case of having it but of 1 year 15% of the gain will be pay. 2Limited public prosecutor.
        • If the property is 10 years old it does not have to pay IRPF. If it has more than 1 year he must pay 35% of the gain.As from the year 2007 IRPF lowered a 18% of the gain.
      • Annual taxes.
        The IBI must be paid in urban lands.The proprietor must pay them annually.As a base calculares the cadastral value,that is between 0,3% and 0,4%.

  • Additional information on the transaction of buildings through societies
    Many properties are bought through societies.

  • Properties transaction
    When buying a property though a S:L one must pay a 7% of IVA or 7% ITP.IVA can be compensated with the amounts of IVA(if its an active S.L which it means that not only administers properties.

    Sales of Buildings
    The benefict of a S.L activates this subject to the tax of societies,until an amount of 90.000 euros prevails a 30%,later 35% of the benefit.More or less the shame as withj the non-residents tax.Societies Tax(AJS).La AJS of a1% must be paid if a private person presents a private property to a S.L.

     


 
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