BUYING AND SELLING PROPERTY IN ESTEPONA AND ITS SURROUNDING AREAS
María del Mar Hernández Cortés
Lawyer, Solicitor, Mediator
English, German, Spanish
Tf. 0034 952804464
Estepona, Marbella, Málaga, Spain
If you are looking into buying property in Estepona, Manilva, Casares, Marbella, Fuengirola, Benalmadena, or elsewhere in the province of Malaga, there are important considerations that need to be made. To facilitate this procedure, it can be beneficial to hire the services of a specialised law firm, who also cover estate (inheritance) planning. It is a good idea to look at both the purchase of property and estate planning together, as the two areas of law complement each other highly.
Before covering the main elements in the process of purchasing property in Spain, I would like to highlight our law firm’s vast experience in this area, working closely with other foreign law firms and associations that specialise in international probate law. Therefore, we are highly qualified to provide our clients with advice.
This article is merely informative. Nevertheless, please don’t hesitate in asking for a free price quote for our services for your particular case.
Some of the most important aspects to consider, albeit not the only ones, are the following:
- UPDATED INFORMATION FROM THE PROPERTY REGISTRY:
It is important to obtain a Property Registry Filing for the property (known as a “nota simple” in Spanish) from the Land Registry. It’s not a legal requirement to be registered in the Land Registry to own real estate, but generally, everyone is registered. However, in some instances, sellers won’t be registered, but this doesn’t mean that they aren’t the owner of the property. To confirm this, the title deeds need to be revised.
However, the “nota simple” makes the procedure easier, as you can see both who the owner is and if they are registered, as well as any charges which could affect the property, which is also important to consider.
Another issue related to the Land Registry is the description of the real estate. Often, the description does not correspond with the actual property. However, following a new law introduced in 2015 (Ley 13/2015) which promotes coordination between the Property Registry and Cadaster, is being updated in order to ensure that the descriptions match the properties, although this can still be a difficult matter in some cases.
- PRIVATE PRELIMINARY CONTRACT OR NOTARY PURCHASE DEED?
Both private preliminary contracts and notary purchase deeds are equally valid. The decision depends on the will of the parties to the transaction and the circumstances- whether possession can be transferred, the buyer has the funds, when the parties have the NIE number etc. There are many different variables, but as stated above, the two options are equally valid.
It is common to sign a preliminary private purchase contract if the notary purchase deed won’t be signed for two or three months following agreement of the purchase. However, this isn’t a legal obligation, therefore the parties are free to come to an agreement as they see fit. Nevertheless, although under Spanish law you can only own property with a private purchase contract and the transfer of the property, private contracts don’t go through the Land Registry. That’s why the acquisition of property is rarely formalised through a private contract, but rather by means of a notary purchase deed, in order to go through the Land Registry.
In the preparation of the notary purchase deed, documents, certificates and licenses must be obtained and checked. This is often necessary in advance, depending on the complexity of the purchase.
- TRANSFER TAX, PRICE AND TAX VALUATION
If you purchase from a private seller, you have to pay transfer tax, which could be anywhere from 8% to 9% or 10%, initially depending on the price. Why initially? After you have bought and paid the transfer tax, if the Andalusian Tax Agency gives your property a higher tax valuation, you’ll receive a complementary transfer tax return asking you to pay the difference between the new and previous tax rate. Considering this, it’s worth checking this valuation with the solicitor advising you on the purchase, to determine whether it’s worth taking a recourse.
- OTHER TAXES AND COSTS TO BE PAID AS BUYER AND OWNER:
As the owner of Spanish property, you are required to pay annual income tax for non-residents regardless of whether the property is being rented and you have been receiving income, or not. Aside from this tax, you also have to pay the “IBI” or Real Property Tax. This tax, paid to the local town hall annually, is shared by the buyer and seller. There may be other taxes to add, but in the generic case, these are the taxes which are always required.
Aside from the above taxes, the buyer also pay notary and property registry fees. Each party also pays their solicitor fees and the real estate agent’s commission is paid by the seller.
- BUYING OFF-PLAN:
A buying-off plan can be advantageous, in some cases it gives you the option to choose qualities, be the first one in using the property, avoiding renovation works, etc. However, its important to consider safeguards to guarantee that the investment amounts which are paid in advance are assured, and in the instance that the building needs changes, your interests and options are fully protected.
- COMMUNITY OF OWNERS:
If the property is part of a Community of Owners, its important to be aware of the Statues of the Community before deciding to purchase, as well as the monthly fees and if any new fees have been introduced since the last General Meeting.
- CAPITAL GAINS TAX FOR SELLER:
If you are interested in selling, it is important to calculate the taxes related to the sale of your property, before setting an asking price.
- There is a State tax levied on the sale of real estate, the size of which will depend on whether the seller is a tax resident. The tax is applied to the difference between the sale price and the acquisition price plus the costs/taxes involved in the purchase, as long as the bills and invoices are provided.
- There is also local tax, known as “plusvalia”, paid to the local town hall responsible for the property, which is paid on the increase in the value of the property.
Both taxes must be calculated in advance, in order to be able to finally calculate a final balance after paying the relevant taxes on the sale.
- CAPITAL GAINS TAX RETENTION ON PROPERTY SALES BY NON RESIDENTS
If the seller is a non-resident for tax purposes, by signing the notary purchase deed, the seller has to give 3% of the sale price to the central tax agency. This is to assure that the seller is paying capital gains tax which they are legally obligated to do.
- ESTATE PLANNING BEFORE OR AFTER BUYING A PROPERTY
Our clients are often adults who want to plan their inheritance in advance, generally with descendants that they would like to facilitate the steps for in an inheritance case. The best way to plan this is with specialised lawyers. We have vast experience in international succession law, and having collaborated with international law firms, we are able to provide the best comprehensive and global advice on the issue of inheritance.
- RENTING OUT YOUR PROPERTY
This is an issue where specialist support is crucial. Unfortunately, we often receive queries from property owners who have already signed short term rental contracts to tenants who use the property as their primary residence, at which point, the action is irreversible. Under Spanish law, if the property is used as a main home, the tenant has the right to reside there for three years, regardless of another duration being expressly included in the contract.
Therefore, if the expressed duration is to apply, the necessary conditions must be included, otherwise, short term rentals won’t be legally enforceable. To sidestep this issue, owners may try to rent their properties as “vivientas turisticas”- tourist houses/apartments, without being legally eligible.
Any step to formalise a rental contract requires specialised legal advice, in order to ensure that there are no misinterpretations in the contract.
- FREE, NO-COMMITMENT ESTIMATE OF FEES BEFORE HIRING OUR SERVICES
If you are interested in receiving legal advice in the purchase and sale of property in Spain, we would be delighted to send you a free estimate of the fees involves by email. Only on acceptance on your part will we begin to work together.
- HOW AND FROM WHERE WILL WE OFFER OUR SERVICES TO YOU:
If you are interested in discussing anything in further detail, we would be delighted to respond to your queries. Our office is situated in Estepona, but we also work from the Business Centre in Marbella and Malaga, or elsewhere, on request.
Alternatively, we can also arrange a discussion over Skype (maria-bhabogados) or the telephone, if this is of preference.
For any further details, please email us at firstname.lastname@example.org, where we will tend to your queries.