Guide to Buying a home
GUIDE TO BUYING A HOME
The professionals authorized to mediate in property transactions are the APIs, appropriately registered, as their intervention is under the guardianship of their Professional Colleges. And their services are free of charge for the buyer.
We can summarise the process of buying a home in Spain in the following steps, each of which is highly essential:
- The choosing of a home in order to find the one most suitable.
- Information about the legal, registration, fiscal and the town or country planning situations.
- The contract and the title deed.
- Dealing with the title deed, taxes and the property registrer.
- Changing the name in the cadaster.
In order to have the security of correct guidance in each of the stages, it is recommended that you use a Qualifield Estate Agent, an A.P.I., as both his experience and his professionalism are guarantees of a transaction which will be formal and without surprises.
CHOOSING THE HOME
The APIs will advise you from the start, from the moment you decide to buy a home. You will find the best opportunities with them as they have the widest knowledge of the market.
THE LEGAL, REGISTRATION, FISCAL AND TOWN OR COUNTRY PLANING SITUATIONS
One of the professional norms set out in the Code of Ethics of the College is that every offer from an API guarantees thet the seller is in a legal condition to transfer the property and that the buyer can own and make use of it without any impediment.
The buyer must have the certainty that the property is not subject to any registered charge or, if subject, he will be so informed and where necessary the charge will be lifted with the absolute security that it will be correctly done. Currently, the Notary is also obliged to obtain information from the property registry.
The API will also give you precise information about the fiscal consequences of your acquisition.
There still remains the sorting out of your home with respect to taxes and, should this be the case, with the Proprietots Association and with the Town Hall with reference to the town or country planning relating to the property.
THE CONTRACT AND THE TITLE DEED
It is advisable that property transfers are recorded as soon as possible in deeds authorised by a Notary. Nevertheless, experience has shown that normally the initial transfer document only takes the form of a private contract.
A private contract is enforceable before a Court of Law but has the handicap of not being registrable in the Property Register, a situation which could imply a problem, although a remote one.
DEALING WITH THE TITLE DEED. TAXES
Within one MONTH of being signed, the title deed must be submitted to the Settlement Office for payment of the Asset Transfer Tax.
One is entitled to a 70% discount on the Asset Transfer Tax if he meets the following requirements:
• It must involve the transfer of the fee simple of a property or part of a property for its use as a residence.
• It is in favour of a Real Estate company whose main activity must be: the construction of buildings, real estate development, or the sale of properties on its own behalf.
• The acquiring company in question must incorporate the property into its current assets for the purpose of reselling it.
• The time frame for resale is set at 5 years (as of 1/1/2009), to be carried out in favour of:
- A private party who uses it as his primary residence.
- Another company that complies with the requirements indicated.
* The deed is to document the intention to apply the fiscal discount.
If after this period he fails to transfer the property to one of the preceding parties he is to present a declaration of the percentage outstanding, until reaching 10%, plus the corresponding interest for the delay.
If it represents a new home the document must also be presented at the same Office, and within the same time frame, for payment of the Legal Acts Tax of 1.2%. However, in this case, he is to have paid the Value Added Tax, of 10%.
The taxation terms governing Documented Legal Acts are as follows:
-Waiving of the VAT exemption: 1.8%
-Acquisition of housing declared to be “government-protected”: 0.1%
-Mortgages for the acquisition of “government-protected” housing: 0.1%
-Provisional filings: 0.5%
-Groupings, divisions and aggregations of properties, declarations of newly built properties, the horizontal division of properties, adjudications, transfers subject to VAT, the constitution of mortgages, the modification of mortgages and other documented legal acts documented by a notary: 1.5%: (the scale has disappeared)
The 5% rate is maintained for the Asset Transfer Tax for the acquisition of a primary residence by those ages 32 and younger.
When the deed has been dealt with in the Cashier's Department of the autonomous government Tax Office it is advisable to present it to the Property Registry for it to be registered. The registration of the deed means thet the ownership of the property is recognised for all effects.
Frequently the Cashier's Departement of th autonomous governement Tax Office and the Property Registry are at the same place.
CHANGING THE NAME IN THE CADASTER
Once the title deed has been registered in the Property Registry, there only remains going to the Cadaster in order to register the change of ownership for the purpose of th Property Tax so that the Property Tax Assessment notice will be issued in the name of the buyer.
OBLIGATIONS OF THE SELLER
It must also be remembered that the seller has to hand over the Hability Certificate (Cèdula d'Habitabilitat) as well as the First Occupacy Licence (Llicència de Primera Ocupació) issued by the Municipality where the dwelling is located. The Hability Certificate provides the purchaser with the guarantee that the dweling has the minimum conditions of habitability.
In the case of new buildings the seller must also hand over the certificates from officially recognised installers (plumbers, electricians, etc.)
Both the Hability Certificate and the First Occupancy Licence are necessary in the order to contract for the water, gas and electricity supplies.
It is of great importance to study which is the best way of financing the purchase with respect to each case and each particular time. The API, because he is continually in direct contact with the finance houses, will be in a position to supply you with the information you need.