If you decide to buy a property with us, Monarch Villas, we will ensure that you get the best service possible. We will help you sort out all the details of your purchase and give you any tips you need to make the process run a lot smoother. For example, below you will find helpful information on some of the legal and financial ins and outs of buying a property here in Spain. Take your time to browse through this section, familiarising yourself with what is entailed in buying a property. Further information is available.

Mortgage

When purchasing property in Spain it is better to get a mortgage in Spain. We work in association with most Spanish banks which lend up to 70% of the value of the property however some banks will lend more depending on your financial status. A Spanish mortgage can easily be arranged. All that is needed is proof of income such as a current P60, the last three pay slips if employed, and if you are self employed the last three years audited accounts, tax returns and an accountant’s reference.
Mortgage rates are normally fixed for the first year and variable thereafter. Most banks in Spain charge a setting up fee of 1.5 to 2% of the mortgage.

Taxation

We will introduce you to an English speaking solicitor who will deal with all the legal matters associated with the purchase of the property. We will also introduce you to a Fiscal Representative which is similar to an accountant as this is compulsory for all non-residents to assist in the administration and collection of taxes and rates in Spain.
A person who is considered to be a non-resident is someone who does not reside in Spain for more than 183 days per year and if their economic interests lie outside Spain.

Spain operates on a self assessment basis for the collection of Income Tax. The Fiscal Representative will complete all the relevant forms, pay the taxes due and with in the specified time and send all details to the Hacienda (Spanish Tax Authority.) This must only be carried out by the Fiscal consultant or there will then be a fine for not obeying the legislation to appoint a Fiscal Representative.
If you are resident in Spain you will be liable for income, capitals gains and succession duty (inheritance tax) on your worldwide assets. This is in addition to other incidental tax liabilities such as IVA (VAT) and gift taxes. It is worth noting that gift tax and inheritance tax in Spain are payable by the receiver of the gift or inheritance.
Once you decide to live in Spain you must apply for an NIE number (Identification number for Spain similar to the National Insurance Number in the UK) to apply, you must go to the Local Town Hall (Ayuntamiento) with your passport and photocopy, application form and copy and one passport photo. It will normally take up to one month for your number to arrive.

Capital Gains Tax

If the vendor has a Spanish residency card and has sold his property to buy another property in Spain, he does not have to pay Capital Gains Tax

If the Vendor does not have a Spanish residency card on the date of the sale, he must deposit an advance payment of this tax with the Tax Office within 30 days after signing the Escritura for the sale of his property.

The amount of deposit payable is 5% of the declared value in the New Escritura.

The responsibility for paying this deposit, however, lies with the Purchaser, and if the amount is not paid to the Tax Office, a debt may be charged against the property at the Property Register and not the original vendor.

A 5% deposit is normally withheld from the purchase price by the purchaser’s legal representative.
Capital Gains Tax is calculated on the profit of the sale of the property. The profit is determined as the difference between the declared value in the old Escritura and the declared value in the new Escritura.
You can also deduct from the profit any costs associated for extensions, improvements to the property (legal invoices are needed with VAT), transfer tax and notary and land registry fees.
The balance remaining less the above costs is the net profit. The Capital Gains Tax is 35% of the net profit.

Purchase Costs
New Properties:
VAT IVA: (Impuesto sobre Valor Añadido) is charged at 7% on the declared value of the property.
Stamp Duty AJD: (Impuesto sobre Actos Jurídicos Documentados) is 1%
Resale Properties:
Property Transfer Tax ITPADJ: (Impuesto de Transmisiones Patrimoniales y Actos Jurídicos documentados) is 7%.
Other Costs: Tax on rise in value of land Plus Valía is charged at 0.1%
Notary Costs: App. €600.00
Land Registry Fee: App. €300.00
Solicitors Fee: For the searches on the property, preparation of Title Deeds and translation before a Public Notary. App. €600
Water & Electricity connection Fee:
New Properties: Drawing up of contract of ownership. App. €360.00
Resale Properties: Changing of ownership. App.€100.00
Notary costs may vary depending if you are arranging a mortgage through a bank there will be an additional set up fee as there is a mortgage deed and separate registration fee.
As a normal guide for all the costs associated with a purchase is 10%.
Annual Costs
Community Fee: This depends on the size and location of each individual property and the amenities of each complex. This can vary between €60.00 and €500.00
Local Rates SUMA: This is for the services provided by the council and is €210.00 app.
Electricity & Water: Standing charge for the year paid by direct debit €120.00 app.
Income Tax: Approximately 0.5% of the property value.
Insurance: Building and contents €180.00 app
Fiscal Representative: Dealing with annual tax returns and handling direct debits for water, electric and insurance. €90.00 app

Annual Costs
Community Fee: This depends on the size and location of each individual property and the amenities of each complex. This can vary between €60.00 and €500.00
Local Rates SUMA: This is for the services provided by the council and is €210.00 app.
Electricity & Water: Standing charge for the year paid by direct debit €120.00 app.
Income Tax: Approximately 0.5 % of the property value.
Insurance: Building and contents €180.00 app
Fiscal Representative: Dealing with annual tax returns and handling direct debits for water, electric and insurance. €90.00 app