buyers guide 2
Power of Attorney
If you will be unable to attend the completion it is possible to give power of attorney to your Spanish lawyer or another trusted person to act on your behalf. The document, drafted by your lawyer in Spanish, must be signed by you in front of a Notary. You should always check what the power of attorney allows your representative to do.
Fees and costs
You can expect to pay the equivalent of approximately 10% of the purchase price on taxes and fees. This money must be available on the day of completion
NIE Certificate - Tax Identification Number
Any person purchasing a property in Spain is required to obtain a tax identification number. You will need a certified copy of your passport, obtained from the Notary, to accompany the application form. This service costs approximately 50 Euros per person in Spain but much more costly if done in the UK so it is worth considering making the application very early in the process, whilst still in Spain. Your Estate Agent or lawyer will advise you more about this requirement.
Spanish Bank Account
This will be needed to arrange direct debits to pay the utility bills, etc. You will initially open an account as a non-resident and sign a declaration that your tax liabilities are in your home country, i.e. United Kingdom. Even if you are not intending to return you will be required to provide a UK address but can elect a Spanish address for bank statements and correspondence.
Spanish Banks will allow you to borrow against Spanish property and a mortgage can usually be arranged. This is most often to a maximum value of 70% of the purchase price but can be more depending on the type of purchase and your financial status. These funds are made available on the day of completion. As with the property purchase a mortgage is subject to taxes and fees of approximately 2% so always ask the bank to provide you with a quote.
A valuation will be carried out by a specialist firm associated with the bank if a Spanish mortgage has been applied for. In other cases, it is very unusual to have a property valued. The Spanish law regulates the responsibility of the vendor for structural defects in the property, protecting to some extend you as the purchaser.
When you purchase a property, in Spain, it is recommended that you make a Spanish will that is independent of the will made in your home country, which can help avoid a great deal of trouble and expense. The will made in your home country should be carefully worded in order to respect the terms of your Spanish will. It is necessary to sign your will in front of a Notary and this can be done simultaneously to signing the Title Deed on the day of completion if prior arrangement is made with your Spanish lawyer.
Non-resident Spanish property owners are liable for annual wealth and income tax. Those resident in Spain are liable for income tax. In either case a Fiscal Representative will represent you in front of the Spanish Tax Authorities and do your tax returns.
When purchasing a new build, the builder should offer a bank guarantee for all the stage payments made during the purchase. The guarantee is issued by the bank after each payment is made. However, due to the costs of those guarantees, some builders tend not to offer such guarantees and this can put you at risk if the property is not completed, e.g. due to financial difficulties faced by the builder.
It is common practice for the sale and purchase price to be understated by the vendor, enabling them to reduce their tax liability and reducing your stamp duty fees. However, if you decide to sell in the future, you could be liable for Capital Gains tax on additional profit if the declared value is much higher.
This is a local tax, which varies from property to property and from Town hall to Town Hall. This tax should be paid by the vendor unless stated otherwise in the purchase contract.