House sales still need a lot of legal paperwork to be done for the conveyancing and we assist with the following:
- Preparation of Utilities Contracts, Community Charge and Suma Invoices
- Liaison throughout the transaction with Purchaser´s Representatives and Notary
Preparation of Notary Appointment and all related Paperwork
Accompany you on day of the Sale to the Notary
Translation at the Notary
Calculation of 3% Retention
Calculation and Advise re Capital Gains Tax
Fiscal Representation throughout the Process
Calculation of Plusvalía
WHAT COSTS ARE INVOLVED WHEN SELLING MY HOUSE IN SPAIN?
When selling your property in Spain, many sellers are not fully aware of what they are going to have to fork out in terms of costs before getting the real net figure they want in their hand.
We understand that when you are thinking about selling a property, there is a lot to think about and also concerns over costs, but it does not always pay to try and do it the cheapest way.
Firstly, the average length of a sale process is in between 2 and 3 months. It can be done quicker if the buyer has all funds in Spain and the property has all the required documents in place. If the buyer needs a mortgage to purchase, the process can delay another month.
Make sure you take into account the following costs when selling:
1) Plus Valia – every seller has to pay a tax based on the incremental value of the land which the property occupies over the amount of years you have owned it.
2) Community Fees: Make sure your Community Fees are up to date – normally you will have to present a Certicado de Communidad to the buyer on signing the Escritura.
3) IBI & Utilities- Ensure your utility bills are up to date as these will need to be paid up to the date of sale. You will have to provide the original proof of payment at the signing. Sellers have to pay the IBI or Council tax for the whole year they are selling.
4) Mortgage Cancellation Fees – Your bank will probably have anywhere from a 0.5% to 1% cancellation charge on the balance of your outstanding mortgage
5) Mortgage Cancellation & Registration Fees at the Notary – In addition to point 4), as a seller you will have to ensure your mortgage is cancelled at the Notary and Registry. This may cost anywhere from 600 Euros to 1000 Euros, and is an amount that will probably be retained by the solicitor to ensure this is done
6) Non Resident Retention 3%: If you are non-resident in Spain, the buyer of your property will also have to retain 3% of the Escritura Sales Price to pay directly to the Spanish tax man (Hacienda) on your behalf towards your Capital Gains Tax. Fiscal residents do not have any retentions made on them, but they may have to pay tax on the sale in the following year through their tax returns.
7) Agents Commission – If you have used an Agent to sell your property, then you will also have to account for the Agent’s fees.
8) Legal fees: A good legal office should prepare prepare utilities contracts, community charge and Suma invoices, liase with the purchaser’s representatives and the Notary, prepare the Notary appointment and all related paperwork, accompany the seller to the Notary and translate, calculate the 3% retention, calculate and advise re Capital Gains Tax and give fiscal representation throughout the Process.
Obviously you will still have your Capital Gains Tax Liability, but that will depend on your profit. For non-residents, the 3% retention tax counts towards this. Those of you who are making a loss still have to pay out the 3% retention tax, but can reclaim it back from the Spanish tax providing you have all the correct documentation and receipts to prove you have made a loss and paid all your annual taxes.
Once you know what all of these costs may be, you can then work backwards to calculate what price you need to sell at in order to walk away with the amount you have in mind in your hand.
We can provide a list of documents required when selling, such as :
– Habitation Certificate.- this document proves that the property meets the Town Hall habitability requirements. It is not possible for the buyer to take over your water contract without it.
– Energy Performance Certificate.- this is a new certificate to be provided since June 2013. It is compulsory to have it when you advertise your property for sale or rent.
With regards the taxes involved, the seller has to pay three taxes:
– SUMA tax of the year selling.
– Plusvalia Tax.- It is paid to the Town Hall and the amount depends on the cadastral value and the years passed since you bought the property until you sell it. The figure will vary depending on the Town Hall that it belongs to .
– Capital Gains.- This is paid to the Inland Revenue. When you are Non Resident in Spain the Inland Revenue retains in every case 3% of the money of the sale in lieu of you making your Capital Gains. If you are selling at a loss and you are up to date with your Non Resident Tax for the last 5 years then you can claim any tax paid in excess.
Finally, other costs you might incur when selling are:
– If there is a mortgage on the property: Mortgage cancellation costs. If you ever had a mortgage on the property and this has not been removed from the Land Registry yet then it is required that the bank goes to the Notary to sign that they have received full payment for it. Later the document has to be taken to the Land Registry for them to remove the entry from the property. Both the Notary and the Land Registry will charge you for their services to cancel the mortgage. We usually need a provision of funds to pay them of 800€. If the mortgage has not been paid off yet the process is the same, only that the bank will receive the cheque on completion to redeem the outstanding amount. This cheque will be deducted from final payment to you.
– End of building certificate: Some properties appear to be in construction at the Land Registry office, then this is certificate is required to certify that is fully finished.
– Age Certificate or Extension Certificate: these might be required if the current property metres are more than the ones registered.
Registering extra metres is far more complicated than only providing an antiquity certificate but as this will vary with every individual property, we would discuss this personally with you.
A consultation is free of charge.