What are the costs involved when selling your Spanish Property

Below are the cost implications of selling your house in Spain.

 

Capital Gains Tax

If you earn from the sale of your home, you’ll owe capital gains tax. Before computing the amount of Capital Gains Tax owed, any costs associated with the sale and purchase of the property, such as notary fees, real estate agency fees, and solicitor fees, can be subtracted from the profit. It is also possible to deduct the cost of house renovations and construction work.

 

CGT now begins at 19% for the first €6,000, rising to 21% for profits up to €50,000, and 23% beyond for residents. It is 19 percent for non-residents. Purchasers in non-resident countries are required to hold back three percent of the purchase price as an advance payment against their Capital Gains Tax due, which is subsequently forwarded to the Spanish Tax Office on your behalf. Depending on whether you and the buyer have completed the proper tax papers, you may be eligible for a tax credit or be obliged to pay the extra Capital Gains Tax.

 

Residents are exempt from paying capital gains tax if they sell their primary dwelling and use the proceeds to purchase a new primary residence (both properties must meet certain conditions to qualify, such as being situated in a country in the EU or the EEA). Additionally, non-residents outside the European Union or the European Economic Area (EEA) are subject to this rule. In Spain, anyone over the age of 65 who sell their primary house is excluded from capital gains taxes, regardless of whether they reinvest the money or not.

 

The Plusvala tax

Additional Value Tax (plusvala tax) is a local tax based on urban land’s incremental tax (cadastral) value during its ownership tenure, beginning with the acquisition of the land and ending with its sale. If there is no rise in the value of urban land or if the Plusvala Tax is negative, no Plusvala Tax will be owed. No matter how it happens, the land sale must be reported to the competent authorities following Spanish law’s requirements for notification.

 

There are costs associated with cancelling a mortgage (if applicable)

Unless the buyer exercises the right to subrogation, you will have to terminate the mortgage on the property. A Notary Public must be present on completion to record this at the Land Registry. Banks often charge between 0.5 percent and 1 percent of the outstanding mortgage debt. If you want to get rid of your mortgage, you’ll have to pay roughly €800 in notary and land registry costs.

Even if your bank has administratively terminated your mortgage after being paid in full, you must still make certain that this is documented with the Land Registry. If you haven’t signed a mortgage cancellation deed before a Notary Public, you haven’t completed the process.

 

Expenses incurred by a Real Estate Agent

The fees charged by a real estate agent depend on the terms of the signed contract.

 

Fees Paid to a Legal Representative.

It is not required by Spanish law, but it is strongly advised that you hire a lawyer to assist you with the sale of your home. Due to the intricacy and magnitude of the transaction, the solicitor’s fees might vary widely from one transaction to another.

 

Certificate of Occupancy fee

When selling a home in Spain, an Occupancy Certificate (Cédula de Habitabilidad) is necessary. This is a legal document that says and ensures that the property meets the minimum standards of habitability required by law, making it a legal habitation. Costs vary depending on the size of the property but typically start at roughly €50 for the application and processing.

Land Registry is a Spanish agency that stores the precise location, size, and borders of every property inside Spain. To avoid paying tax on additional square metres that have not been formally inscribed in the Land Registry, you or a previous owner of your property must declare any expansions or additions, such as a swimming pool, before or at the time of the sale of the property.

 

EPC (Certificado de eficiencia energética (CEE))

Energy Performance Certificate (Certificado de la Eficiencia Energética (CEE)) is required for all property owners who plan to sell or rent out their property. A certified certifier must issue this document, such as an architect, surveyor, or technical house engineer. The price ranges from €100 to €500, depending on the size of the property. A property’s energy rating and EPC must be made available to prospective buyers or tenants to be listed online.

To put it another way, the local property tax (Impuestos sobre bienes inmuebles)

IBI is a local property tax that varies in total amount based on the city’s location. When calculating the total amount of tax due, many factors such as the property’s size, age, and location (urban vs rural) are considered. Spain’s IBI tax is a legal obligation for the owner of a property on the 1st of January; however, you can agree with the buyer to split these charges according to the date of transfer.

 

Spain’s Property Selling Procedures

 

Sales of luxury homes in Spain’s main cities and most sought-after vacation spots are the speciality of Esales Property, a pioneer in house sales to international purchasers. Professionalism, industry expertise and experience have earned us a reputation for excellence. Your home will be sold quickly and for the best price by a team of bilingual Sales and listing agents committed to the cause.

 

Esalesinternational is a worldwide real estate platform that provides clients with a global network of buyers and sellers.

 

 

EXCLUSIVE MARKETING IS A MUST.

The most efficient approach to selling your home is to use only one agency, and we strongly urge sellers to avoid doing so. By marketing a property through many agents, the value and uniqueness of the property might be diminished. Owners benefit from saving time and effort by working with just one real estate agent. We’ve also found that houses that are more exclusive sell more quickly.

 

In the event of special instructions, we at Esalesinternational are happy to provide the following additional services free of charge after listing:

  • Esales International websites have this property as their featured property!
  • Leading national portals feature this property as a highlight.
  • The assertion in our monthly property mailouts
  • As a member of Esales International
  • Our Property Lounge displays will show a professional film of your property, and the video will be shared on social media.
  • A remodelling project is simulated using 3D renderings.
  • PR and media initiatives that are tailored for both domestic and international audiences

 

Sign the property.

According to Esalesinternationaloffice’s instructions, the following papers will be processed through a notary in Spain

Certificates of Occupancy and Energy Performance Certificates (Certificado de Eficiencia Energética (CEE))

Secondly, the formal offer and the letter of intent

Your real estate agent will provide you with a possible buyer’s offer on your property, whether orally or in writing. Esalesinternational encourages purchasers to deposit a Good Faith Deposit into the firm escrow account and sign a formal Letter of Intent, explaining the details of their offer in writing. Using this method, we can show that the buyer is genuinely interested in purchasing the property, and it allows us to distinguish genuine bids from speculative ones. This isn’t common practice in the business, but we’ve found that it improves the formality of the offer process and increases the likelihood of a successful negotiation.

It is instantly converted into a private Reserve Agreement, and the Good Faith Deposit is converted into a Reserve Fee, removing it from public view after an offer has been accepted.

 

The Arras Contract for Private Use (Contrato Privado de Arras)

When the seller and buyer reach a private agreement to sell and buy a piece of real estate, they agree to conditions that are acceptable to both parties.

In the Private Arras Contract (Contrato privado de arras), you will find all the important information, including the property description, the purchase price, the payment plan, and the completion date.

To finalise the transaction, the buyer will be required to submit an initial payment. 10% of the negotiated purchase price is typical in Spain, which is paid straight to the seller’s bank.

Penitential Arras (Arras Penitenciales) is an optional penalty provision used in Private Arras contracts that states that if the buyer backs out of the deal, the seller will keep the whole down payment. A buyer can get two times their down payment as compensation if the seller backs out of the deal. As a result, the chance of a Seller accepting a greater bid from a third party is reduced.

To sign the Private Arras Contract, both parties need not be present. The contract can be signed remotely and then exchanged between the parties or their agents in original form.

 

The Deed of Sale for a Public Purchase (Escritura de compraventa)

Any outstanding mortgage balances must be paid in full on completion. It is also necessary to terminate any current mortgage debts so that the property is transferred free of debt. The seller’s bank often attends the signing, receives a check from the buyer for the loan’s outstanding balance, and grants the mortgage cancellation deed. Loans can be terminated and registered in the Land Registry in this manner. Alternatively, the seller’s bank may subrogate the mortgage, allowing the buyer to take over the current debt.

The public purchase sale deed (Escritura de compraventa), the property’s title deed, is signed by both the seller and the buyer. A Notary Public gives buyers a Public Purchase Sale Deed in front of the Spanish Tax Office, and Land Registry that validates the property transfer, and a copy of the Public Purchase Sale Deed will be sent to both.

In Spain, a Notary Public is a government official who must sign the sale document. However, Sellers should seek the advice of an expert and independent legal counsel to update contracts and preserve their rights.

To sign the Public Purchase Sale Deed, both the buyer and the seller must be present. It is possible to get a Power of Attorney issued to a lawyer, spouse, or other representatives to act on your behalf if you cannot do so yourself.

 

What paperwork is needed?

  • Owner’s DNI or NIE and passport are required for all property purchases (s)
  • Documents about a firm’s ownership structure, including the DNI or NIE and passport of the Administrator if a company owns it.
  • Those who have the authority to sign on behalf of others or businesses (if applicable)
  • A public sale deed of original purchase (Escritura de compraventa)
  • Certificate of Cadastre (Certificado catastral)
  • Acknowledgement of Possession of an Occupancy Permit
  • Permit to Occupy the Property (Nota Simple)
  • Certificate of Energy Efficiency (CEE)
  • Receipt for the most recent payment of municipal property taxes
  • Most recent receipt for community fees
  • The most recent invoices from the electric and water companies
  • All of the rules and regulations governing the community (if applicable)
  • The term “Certificate of Technical Building Inspection (ITE)” is used in the Spanish-speaking world.
  • With any outstanding mortgage debt.
  • Floor layouts for a beneficial house
  • Documents about a mortgage
  • A detailed chart of the land’s topography (if applicable)
  • Utility installation certifications

 

How much does it cost to do this?

Tax on Profits

If you earn from the sale of your home, you’ll owe capital gains tax. Before computing the amount of Capital Gains Tax owed, any costs associated with the sale and purchase of the property, such as notary fees, real estate agency fees, and solicitor fees, can be subtracted from the profit. It is also possible to deduct the cost of house renovations and construction work.

CGT now begins at 19% for the first €6,000, rising to 21% for profits up to €50,000, and 23% beyond for residents. It is 19 percent for non-residents. Purchasers in non-resident countries are required to hold back three percent of the purchase price as an advance payment against their Capital Gains Tax due, which is subsequently forwarded to the Spanish Tax Office on your behalf. Depending on whether you and the buyer have completed the proper tax papers, you may be eligible for a tax credit or be obliged to pay the extra Capital Gains Tax.

Residents are exempt from paying capital gains tax if they sell their primary dwelling in Spain and use the proceeds to purchase a new primary residence (both properties must meet certain conditions to qualify, such as being situated in a country in the EU or the EEA). Additionally, non-residents outside the European Union or the European Economic Area (EEA) are subject to this rule. In Spain, anyone over the age of 65 who sell their primary house is excluded from capital gains taxes, regardless of whether they reinvest the money or not.

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