PURCHASE GUIDE

Re-Sale or New Construction ?

When choosing a property in Spain you will be faced with the decision of purchasing a new construction or a re-sale property. Both of these types of purchases have their own benefits.

Re-Sale

The main benefit of purchasing a re-sale property is you are buying exactly what you see. Also the completion time is fast, usually you can move into the property in approximately one month and often re-sales are sold partly furnished or sometimes fully furnished. The down side of a re-sale property is that the lay out of the house may not be quite right for you or you may not like the choice of tiles or even the choice of bathroom suites fitted. If any work did need to be carried out First Rate Villas would be more than pleased to assist you in any way.

New Construction

The advantage with new construction is that you are able to choose the best layout to suit yourselves. We will show you numerous different houses and plans which will give you lots of ideas, we can then sit down with the architect and make any alterations so the plan is exactly right for your needs. First Rate Villas will show you our large portfolio of plots available where you could have your home built. You will also have the benefit of choosing tiles, bathroom fittings and your kitchen. Our representative can take you to various local suppliers who provide these services. The downside of new construction is that the moving in process is of course slower than that of a re-sale. However this does suit some clients as stage payments are made which then gives you more time to prepare your finances.

Reserving the chosen property

You have now found the desired property. The first thing to do is to pay a securing deposit (which is usually approx 2000 pound Sterling). Once this is paid the property is taken off the market. After paying the deposit your lawyer (Abogado) will start to prepare all searches and checks on the property, the time allowed for this is usually around 30 days. On the agreed completion date you will sign the title deeds (Escitura) in front of the notary at the local notaries office.

If you have decided to pursue building a new construction you will again be asked for a deposit of approx 2000 pound Sterling to secure the plot. Your lawyer will then check that there are no debts or charges on the land and once this is done he will then draw up the contract for the construction. Usually there are stage payments that will be listed in the contract, as will time limits and obligations by both parties.

Conveyancing of the property

This is carried out by your lawyer (Abogado). First Rate Villas can recommend various good lawyers who work in the local area, or of course you can source your own if preffered. The service of your lawyer is usually between 700 - 1000 pound Sterling. Lawyers can also make payments or sign documents in your absence if power of attorney is granted.

The final completion date

When this date arrives both yourselves, your lawyer and the vendor shall meet before the notary where you shall sign the change over of the deeds (escitura). When the escitura has been signed the notary will send a copy to the land registry where they shall update the deeds into your name. If the signing is on a re-sale property the transfer tax is paid on the same day. The fees for the notary can vary from one town to another.

Obtaining your NIE number

This is an identity number given to foreigners who wish to buy a property in Spain. Your lawyer will deal with this and make any necessary appointments.

Land registry

This is the office where your escitura is updated with your name. This is also the office where your lawyer carries out his searches. The fees are very similar to that of the notary.

VAT on purchasing property

In Spain this is called IVA. IVA is applied to all new property. There are different bands of IVA, which we have listed below.

· 16% on plot only
· 7% on new ready built properties
· 7% on plot with construction

Taxes on re-sale properties

You will not pay VAT on re-sale properties but you will be liable to pay a transfer tax, which is 7%. This tax will be paid to the notary on the day of signing the escitura.

Plus Valia Tax

This tax is paid to the local authority and is a form of capital gains tax that is payable on the increase in value of the land since the last purchase. It should be stressed that this tax is based on the increase in value of the land, and not on any buildings erected upon it. The obligation to pay this tax falls upon the vendor, but the vendor may attempt to require the purchaser to meet this - care should therefore be exercised where the contract refers to the purchaser paying - todos los gastos -all the expenses of the transaction - which would include the Plus Valia tax.

Useful terms

Please note that the information listed from First Rate Villas is a guide line only. We would therefore recommend that you take the professional advice from a lawyer