The Property Banks Buyers Guide to The Canaries
Buying a property in Spain has been growing in popularity for many
years. A pleasant climate, relaxed lifestyle and reasonable living
costs means that buying a property in Spain is a very attractive
proposition. Spain recognizes the value of tourism and foreign
residents and has made the switch easy, to the extent that Spain has
more foreign income than any other European country.
There are many areas to buy a property in Spain and different types
of property to buy in Spain, from farmhouses (fincas), apartments,
houses to villas. You can buy old properties, new properties or even
new developments in Spain.
Buying a property in Spain is of course different to buying property
elsewhere, but the underlying principles are the same if you were
buying a property in the UK or buying a property in the USA. So
always bear in mind:
View the property more than once.
Location
Budget
Survey the property or have it checked out professionally
Check ownership and debts on the property
Costs associated with buying a property in Spain. (Usually between
8-12%)
As well the purchase price of the property, there are other costs
that must be considered when buying a house in Spain.
Transfer tax (IVA), which at present is 6% on a second-hand property
and 7% on a new one
1/2% stamp duty
Change of deeds - approx 300€
Notary charges for copies of the 'escritura publica', costs
depending on the contract price
Sometimes the buyer also pays the sellers fees. Check this at the
point of enquiry.
Once you have purchased your Spanish property you will also have
ongoing costs:
IBI which is an annual real estate tax
If you buy a property in a shared development you may have a
community charge to cover things such as maintenance, swimming
pools, gardens etc
Wealth tax, payable annually, based on the value of the Spanish
property
Property owners income tax based on your income from the property if
you rent it out.
Legalities of buying a property in Spain
The seller of a second-hand home should provide the following
documents:
The title deed of the property.
Receipt of payment of the real estate tax for the last year.
Receipt of payment of the tax on the increased value of Urban Land.
Certificate that any community charges (if applicable) have been
paid up to date.
Latest copies of domestic bills so that you can take over the
services such as electricity and water.
The seller or developer of a new property should provide you with:
Deed of declaration of new construction
Occupancy permit
Certificate of rateable value of the property
Before the property purchase proceeds there is an agreement drawn up
between the buyer and seller identifying the two parties and set out
the terms of purchase. It is important to seek legal advice before
signing this and you must be committed to the property as there will
be no rebate on deposits after this point. In the case of the seller
defaulting then he has to pay twice the amount. The contract has to
be signed in the presence of a notary, in the form of a public deed.
The details are then entered onto the public records.
Tax advantages for buying a property in Spain
If you spend more than six months a year in Spain, you are obliged
by law to apply for a residents permit. There are however, several
tax advantages for residents of Spain that do not apply to
non-residents.
Inputed income tax charged at 0.5% of the catastral value (house
value). If you are a resident you will not be charged this on your
principal home.
Wealth tax is a tax on all assets in Spain and is charged at 0.2% of
the catastral value. For residents the first 108,000€ is exempt and
for a joint ownership this would apply to each partner.
Capital gains tax will be charged on any profit on sale of property.
This is 35% for non-residents but only 20% for residents. If you are
over the age of 65 and have lived in your property for at least
three years, you are totally exempt from capital gains tax. You can
also bequeath your property to your spouse or children and avoid
paying inheritance tax on 95% of the valuation. The inheritor must
also be a resident of Spain and agree not to sell the property for
at least ten years
In
July 2007, it was released in the Worlds Press that The Islands of
Gran Canaria and Tenerife suffered terrible Forest fires and
devastation. Fed by high winds and unseasonable temperatures, the
blaze affected an estimated 50,000 acres on Gran Canaria and nearly
as large an area on Tenerife.
Most of the 13,000 people evacuated from their homes on Tenerife and
Gran Canaria, the sites of the biggest fires, had returned by late
yesterday, some of them to find their houses or businesses reduced
to blackened shells.
"In the recorded history of our islands, we have never seen a
natural catastrophe of these proportions. It has been a real
nightmare," José Miguel Pérez, head of the regional government of
Gran Canaria, said by telephone.
Firefighting teams were dousing the smoldering ground on the two
islands in the hope of putting out the final flames of the
archipelago's most devastating blaze in 50 years. They said they
would continue to soak the ground for several days.