Info Buy Spain real estate Costa Blanca

Foreign tax number:

All resident foreigners resident in Spain, whether resident or non - resident, must receive a foreigner identity number (NIE), which will be forwarded to the Spanish tax authorities. NIE numbers are issued by the Immigration Office of the National Police or in the home country by the Consulate General.

The NIE number is crucial for the purchase of real estate (registration of property, title deeds, etc.) in connection with the tax authorities, securing contracts for water and electricity, registering a health card, opening a bank account, applying for a mortgage, buying one Cars and for virtually every other transaction you want to carry out in Spain.

Title deeds - Notary:

The title deeds (escritura) contain a detailed description of the property, the conditions of transfer of ownership and the price of the property. Under Spanish law, title deeds must be signed by both parties before a public notary.

Depending on the wishes of the customer, the property can be bought as follows:

• In the name of a single person

• Together on the names of a couple or family members

• In the name of another person whom the customer designates

• In the name of a company (legal entity)

It should be noted here that the legislation of some countries requires the signature of both spouses when selling a property, ie even if the property was purchased in the name of just one spouse.

All title deeds must be entered in the local land registry (Registro de la Propiedad). This is a public registry that protects property rights. Registration takes about three months from the date of signing the title deed before the notary. The notary has a public function and accordingly authenticates public documents as well as the identity of the parties and their signatures. Furthermore, he authenticates the content of the title deed and that it has been signed in his presence.

Payment plan of a property:

New construction: When purchasing anew building , payments should be made for the majority of property developers * as follows:

1. A € 3,000 or € 6,000 (depending on the developer) Euro non-refundable security deposit is due upon reservation of the property.

2. 20% to 30% are then due within 30 days.

3. Another 20% to 30% will be due within 3-4 months.

4. The remaining purchase balance is due upon completion (minus the already paid € 3,000 down payment).

(*) Each property developer has his own payment schedule. Ask us for more details.

Existing properties (resale): The standard payment plan is as follows:

1. A € 3,000 non-refundable deposit when signing the contract.

2. 10% payment after 7 to 10 days.

3. The remaining 90% within 6 - 8 weeks at handover.

Tax on purchase / sale:

The following taxes must be paid at the time of purchase:

Impuesto sobre el Valor Añadido (IVA) Equivalent to VAT and to the purchase of a new property equal to 10% of the value of the property (Escritura) as stated in the title deed.

• Impuesto de Transmisiones Patrimoniales (ITP) is also referred to as transfer tax and will be applied instead of VAT (IVA) on the purchase of a second hand object. The current rate is 10% of the value stated in the title deed.

When selling a property owned by a seller living outside of Spain, it is customary for 3% of the purchase price to be withheld by the buyer's lawyer and paid to the tax authority. This is a legal provision that covers a potential tax liability due to the value added of the seller.

• Actos Jurídicos Documentados (AJD) A documentation tax equivalent to stamp duty currently at 1% of the value stated in the title deed.

• VAT for Valor de los Terrenos This tax is generally better known as Plus Valía. It is raised on the added value of the land. The percentage is determined by local tax authorities and varies from one municipality to another. The tax is calculated on the basis of the period of time since the last transfer and on the basis of the plot size. Normally, this tax is charged to the seller. This tax can be levied both on the acquisition of new buildings and on existing real estate.

• Tax Claim (so-called D2 complementaria D3) The tax authority may demand additional tax refunds on the purchase ITP or AJD tax for a period of 4 years from the date of purchase. This happens in particular if, in the opinion of the tax authorities, the purchase price was unrealistically low and accordingly a partial amount of the transfer tax was not paid.

Current taxes:

The following taxes are paid annually:

• Property and Income Tax for non-residents: This is a tax return based solely on property value and does not take into account the person's personal income. For bank accounts in Spain, these should be indicated in your country of residence.

• The property tax "Impuesto sobre el Patrimonio": This is based on the highest value between the value of the title deed, the value of the installment and any change in value by the tax office. The rate is on a sliding scale starting at 0.2% of the value, which is up to 0.5%, and is valued regardless of the date of purchase for all properties owned on 31st December.

• Income Tax "Impuesto sobre la Renta" For non-residents, property is not considered a primary residence, but a source of income, whether or not it is an income, so this is a "fictitious tax". (This tax will be replaced by income tax on actual rental income.) 2% of the official unrated taxable value (valor catastral) or 1.1% of the changed taxable value of the property is credited as "income" and that number is taxed at 24%. Note that if the taxable value is considered to be 50% of the value stated in the title deed, 1.1% of it will be considered as "income" and 24% as taxed. All persons mentioned in the title deed (usually husbands and wives) are taxed separately for their share of the property.

• The property tax "Impuesto sobre Bienes Inmuebles (IBI)": This is the most important local council tax affecting the owners of real estate in Spain. The tax amount is calculated by reference to the above cadastral value. The percentage of this taxable amount varies from location to location, ranging from 0.4% to 1.17%. For the Torrevieja area, for example, it is 0.4250%.

Running costs of a property:

• Utility services such as water, electricity, gas, etc. The costs involved depend on the consumption and the invoices are usually settled by direct debit from the customer's bank account. Electricity bills are issued monthly and water bills quarterly.

• Community of Ownership: Each owner must pay for his share of the maintenance costs of the community facilities, eg swimming pool, garden etc. Payment is made annually, twice a year or quarterly.

Rights and duties in Spain:

• In Spain, EU nationals, whether they are working or retired, enjoy the same rights as Spanish nationals.

• These rights and obligations are contained in the legal documents. Detailed information can be obtained from any European Commission office.

Residence rights:

• EU citizens who intend to stay in Spain for more than 90 days and fall into the following categories no longer need to apply for a residence permit and can only stay in Spain with a valid passport:

-employed and self-employed in Spain - registered and paid by the Spanish Social Insurance Institution.

 students (who study in Spain).

(Residence permits for the above can still be requested on a voluntary or facultative basis).

• In the majority of cases, these new exemptions do not apply to those EU citizens who have paid nothing or who have not paid into the Spanish social security system, ie those who have moved back to Spain and those with independent resources. People from these two categories still have to apply for a residence card if they stay in Spain for more than 90 days.

• Please note that these regulations are constantly being changed and updated.

• Currently, according to current legislation, the following documents are required to apply for residence permit (residencia):

Application form,passport,4 passport photos, which are not signed on the back.

Legacy and inheritances in Spain:

• It is recommended that property owners in Spain make a separate Spanish will to their wealth in Spain. It is possible to include Spanish property in a foreign will, but the legal procedure for claiming such a will in Spain can be very complicated and lengthy. For joint owners of a property, it is necessary that both parties make a will.

After a Spanish will has been made, the client should make sure that in the foreign will the property is not mentioned in Spain in order to avoid, for example, a contradiction between the two wills.

Spanish wills will be entered in the will register in Madrid.

A Spanish testament may also be drawn up in front of the Spanish embassy or at a notary public in the customer's home country.

All information without guarantee - no liability for errors or incorrect information. Changes possible at any time through local and national law changes.