Case Study – Changing Ownership of Property and Brexit
We received an email this week which may be of interest if you are divorcing and changing ownership of a property or wondering about Brexit.
The customer said that she and her husband are divorcing and live in the UK. As part of the settlement he has agreed she can keep the apartment in Spain near Murcia. She said that she had a few questions regarding Spanish law and costs involved.
1. We are going to pay off the existing mortgage and transfer the deeds into my name.
2. How long would the process take and can anything be done in advance.
3. What would be the rules as I would like to be able to legally work in a Spain and also in the UK. As I still have to pay for my UK State pension.
4. Any implications with me owning and being a non resident in Spain. Or would I be able to be a full resident (at moment I have an NIE number from when webou ght the apartment).
5. Obviously the biggest concern is Brexit.
6. Any help would be appreciated and your costs/ timescale involved.
For those who might be interested this was our response.
Thank you for your email. I will try to go through it step by step.
My husband and I are divorcing and live in the UK: I am sure you are aware by now the divorce has to be done in the UK,as the jurisdiction is UK.
As part of our settlement he has agreed I can keep our apartment in Spain : We will be able to assist with changing the ownership from joint names to one name, this is a division of joint tenancy. I will answer further below.
I have a few questions regarding Spanish law and costs involved.
1. We are going to pay off the existing mortgage and transfer the deeds into my name: We can help with this process, as above. (By the way, also you do not need to pay off the mortgage, but could do a private contract between you with our help that the mortgage remains with the Bank in joint names but you would become legally solely liable for this).
2. How long would the process take and can anything be done in advance: The process comprises that we would need a copy of the deeds and the IBI bill for 2018 emailed to us and we can calculate costs. These will be Notary fees, Land Registry fees, our solicitor’s fees, fee for cancellation of the mortgage from the deed and the Registry, stamp duty of 1.5% and some smaller adhoc fees. We would also need copies of your passports, NIES, a statement of the mortgage, and power of attorney from you both (you can do this here or in the UK). Once you are going ahead, then we would need an initial provision of 700€, and we would prepare the power of attorney/s as that will take a few weeks to get organised. I don’t know if you would feel like going to do it together if you are both in the same country at the same time or would rather do separate ones? The process might take a month or so.
3. What would be the rules as I would like to be able to legally work in a Spain and also in the UK. As I still have to pay for my UK State pension: I am not sure what you do for work, but you can work in both countries I believe but you need to have a base for residence and tax. Either UK or Spain and if Spain, you would be taxed by only Spain on income in both countries. UK tax, I cannot comment on. For pension purposes, working in either country, when you come to retire wherever you are Resident looks at the pensions of both countries and amalgamates them so you receive one payment. There is a lot about this on the CAB Spain website (Citizens Advice Spain CAB), but you apply where you are Resident when retiring. The onus to become Resident in Spain is if you are spending more than 183 days per year in total (not consecutively) here and your centre of interests or family is here.
4. Any implications with me owning and being a non resident in Spain: No, this is perfectly normal. Your obligations would be to pay non-resident tax (as it is now) and we can help you with this, also council tax/ property tax known as IBI. What else may happen with Brexit, I don’t know, but this is the current position.
Or would I be able to be a full resident ( at moment I have an NIE number from when we bought the apartment ): Please see above. To become Resident in Spain is becoming a little more difficult. Firstly you would need to be living in Spain over half a year as I say. To apply for the Residencia, yes you need a NIE number (needed for lots of things here), also you will need (as you are under retirement age) proof of your work in Spain via a work history or Vida Laboral, 6 months bank statements showing you using your card in Spain to prove you live here), or if not working about 8,000€ in the bank at the moment and private medical insurance. This only gets you the Residencia, then you need the next step to become a Tax Resident to switch paying tax from UK to Spain. We can help with both these matters.
5. Obviously the biggest concern is Brexit : At the moment, yes, it is impossible to predict what exactly the impact will be for UK citizens with property in Spain and living or working here. Our senior solicitor’s opinion is for non resident and resident Brits alike the biggest impact will be taxes. Things like inheritance taxes will be affected. We already know that once Britain is no longer in the European Economic Area (EEA), its Residents will be subject to the more expensive taxes in this respect of the Spanish states, like Russians are now for instance, rather than regional tax law, which is currently very favourable in Murcia. For this reason we are actually urging many people to pass their properties to their adult children now before Brexit.
6. Any help would be appreciated and your costs/ timescale involved: Costs for the change of ownership we can quote straightaway with a copy of the deeds and the IBI bill, generally they are about 5-6,000€ in total but obviously I don’t know for sure until I see the paperwork. We can also quote for bringing Non resident tax up to date with this if not paid, and anything like IBI that might be outstanding.
Residencia is 181.50€, fiscal Residency I would need to speak to our tax person. You would also need a Spanish Will as divorcing, so that is 181.50€ also.
If living here, we will also be able to help with converting your Spanish driving licence (a necessity) and a UK plated car to Spanish plates.
I do hope this helps, and if you send me the deeds and IBI, I will quote for the change of ownership straightaway.