Whatever your reasons for selling your property this is probably the first time that you have sold a property in Spain, or even abroad. We have put this guide together to help you understand a little more about the process of selling in Spain.
This guide is aimed at providing some basic information about selling in Spain and tries to answer the majority of the common questions that we are asked about. Although we hope that you will find it useful it is important to remember that it doesn’t cover all legal issues involved and certainly isn’t a step by step DIY guide to selling in Spain. It is still recommended that you seek advice from a professional before proceeding – after all we do this every day and have been doing so for many years and therefore know all the tricks and pitfalls that you may come across. We also know the practical solutions to the problems that exist and also know how Spanish Law interacts with UK law.
Selling property in Spain faq’s
Is the legal system in Spain the same as the UK?
No, they are very different, but there is an interaction between them when you buy or sell a property in Spain. That is why the best person to advise you on your sale in Spain is somebody who understands both Spanish and UK law.
Do I need a lawyer to help me sell in Spain?
No, you don’t – just like you don’t necessarily need a lawyer when selling in the UK. However, in reality you would always use a lawyer when selling in the UK so what is so different about selling in another country where you probably don’t have experience of before before?
I have been told that I don’t need a lawyer but need a Notary. Is this true?
The Notary is important in Spain but tends only to get involved at the end of the transaction. His role is to carry out some basic checks at the end and attend to the signature of the title deed and in some cases to register the property. He doesn’t normally advise on whether the contract is OK to sign, the tax implications of selling the property and so on.
Do I need to be in Spain to complete the sale?
Both the buyer and seller or their representatives need to be together in front of the Notary to sign the title deeds. This can be done in the UK or in Spain. If you are not able to attend then we can arrange for somebody to represent you under a Power of Attorney
Are the costs more in Spain than in the UK?
Yes, the total costs in addition to the purchase price are higher than you will be used to in the UK. It is therefore important to factor these into your budget from the beginning. Luckily property prices are currently rock bottom which not only reduces some of these costs but also makes the purchase price much cheaper.
In today’s market it can often be difficult to identify the value of your property and what price to ask for it.
In Spain there are various types of valuations ranging from a low cost valuation carried out by an estate agent to an official formal valuation (which will carry a fee). If you need assistance with valuing your property we can put you in contact with people who can help.
In most cases an informal estate agent’s valuation is sufficient.
Selling any property involves a lot of money.
When you are converting from one currency to another the difference between one exchange rate and another can literally make a difference of thousands of pounds on your purchase.
Do not underestimate the difference that a good exchange rate can make.
We know people who have sold properties and have made more money on the exchange rate difference than they have on the sale of their property.
We are not banks or currency dealers, but would recommend that you investigate the cheapest way of sending your money abroad. If you would like we can put you in contact with currency dealers that we know will give you a good exchange rate and a good service.
Currency dealers have increasingly sophisticated products. You can agree rates for the future. You can get them advising you when to buy or agreeing to buy for you when the rate hits a certain level. You can even agree a fixed rate for longer periods of time if you make regular payments abroad (for example for a mortgage or moving your pension money).
We work with currency dealers who can give you a good exchange rate for your purchase and whom we have known for years. We will normally receive a commission for introducing them to you. This does not cost you anything more as they are simply paying us part of what they make. This commission is costed into our overall charges for providing our services.
Power of attorney
A Power of Attorney is a document which allows somebody to do something on your behalf.
If the title deeds are not being signed in the UK then often clients prefer to grant a Power of Attorney to somebody to sign the title deeds on their behalf.
This has several advantages;
You are normally busy and haven’t time to go out to Spain to sign the title deeds.
Signing title deeds is not particularly exciting and most people prefer to use their time off enjoying the property rather than signing pieces of paper.
It normally works out cheaper than you going out to Spain to sign.
You should only give a Power of Attorney to somebody that you trust as they allow that person to do things legally on your behalf.
In Spain Powers of Attorney have much wider faculties than we are used to in the UK and often have very general clauses in them “just in case”. We try and limit the Powers of Attorney down as much as possible whilst still allowing the person appointed the freedom to do what you need them to do.
We charge £200 plus tax for drafting up a Power of Attorney. On top of that you will have Notary fees, foreign and Commonwealth Legalization fee (£30 per document) and often Courier fees.
Fractional Ownership is not a new concept and has been around for many years – although back then we called it Co-ownership.
Put simply Fractional Ownership is where several people buy a property together. This can be members of a family, friends, work colleagues or even complete strangers.
You buy a share in the property and also share the running costs.
The best Fractional Ownership schemes are those where the cost of buying is closest to the value of the actual share in the property – i.e. the ones where there are not huge margins built into the sale.
Timeshare is a type of Fractional Ownership but Fractional Ownership is not necessarily Timeshare as there are strict definitions as to what Timeshare is.
If you are struggling to sell your property then turning into a Fractional Ownership property may be a way of making the purchase by others more affordable and can even mean that you can keep part of the property should you wish to.
The NIE (Numero de Identidad de Extranjeros, which translated literally is your Foreigner’s Identity Number) is your Tax Identity Number in Spain.
There are several times when you are likely to be required to produce your NIE number;
- When you buy or sell a property
- Opening a bank account
- Dealing with the utility companies
- Taking out insurance
- Dealing with the tax authorities
- Buying or selling shares, bonds and stocks
- Buying a car
If you bought many years ago you may not have realised that you needed an NIE but will need one in order to sell. The rules on NIEs change regularly and between geographical areas. Sometimes you have to obtain this yourself and sometimes it can be done by somebody on your behalf. We will therefore advise you how this is working and costs at the time that you contact us.
What price to declare on the title deeds
For many years in Spain there was a practice of under declaring the value of the property in the title deeds (i.e. selling for one price but declaring a lower price in the official documentation). This was done in order to save tax for both the buyer and seller. If you have bought many years ago it is probable that you were persuaded to do this.
Unsurprisingly the Spanish tax authorities have tightened up on this practice. And it is inadvisable to declare less than the actual value of the property. The Spanish Notary may actually refuse to sign the title deed (Escritura) if he believes that the value declared is less than the actual market value. Even if he does the authorities have four years to come back to you and challenge the amount declared. If they are successful then they will raise a supplemental demand for the unpaid tax plus penalties and interest.
If you are not resident in Spain and haven’t owned the property since 1985 then the buyer of your property must lodge 3% of the sale price with the tax authorities and you only receive the balance of 97% at that stage.
Contrary to common perception this is not a tax but is actually a retention made by the tax authorities. The tax authorities will retain this money until they are satisfied that you have paid all your taxes. If you have paid your taxes you will get that money back. If you haven’t then they will keep the amount of unpaid taxes.
You must apply for the return of the money and the authorities regularly take up to a year to return the money. It is the buyer’s obligation to pay this amount to the tax authorities.
There are generally two taxes that need to pay when you sell a property in Spain.
The first is Capital Gains Tax. This is at a rate of 19% but can be as high as 23% depending on how much gain is made. This is calculated by taking the price that you declared when you purchased and the price that you declared when you sold. The difference between the two is the gain. From that you can deduct various expenses associated with the sale, any cost of major work to the property (providing that you have documentation to back up your claim) and an allowance to allow for inflation. You then pay tax on the resulting amount.
If you are resident in the UK then you will also have to declare the Capital Gain back home as part of your Worldwide Capital Gains. The tax paid in the UK will be based on the UK Capital Gains rules and rate. As Spain and the UK have a Treaty relating to Double Taxation you can offset any tax that you have paid in Spain against any tax Capital Gains Tax due in the UK.
Our charges. We charge 1% of the purchase price subject to a minimum of £1,500. If the property title is defective or unexpected additional work is required then there may be additional charges. We would inform you before incurring this cost.
Our charges include;
- Legal advice on the terms of your offer to sell
- Preparing the information and documentation required by the buyer
- Liaising with the seller’s lawyer
- Drafting the contract for sale
- Arranging for receipt of the deposit
- Obtaining certificate from the Community of Owners (if appropriate)
- Arranging the signature of the title deed
- Making sure that you receive the money
- Arranging payment of the relevant taxes
- Making sure that you are removed from the land Registry as the owner
- General hand holding and advice throughout the transaction
Other work required may include obtaining NIE numbers, signing the title deed on your behalf, transfer of utility contracts etc. which attract a separate charge
|Abogado||Lawyer or solicitor|
|Agente de propiedad inmobiliario||Estate Agent|
|Apartamento / piso||Apartment|
|Asesor fisca||Tax consultant|
|Comunidad de Propietarios||Community of owners / Residents Association|
|Compra / compraventa||Purchase / Buying and selling|
|Contrato de compraventa||Purchase contract|
|Contrato de reserva||Reservation contract|
|Declaración de obra nueva||Declaration of new building work (At the Notary)|
|IBI (Impuesto Sobre Bienes Inmuebles)||Council Tax|
|IVA (Impuesto Valor Añadido)||VAT (Value Added Tax)|
|Luz||Light (but often refers to electricity)|
|NIE (Numero de Identificación de Extranjeros)||Foreigner’s Identification Number|
|Nota Simple||Land Registry Search|
|Permiso de obra||Planning permission|
|Poder||Power of Attorney|
|Póliza de seguros||Insurance policy|
|Registro de propiedad||Land Registry|
|Valor Catastral||Official value of the property|
Why use Judicare
We have an experienced Spanish legal team comprising Spanish lawyers and English lawyers who have studied Spanish law.
We are Solicitors
We are a UK based firm of Solicitors regulated by the Solicitors Regulation Authority and who specialise in international legal issues.
We understand both sets of laws
Because we understand both sets of laws we understand the difficulties that come when two sets of laws meet.. This is particularly important when it comes to issues involving ownership, taxation and inheritance.
We are members of AIPP
The Association of International Property Professionals was set up to improve standards of professionalism in a largely unregulated overseas property market.
Our Spanish team has many years of experience dealing with a whole range of legal issues with Spain. We speak your language You need a lawyer who can speak your own language. More importantly you need somebody who can explain and discuss often complicated issues in terms that you understand.
We are independent. We are not allowed to act for the buyer and the seller at the same time. We are not linked with any Development Companies, Builders or Estate Agents