Helpful hints for buying and selling property in Menorca.
Can someone who is not a Spanish resident still purchase a home there?
A non-resident of Spain who wants to acquire property must apply for and receive an NIE number from the Spanish government in order to legally transact business in the country. The Estate Broker handles this routine task with ease.
When buying, how much should I expect to pay?
Generally speaking, there are two major outlays associated with a Spanish purchase. The first is Stamp Duty, which is equal to eight percent of the purchase price up to a maximum of four hundred thousand euros. The rate is 8% on the first €400,000, 9% on the next €600,000, and 10% on the rest. Finally, there is the 2%-of-the-price-or-less expense of the Notary and Land Registry. Additional fees may apply if a mortgage is used to finance the purchase; the exact amount will vary. An additional 5% is typically believed to be needed to account for the numerous fees and taxes associated with arranging a mortgage.
To whom does one address questions regarding the Notary?
The Public Notary is the only person authorized to sign legal documents related to real estate transactions. Although the Estate Agency and the attorney will be responsible for drafting the private reservation contract, the Notary will be present for the actual exchange of deeds.
What steps should I take after identifying a potential home?
Once a property is selected, a sales contract is drafted outlining the terms of the transaction between the buyer and seller. At the time of this agreement’s signing, it is customary to make a down payment. The contract is considered binding if the Land Registry Office issues a “nota registral” verifying the legitimacy of the property being sold. Any mortgages that are attached to the property are also displayed here.
What is the typical down payment amount?
Typically, a deposit is 10% of the buying price, though this percentage is negotiable. The higher the deposit, the less likely someone will try to “gazump” you. Once a deposit has been received, the seller cannot renege on the deal without returning twice as much money as was originally paid in accordance with Spanish law.
Can I lose my deposit?
If the buyer cancels after making these payments, they will forfeit their deposit. The sales agreement specifies that this sum is non-negotiable in the event of a buyer’s change of heart.
Does the contract allow for vendor default?
If the Vendor terminates the contract, the Buyer is entitled to receive any duplicate payments made by the Vendor.
I was wondering how long it would take to finish.
The completion time is completely up to the parties involved. Completion dates are often estimated at two months, though this greatly varies depending on the specifics of each deal. If a property, for instance, is unable to close because of summer rental agreements, the signing process could take as long as six months. It may only take a few weeks if the property is vacant and a mortgage isn’t necessary.
What occurs if a mortgage already exists?
In the event that the property being purchased is subject to a mortgage, the buyer has two choices. An option for a buyer is to assume the terms of the current mortgage. The costs associated with obtaining a new mortgage are reduced by using this method. A mortgage may be transferred to the new owner during the deed transfer process if desired; otherwise, the mortgage will be terminated at the same time. The mortgage holder’s bank presents an existing mortgage, writes a cancellation check, and then signs a cancellation document at the Notary’s office. This is sent to the Land Registry so that the relevant information can be deleted.
Do I have to pay something akin to rent?
Property taxes are a fact of life, and they vary greatly from one location to the next and from one property to another because of this. Showing the Notary a copy of the rates receipt establishes that payment was made in full. The period from January to December is considered one “rates year.” When the project is finished in the middle of the year, it is common for the parties involved to come to an agreeable arrangement over the cost of completion. Foreigners must additionally pay an annual “Income Tax” on any money they bring into the country. The amount is again established by the property’s market price.
So, how do we handle the utility costs?
After the deed is recorded at the Notary, the utilities can be switched over to the new owner. The attorney will typically set up a direct debit for this. The same holds true for utilities such as gas and water, as well as any necessary community fees.
MENORCAN PROPERTY FOR SALE
To what extent would a sale increase or decrease your capital?
Sale proceeds for a non-resident are subject to a 19% capital gains tax. To determine how much money was made, compare the selling price to the original purchase price and the associated costs. Since the processing of the Capital Gain can take many weeks, it is customary to withhold 3% of the sale price on the day of completion. When this sum is insufficient, the remaining balance is due. If this sum is excessive, the surplus is transferred to the vendor’s bank account. A refund on this may take up to a year to process.
As a business, am I responsible for any extra fees or levies?
A levy called as Plusvalia must be paid by the seller. The Town Hll factors in your length of ownership while determining this fee. It has nothing to do with CGT in any manner.
I’m curious as to how long it will take to finish.
The timeline for completion can be as little as a few weeks or as long as a few months depending on the parties’ agreement. It can take more time if there are mortgages or leases to negotiate.
When making a purchase, whose responsibility is it to draught the contract?
A Legal team or your own will draught the sales agreement. Given the time savings, we advise hiring a lawyer in the area.
After making a deposit, can I alter my mind?
If you accept a deposit from potential purchasers but ultimately decide not to sell your home, you must return both of their deposits in full.
