Category: Financial

Costs In Selling Property In Spain

When wanting to sell your property in Spain it can often come as a shock the fees that are included. We always aim to ensure that our clients are fully aware of the costs involved and we help them to prepare for these.

In our guide below we hope to offer further information on just what is included as a cost to sell your property in Spain. These are standard fees that everyone must pay and are most usually deducted from the price of selling the property.

Agency Commissions

Of course it is possible to avoid agency commissions if you sell your house through private channels but this in itself can present costly issues. An agency will have preferred lawyers, gestors, contacts at the notary and many other key lines of communication that you may not otherwise be able to reach.

An estate agent fee will be 5% generally. This can vary from one agent to another and should not be the deciding factor in selecting an agent. Consider the services and selling record of the agent first and foremost. If your property is sold at a higher price, with great advice and in a much shorter time period, then a higher percentage may not be so costly.

Use an agents legal know-how to be a step ahead at every moment in the selling process. A great agent will ensure you are informed and well placed in the whole transaction.

Capital Gains Tax

In 2018 the capital gains tax is set to:

  • 19% for the first 6.000 €
  • 21% from 6.000 € to 50.000 €
  • 23% from 50.000 € onwards

There are specific exceptions to this where the seller may not have to pay capital gains tax but these are rare. An example of one of these situations could be if the sellers are over the age of 65 and have officially lived in the property for over 3 years.

All other expenses must be documented and then can be deducted to reduce the cost of this fee.

Income Tax Provision For Non-Resident – Retencion

If you are selling your property and are not a resident in Spain then there is a ‘retencion’ or income tax provision that must be retained. This amount is set at 3% at the time of writing. The fee goes directly to the Spanish tax office and will cover any resulting tax costs of the property purchase.

If the liability is less than the stated 3% the seller can apply for a refund or rebate on this money. It is a very good idea to use Spanish law representation in this scenario to ensure you can claim if the occasion should present itself.

Energy Certificate

It is law and has been law since 2013 that property owners must have an energy certificate if they wish to either sell or rent their property. These certificates must be issued by a licensed supplier. Examples of these certificate suppliers include architects, surveyor, and other registered engineers.

The costs of obtaining a certificate can fluctuate but you should be looking to pay no more than 500 € for this document. This amount should be deducted from your capital gains tax before final payment of the latter.

Plusvalia

Plusvalia is a tax that is charged on the increase in value of the property or said more correctly the ground that the property is on. This is a tax that is paid to a local town hall and not directly to the Spanish tax office as the capital gains tax is. To calculate the Plusvalia 3 main factors must be taken into consideration:

  • Time period of ownership
  • Location of the property
  • Cadastral ground value.

This tax is something that can be easily requested from the town hall where the property is located. Due to the costs that can be accrued through Plusvalia this is another area where having local representation can prove imperative. Plusvalia can be a substantial payment that must be made when selling a property.

We hope the information presented above will help sellers to have a better idea of the costs involved in selling your house. It is nothing to worry about as most of these can be deducted from the final fee but it is something that all sellers must be aware of.

** PLEASE BE AWARE. This information is correct to our knowledge at the time of writing. We are not legal representatives and as such we recommend you seek qualified legal advice on all of the above. This is intended as an advisory guide.

How To Get A Mortgage In Spain?

The Spanish property market is running strong at the moment. Despite fears over Brexit that slowed the growth at the beginning of the year, foreign buyers are still dreaming of owning property in Spain, especially in the Comunidad Valenciana.

With such an influx of property purchases one key factor is always at the centre of any enquiry. How do I get a mortgage in Spain? Should I get a mortgage in Spain?

Here we have tried to address the most common questions that clients often have for our staff. Hopefully this will help to guide you to have all the information necessary when applying for a mortgage in Spain.

Can I get a Mortgage As A Non-Resident?

To start with, probably most importantly, can you even get a mortgage as a non-resident in Spain? We are often asked this question by foreign investors and the answer is yes. You can apply for a mortgage as a non-resident and the Spanish government actively encourage investment in the country.

The criteria for getting a mortgage as a non-resident is slightly different from that of a resident, you will need a higher deposit for the property and be able to borrow less against the value. In short though, you will be able to get a mortgage as a non-resident in Spain.

Who Is The Ideal Customer For The Bank?

  • Clients with a good professional profile
  • Good credit report
  • Affordability or debt to income below 35%
  • Good resale value of the property
  • OECD countries

What Documents Do I Need For A Mortgage?

To apply for a mortgage you will need to provide the bank with a specific set of documents that are required to even begin the process. Many of these will need to be applied for separately before you even begin the purchase process.

Generally the required documents include:

  • DNI / NIE
  • Contract of employment
  • Last 3 payslips (if employed)
  • Last income tax return
  • Pre-agreement with seller
  • Proof that property tax (IBI) payments are up to date
  • Details of previous or current mortgages and loans you have
  • Property deeds in Spain and overseas
  • Certificate of work (Vida Laboral) showing your work history
  • Records of current assets
  • Prenuptial agreements, if any
  • Certificate of non-residency
  • Local tax activities (if self-employed)
  • VAT tax paid in last quarter and last year (if self-employed)

You may be provided with a more detailed list by your specific bank but this is a good overview to get you started.

How Much Can I Borrow?

You specific lender or bank will decide on the amount that you can borrow and at what rate after reviewing your financial profile. General Spanish mortgage lenders are giving up to 60% / 70% of the value of a property to foreign buyers. You may be able to find lenders willing to offer an 80% mortgage depending on your financial situation but these are less common.

What Types Of Mortgage Are Available?

The vast majority of mortgages available in Spain are variable mortgages, although interest only and fixed rate mortgages can also be found.

In a variable-rate mortgage, rates are based off the Euribor rates. This can be +X% that is set by the bank and it is subject to the mortgage rates across Europe. This may sound like a more risky solution but Euribor rates as of August 2019 have been at  roughly -0.413%.

What Costs Are Involved In Mortgage?

When taking out a mortgage to buy a property as a non-resident you will be offered a maximum of 70% finance towards the purchase. This means that a further 45% of the cost will need to be covered by you personally (30% remainder of value  + 15% fees and costs of buying property = 45%). The extra 15% is often forgotten about in the purchase process but the banks will take this into consideration when granting a mortgage.

The costs can include but are not exclusive to:

  1. Property Valuation Fee
  2. Mortgage Opening Fee
  3. Mortgage Insurance
  4. Mortgage Early Cancellation Fee
  5. Mortgage Notary Fee
  6. Spanish Stamp Duty
  7. Deed Arrangement Fee
  8. Land Registry Fee
  9. Agent Fees

These are some of the costs that may be incurred when purchasing a property in Spain.

What Are Typical Lengths Of Mortgages?

This can vary greatly depending on bank / lender and the age of an individual. The general length of mortgage being offered currently in Spain is of 20 to 30 years. Longer is very uncommon and shorter time frames would probably require strong proof of income and security.

We hope that this short FAQ about the mortgage process in Spain will help you navigate the application in a much more informed way. If you have any further questions or would like information about our mortgage partners then please contact info@marrosgroup.com.