Information for the Property Seller
When selling any piece of property, you are confronted with a host of questions, questions we would like to help you answer. From a market-orientated valuation of your property, inspection of existing documentation to the procurement of any missing documentation, we can assist you with the sale of your property. Creating professional photos and text describing your property is also part of our service, as is advertising your property in a variety of different media. Below you will find several points which you should pay particular attention to before a sale.
Entry in the Land Registry
If your property has an entry in the land registry, it is usually far easier to sell. However, it is neither necessary nor advisable to enter the property in the land register shortly before a sale as there are significant associated costs (7% of the market value, plus notary fees). It is usually sufficient to establish the conditions required for entry into the land registry and register same with the certificate of sale within a notarial deed, as these costs are only incurred once in the process.
Since 2012, it has been a legal requirement that within a registration of a property, the property area, as entered in the cadastre and in the land registry, may not deviate from each other by more than 5%. If the entry of property’s area measurements in the cadastre and land registry varies by more than 5%, we can help you contract a reasonably priced surveyor or retain one in your name and ensure that any necessary corrections in the cadastre or land registry are undertaken. This means that when you find a buyer, this requirement can be easily proven.
New building certificate
Some buildings up for sale are not or are only partially registered. However, a legally compliant and lawful sale requires that all parts of a building are registered. We can offer you support in the process of legitimizing your registration and can put you in touch with or indeed contract reliable surveyors, architects or builders on your behalf. There are however, also obvious taxation aspects to be taken into consideration. We are happy to advise you on these issues in a non-binding, free of charge consultation in order to find you the most reasonable solution. Errors are often made, especially in the registration of new buildings – and those errors can become extremely expensive later on and cannot be corrected.
If you sell your property at a profit, the difference between the sales cost (including surcharges for aging buildings) and the sales price obtained is generally subject to taxation, currently at a rate of 19% payable to the state of Spain. If certain conditions are met, then there are exceptions
to this rule as well as a little leeway which can mean total exemption from paying the tax. So you should get in touch with us as early on in the process as possible and we will undertake an initial consultation free of charge. We may refer you to a reliable accountant, meaning that you can ensure that the sale of your property is as managed as economically as possible while observing all tax-related issues.
Withholding Tax (Retención)
If one is not a tax resident in Spain (no residente fiscal), a rate of 3% of the sales price is generally payable by the seller and can be claimed as withholding tax on any potential profits tax generated. This withheld tax can be included in your tax returns and claimed back in the year following the sale. If the profit and the associated profits tax are higher, then you are obliged to pay the balance. In order to benefit from a repayment of this tax or indeed to be exempted from payment altogether, certain conditions must be fulfilled (e.g. subsequent purchase of a property in Europe, turning 65 – the Spanish retirement age). A consultation with our offices and follow- up meeting with an accountant is usually a worthwhile undertaking from a financial point of view. Please do not hesitate to consult with us on this issue well in advance as certain arrangements can be made in regard to conditions if they are introduced in good time.
Tax on the Increase of the Value of the Land (Plusvalía)
The Plusvalía is often confused with the profits tax. The Plusvalía is a community tax charged on the sale of a property based on the increase in value of the property area. It is generally payable by the seller. Due to the fact that it is based on the cadastre valuation as opposed to the generally higher market value, the tax is usually quite negligible and should be of little consequence.
Remedying of Defects
Hidden defects are also part of the Spanish vocabulary. If there are problems with the property which are known to you, they must be communicated to the buyer and accepted in writing in the contract of purchase or remedied correctly before the sale of the property. We can assist you with the appraisal of damages and suggest remedies and repairs so that you are not in for any nasty surprises after the sale has been agreed.
What documentation do I need for registration of a property?
Registration of a property requires a certified extract from the land registry and a non- anonymous extract from the cadastre in order to prove ownership. You will also be required to produce a certification from the authorities that all municipal taxes have been paid (IBI). In addition, you must present a current passport or personal identification and your N.I.E. or resident identity card. In certain cases, some additional paperwork is required but we will not abandon you to red tape! We are on-hand to assist and can even help with the procurement of any documentation you require or retain a notary to do so. This may require power of attorney or alternatively we can accompany you to the registration at the city hall.
Power of Attorney
As a rule, all owners must be present for registration of the property. If you cannot be present, it is recommended that you grant a trusted party power of attorney in advance. This party is usually a spouse or life partner meaning only one partner is required to be in attendance. But a power of attorney must always be certified by a notary in Spanish. If the power of attorney is issued
abroad, it must also carry the Apostille stamp (official authentication). If you require any assistance in procuring a power of attorney, we are happy to help.
Methods of Payment
It is common practice to pay the purchase price on registration with a certified personal cheque (cheque cerificado). If you intend to leave La Gomera after the sale, you should only close down your bank account after the sale has completed so that you can lodge this cheque and transfer the sum to your home bank account afterward. A certified cheque can also be paid into an account abroad, although you bear the risk of transporting it. Paying in cash at the notary is no longer an accepted method of payment but there are other options we can advise you on.
We can provide interpreting and translation services during negotiations and registering the property in Spanish, German and English. This service is included in our package and will not incur additional costs. If you require another language, we can put you in touch with an interpreter who will require direct payment from you or the buyer.