The buying process

THE BUYING PROCESS- HOLMES PROPERTY SALES S.L.

Once you have decided to buy a Property, it is essential to decide a maximum budget before beginning to view properties in order to provide vital information to the agent, so that he may focus on properties available that are within your means. With this knowledge of market values, when the time comes to negotiate the purchase, you will feel assured that the appropriate price for the property is being paid

Choose a reliable agent

Remember, a good agent is there to help you find the right property and Holmes Property Sales, S.L. has worked in Sotogrande since 1979. It is the longest established real estate agency of the area and has always focused its attention exclusively in Sotogrande and we too are recognized by our peers as the experts and professionals to rely on when it comes to finding property in Sotogrande.

Our career path and experience will help the buyer to avail of the agent’s valuable know-how of the area. Our larger inventory of properties will offer the buyer a wider choice to enable him to find the right property and at the right price. As well as being unbiased and making use of his wide inventory, a reputable agent’s goal will be to direct you to the property you need.

In the end, the buyer should feel relieved to know that with the knowledge the agent has provided him, he will have bought the property that best suits his needs at the best price.

Choose a lawyer:

Unless you already have been recommended to a reliable lawyer, only heed the advice from someone who is independent. A developer or an agent is not necessarily the best person to make a recommendation, unless they provide you with a selection of lawyers to choose from. The lawyer you choose must speak your language and make you feel comfortable and will ultimately ensure your buying process is safe.

Should you be considering a re-sale property, we strongly advise that you pay for an independent house buyer’s survey report from a qualified surveyor, structural engineer or architect.

Cost of purchase

Apart from the price of the property payable to the seller, you will find other costs to take into consideration, that your lawyer will explain and we mention as follows as a guidance:

a) Transfer tax(“Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados” I.T.P.) payable to Junta de Andalucía.

By law, this tax is payable by the buyer based on the purchase of the property. The tax is calculated on the higher amount of the following:

– the purchase price, the  “Fiscal value” of the property,

– (the rate-able value multiplied by a multiple set by the Town Hall)

– or the “Bank Valuation” of the property

By purchasing with a mortgage and the valuation is included in the mortgage deed, it is therefore important to check what value the I.T.P is likely to be calculated on before committing to a purchase.

The rates (*) are:

https://www.juntadeandalucia.es/organismos/haciendayfinanciacioneuropea/areas/tributos-juego/tributos/paginas/impuestos-cedidos-transmisiones.html

(*) However, the Decree Law 7/2021and 5/2022, Andalucía approved a reduction on this Transfer Tax from April 27th 2021 to December 31st 2022:

(*.1) Transfer Tax (“ITP”) unique of 7% for all Property Transfers.

(*.2) Stamp Duty (“AJD”) of 1,2% for all deeds that is usually 1,5%.

 https://www.juntadeandalucia.es/organismos/haciendayfinanciacioneuropea/servicios/actualidad/noticias/detalle/275518.html

b) VAT (“I.V.A”)- it is applied to the sales price of properties owned and being sold by developers instead of I.T.P. Usually when this is the first time the property in its current state is being sold. I.V.A on constructed properties is 10% of the purchase price plus 1.5% Stamp duty or AJD (reduced to 1,2% from April 27th 2021 to December 31st 2021 according to Decree-Lay 7/2021 in Andalucía). Check that the entity that is selling the property can apply I.V.A to the sale before you pay the I.V.A, if they are not entitled to charge I.V.A on the transaction you could still also be liable for the I.T.P.

For plots of land, commercial premises or commercial garage spaces owned by a developer, promoter or juridical entity, the tax to be paid is V.A.T. (21%), plus Stamp Duty of (1.5% reduced to 1,2% from April 27th 2021 to December 31st 2022 according to Decree-Laws 7/2021 and 5/2022 in Andalucía).

c) Notary Fees –By law, the first copy of the title deed is payable by vendor. The cost (no more than 0.5%) increases according to the number of pages and complexity of the title deed and the value of the property.

d) Registry Fees –By law, this is payable by the buyer. These are calculated on the same basis as the notary fees explained above and are at most 0.5%.

e) Lawyer’s Fees –Lawyer’s fees are in the order of 1% of the selling price, more or less, depending on the lawyer and the price of the property.

f) Mortgage Costs- If you plan to purchase with a mortgage you need to consider that there are additional cost involved.

– Valuation to get the economic value of the Property. The purchaser may hire an independent (with official recognition of the Banco de España) and submit it to different mortgage loans offers. This cost is depending of the size of the property and about 300 and 500 euros. However, some Banks take over this cost. The valuation is a guide to determine the mortgage amount, which is about 80% of it.

– Loan Formalization Fee that includes formalization and mortgage study and is about 0,5 and 1 % for the mortgage amount.

– Copies of Notary Deeds (if requested)- is a very low cost and depends on the number of Deed´s pages.

– Extract information from Title Deed (“Nota Simple”) that is about 9 euros.

– Property Insurance Coverage that is compulsory when getting a new Mortgage.

All the other costs involved in formalizing a Mortgage are assumed by the Bank like: Notary Fees, Registry Fees, Administrative Management services and Stamp Duty (“Impuesto de Actos Jurídicos Documentados”) involved.

g) Municipal Added Value Tax (Plusvalía Municipal) –This tax can be as little as a few hundred Euros or as much as many thousands of Euros, depending how large the land is and for how many years it has been owned. By law, payment of this tax corresponds to the vendor, but sometimes the vendor tries to have the buyer pay for it. Before accepting it, check with your lawyer to see what the amount is to be paid.

Summary – The total costs of purchase involved normally amount to a total of 9-10% if the vendor is an individual, and 12.5% if it is a developer entity. To this cost, you need to add the 1% lawyer’s fees. If you are buying with a Mortgage, you will also need to add the Mortgage costs.

PROPERTY TAXES PAYABLE IN SPAIN

Once you have bought a property in Andalucía Spain, you have to pay some taxes:

Town Council Taxes includes two concepts that are based on the cadastral value (“valor catastral”) which is the official value for taxes purposes. The rate varies in some autonomous community within Spain.

• 1) Real Estate Tax (“Impuesto sobre Bienes Inmuebles” IBI)- the main local tax and yearly payable about september and october each year and the rate would be between 0,5%-1,00%.
• 2) Rubbish and Sewage System (“Tasas de Basura y Alcantarillado”)- it is quarterly payable on quarterly due and the amount is about 200€-250€ by year.

 Personal Income Tax (“Impuesto a la Renta de las Personas Físicas”)  each taxable situation may varies then we suggest you to get advise from an expert but we may mention some guidance in this point. includes two concepts that are based on the cadastral value (“valor catastral”) which is the official value for taxes purposes. The rate varies in some autonomous community within Spain.

If the property you have bought is your permanent residence, there is an exemption. However, if it is your second residence and it is not rented to a third person, Spanish Tax authority will assumed you are receiving an imputed income, which is about 2% of the cadastral value. Additionally, if you are non-resident tax-payer, you are obliged to pay a tax rate between 19% or 24% depending the type, amount of income as well as the country you are tax resident.

Wealth Tax- (“Impuesto al Patrimonio”)- This national tax is applicable differently depending on the autonomous community you are resident. In Andalucia, the minimum exempted is 2.000.000,00€ of the net wealth value (total assets deducting the value of permanent residence, less total liabilities):

https://sede.agenciatributaria.gob.es/Sede/declaraciones-informativas-otros-impuestos-tasas/impuesto-sobre-patrimonio.html

https://www.juntadeandalucia.es/organismos/haciendayfinanciacioneuropea/areas/tributos-juego/tributos/paginas/impuestos-cedidos-patrimonio.html

Inherintance Tax– as your lawyer or tax advisor.