Becoming a Resident. If you are buying a Spanish property and intend to spend more than six months in Spain you need to apply for a Residencia. Being a resident has many advantages i.e. lower taxes, and if you don’t become a Resident you must appoint a fiscal representative.
Fiscal Representative. Once you have bought a property in Spain, and if you do not become a resident, this is a person to whom the tax authorities can send all correspondence relating to your affairs in Spain. The fiscal representative must be resident in Spain, but it is for you to choose whom to appoint. It can be either a friend, a neighbour, a lawyer or your tax adviser.
Gestor – For day to day management of your affairs in Spain it is advisable to appoint a local ‘gestor’ A gestor can assist you with applying for a “residencia” work permits, licences and permits in connection with the opening of new businesses, pension payments, national insurance and other related matters.
Banks – It is necessary to open a bank account in Spain to purchase a Spanish property. You will need one to have your home running costs dealt with through direct debit. Choose your Spanish bank carefully as running costs vary considerably between banks. We can a
Insurances – Fire insurance is compulsory by law when taking out a mortgage for your Spanish property. Comprehensive household insurance is available to protect your home and contents. Life insurance can be taken out to guarantee payment of the loan in the case of death.
Health Care – national Insurance in Spain is excellent. If you are non-resident and have the necessary E111 form from the UK you will be able to receive emergency medical treatment free of charge.
A Spanish Will – Property in Spain is subject to Spanish laws, so it is strongly advised that you make a Spanish will, which costs approximately 200 euros. Your solicitor should be able to advise you on this point.
Schools
The standard of education in Spain is excellent. There are two options:
International Private SchoolsAll of these Establishments offer tuition in English. The syllabus follows the English school curriculum to GCSEs and A levels. These are all fee paying.
State schoolsMore and more ex-pats are deciding to integrate their children into state schools where the standard Spanish curriculum is taught. This will give your children an excellent opportunity to pick up on the Spanish way of life very quickly.
Cars and DrivingIf you become a Spanish resident it is illegal for you to drive anything but a Spanish registered vehicle. It is possible to transfer foreign registered vehicles onto Spanish registration plates, but only if the vehicle is left hand drive. If you intend to live and work here you are strongly advised to buy a Spanish registered vehicle as soon as possible. You will need to make sure that you have all your documents, including your driving licence, with you at all times when driving in Spain.
Living Costs.
Urbanizacion and Community Fees
These cover the running and maintenance costs of shared facilities of the Spanish property which can include private roads, drains, lighting, private water supplied, gardens, swimming pools etc. These costs vary considerably and are controlled by a committee of owners.
Local Rates – PatrimoniaAll non-residents have to pay wealth tax, ‘patrimonia’ based on the amount on the escritura publica (title deeds of the property) or the valor catastral (rateable value), whichever is the highest value.
Property Tax – IBI
The local Town Hall charge IBI (Impuesto sobre Bienes Inmeubles), on owned property, which is an annual real estate tax. This local tax varies and is based on the valor catastral (rateable value of the property.
Tax on Rental IncomeBritain and Ireland have a double taxation treaty with Spain. Tax is paid on the declared income from the property and your rental income must also be declared to the inspector of taxes in Britain or Ireland.
Water and ElectricityWhen you have bought property in Spain there is a standing charge and a consumption charge for utilities similar to the U and Ireland.
Telephone.
The standard charge for a telephone line installation is around 180 euros. The line rental and call charges are then paid every two months.
Rubbish (basura)
In some areas you will have to pay the basura separately in others it is included in the IBI.
Legal IssuesThe solicitor (abogado) will take care of you and assist you in all the different steps involved in buying property in Spain. There are many excellent English-speaking solicitors in Spain. Choosing the right solicitor is your guarantee that Spanish legal requirements are met, that the Spanish property is registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. When you find a property, clear everything with your solicitor. Do not sign any contract or agreements with an agent, get them sent to your solicitor who will negotiate and discuss the purchase terms with the seller’s solicitor. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date the form of payment, etc.
Additional Fees
Typically you can expect to pay around 10% of the price of property .
EITHER – I.V.A. (VAT) on new construction – 7% of the contract price (16% on land)
OR – Transfer Tax (Stamp Duty) on resales – 7% of the declared value
Title Deed Tax 0.5% of the declared value plus
Valia tax on any increase in land value – this varies and may not even apply.
Finance
When buying property in Spain you can chose to apply for a mortgage in Spain or the U.K. Mortgage rates in Spain tend to be lower than those in the U.K. You know the price of the property in Euros but you will not know the actual cost until you buy all of the currency to pay for it. This means that the Spanish property could either cost you more than you planned (if the Euro strengthens) or the property could become cheaper (if Sterling strengthens).
There are two levels of mortgages offered against property in Spain, one for residents and one for non-residents. For non-residents, the mortgage offered against Spanish property is generally around 70% of the declared value and for residents it is usually around 80% of the declared value.
Applying for a mortgage for your property in Spain is a straightforward process. As in the U.K. you will need to prove that you have an income, or sufficient funds to pay the mortgage, a letter from your employer or accountant is often sufficient for this. The level of mortgage offered against Spanish property is usually dependent on your financial status and also the declared value of the property. Many new developments have pre-arranged mortgages available.
