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Palmera Estates has teamed up with Spanish Solutions and Spanish Mortgage Services to assist you in every aspect of the buying process. You will find below some Frequently Asked Questions and details of the services available. After you have read the FAQs you may feel that the process of buying is rather daunting. Don't worry! You will be personally guided through the process from beginning to end.

Frequently Asked Questions

Financial Solutions

In Association with Spanish Mortgage Services — The Mortgage Professionals

Mortgage Guide
Mortgages Available
Documents Required
Mortgage Application Form

1. The Costs

Q: I am thinking about buying a property in Spain. What are the costs involved?

A: The costs of buying a house depend on whether the house is a new build property or a re-sale. In all cases, on top of the purchase price, you will need to pay the Notary Fees and Registration. After this, there are taxes due dependant on the house type, as detailed.

NOTARY FEES
This is the charge that the Notary office will make for the purchasing/selling process and all paperwork that they are required to produce. In effect, this covers the amending and printing of the Escritura (Title Deeds) and the Notary witnessing the signing of the new Escritura.
REGISTRATION
The Land Registry will make a charge for the registering of the change of ownership details of the property.
IVA: New Build Properties
IVA is paid directly to the builder, either in stages with the payments or at the final payment, at a rate of 7%.
ACTOS JURIDICOS DOCUMENTADOS: New Build Properties
This is a tax levied for the administration involved in the registration of new build properties. It is calculated at 1% of the value of the house as stated on the Escritura (Title Deeds).
IMPUESTO DE TRANSMISIONES: Re-Sale Properties
This is calculated at 7% of the value of the house as stated on the Escritura (Title Deeds).

In brief, it is generally recommended to add 10%-12% for taxes and costs, over and above the actual purchase price of the house.

2. Documents Required

Q: What documents will I need to purchase a property in Spain?

A: In order to make the tax payments, a Foreign Individual Identification Number (NIE: Numero de Identificacion de Extranjero) is required by all purchasers of property. In the past, it was not necessary to have an NIE number to buy property as the passport number was used in place of this.

Due to a recent change in the law, sellers of property must also have NIE numbers.

For both parties (buyers & sellers), if they are not in possession of an NIE Number on the day of the signing of the Escritura (Title Deeds), the NIE number must be obtained within 30 days of this date in order to pay the taxes as outlined previously. If the period to obtain the NIE number extends over 30 days, interest will be added to the amount to pay.

If you are in need of an NIE number, Spanish Solutions will assist with the application process for this.

3. The Legal Process (Notary)

Q: What takes place at the Notary office?

A: Different purchase processes in Spain take place at a Notary, the equivalent of a Solicitor's office in the UK and Ireland. Appointments are made for the required time and if the persons completing a transaction are not Spanish speakers, a translator is required to be present at the same time. Spanish Solutions can offer assistance, translation and representation with all Notary processes.

In all cases, it is advisable to have a representative with you at the Notary on the day of the signing that can translate the information easily and clearly to you, and also guide you through the process.

In the case of a private purchase, or simply to have an independent advisor who does not have a vested interest in the process, the buyers and the sellers may elect to use a Solicitor or Fiscal Representative.

Spanish Solutions can provide impartial representation and translation for Notary processes and assistance with all elements of purchasing a property, including the registration of the property, payment of taxes and in the case of re-sale properties, informing all the utility companies of the new ownership.

4. Purchasing/Selling Process

Q: What is the Purchasing/Selling process?

A: To complete the transaction of buying/selling a house, many people are required to be present - the Notary, the buyers, the sellers, the buyer's bank (if a mortgage is required) and the seller's bank (if they have a mortgage that has to be cancelled). That means a lot of people to get organised for the same day with different purposes.

In certain circumstances, the buyer or the seller will give Power of Attorney to a third person, meaning that the buyer or seller does not have to be present on the day of the transaction, however the person who holds Power of Attorney must be there to represent them. Spanish Solutions can hold Power of Attorney for clients wishing representation.

The new Escritura (Title Deeds) is printed and should be translated to the buyers and sellers. Then both parties present themselves in front of the Notary, who will read the Escritura again, and if everyone is in agreement, the Escritura is signed by the purchasers, the sellers, the translator and the Notary.

Once everything is signed at the notary, then all the legal fees have to be paid in order to get the title deeds registered (this process may take from 4 to 6 months).

If there is a Spanish mortgage on the property, then it must be the bank's solicitor who deals with the title and mortgage deeds registration.

Spanish Solutions can provide the same Solicitor that we use for our own legal and fiscal matters to register property, translate at the Notary and to assist with the payment of taxes due.

5. Power of Attorney

Q: What does Power of Attorney (POA) mean?

A: This is the process whereby you nominate someone to transact on your behalf, for example to buy or sell houses, open bank accounts and sign documents.

This can be between partners and on a reciprocal basis, giving both equal rights to effect transactions on behalf of each other. Also, this can be arranged for a third party, meaning that the purchasers/sellers of properties do not need to be present at the Notary when the sale takes place.

Power of Attorney can be given to one or two persons, for example, meaning that if one person cannot attend the signing for a property, the second person can go in their place and both represent the original buyer/seller. Spanish Solutions can offer this type of representation.

The POA takes place in the Notary, in front of the people transferring powers and a translator. The document can be produced in Spanish, or in Spanish and English.

POA can be arranged with an expiry date, and after this date the document becomes invalid. This means that the person holding POA can only transact on behalf of the individual for a limited period. If POA is granted for an indefinite period of time, the same people have to return to the Notary when they desire to revoke the Power.

It should be stressed that this is an important document and whilst effective for the processes it covers, whenever the document is no longer required, the best action is to then cancel the same.

6. Taxation (Non-Residents and Residents)

Q: What taxes am I liable to pay and how can I pay them?

A: There are three annual taxes which all home owners in Spain must pay:-

INDIVIDUAL INCOME TAX
PROPERTY TAX (WEALTH TAX)
REAL ESTATE TAX (SUMA)

The actual amount applicable for each tax is dependant on whether the home owner is a Resident or Non-Resident in Spain.

Importantly, when a property is owned by a married couple or various people, each person listed on the Escritura (Title Deeds) is defined as an independent tax payer, which means that an individual tax return must be filed separately by each of the co-owners.

For Non-Residents (i.e. anyone who has not applied for Residencia, or who has been working legally in Spain for less than 183 days) a flat rate of 25% is applicable when completing Individual Income Tax. It should be noted that this tax is obligatory and irrespective of whether you pay taxes in your home country. Taxes for Non-Residents require to be filed around Jan - Jun of each year.

Residents pay a variable level of Individual Income Tax in accordance with their income and should file their returns around May/June of each year. They are also liable for Wealth Tax when the declared value of the house exceeds the tax free allowance given by the Spanish Tax Department (108,000€ per person on the Escritura).

In order to pay the taxes, the Non-Resident must be in possession of a Foreign Individual Identification Number (NIE: Numero de Identificacion de Extranjero), which can be obtained directly or Spanish Solutions can organise this for you. It is mandatory for all property owners to obtain this Identification Number.

A Resident must have a valid Residencia Card. However if you have not obtained Residencia but can prove that you have paid your Social Security contributions for a minimum of 183 days, you can qualify to pay the same Individual Income Tax level as awarded to Residents in Spain. Spanish Solutions can help you apply for a Residencia or assist with proving your status as a Resident.

INDIVIDUAL INCOME TAX

Based on property used by the owner(s) as their own dwelling, this tax is based on an estimated income calculated as follows:

On a general basis it is 2% of the value of the property which appears on the Real Estate Tax receipt, "IBI"
In the case of property whose value has been modified from January 1, 1994 onwards, the percentage has been set at 1.1%
The tax is calculated annually based on property owned on December 31 of each year and paid around June of the following year
Tax rate: 25%
The taxable amount is therefore 25% of the estimated income

Calculation and payment of the Individual Income Tax can actually be completed directly by individuals, however, like the Inland Revenue system in the UK and Ireland, this can be a complicated business from obtaining the forms, to completing the same.

PROPERTY TAX (WEALTH TAX)

All home owners* are required to file a return for this tax on estates owned in Spain on December 31 of each year, whatever the value of the estate. A Fiscal Representative must complete and file the paperwork for this with the Delegación de Hacienda Española (the Spanish Treasury Department).

Value: One of the following, whichever is the highest:-

The catastral value (land value according to the Townhall) which appears on the Real Estate Tax receipt, "IBI".
The price or purchase value
The value given by the Administration in an evaluation carried out for other tax reasons

This is the amount for tax assessment, as long as debts or arrears are not outstanding on the property.

The tax due is calculated by applying the tax scale (approved for the corresponding year) to the base amount.

In the case of more than one person being listed on the Title Deeds (Escritura), each person will be liable for their percentage share of this tax.

*Residents require to pay this tax when value exceeds 108,000€ per person

REAL ESTATE TAX (SUMA)

This is a local tax which the local Municipal Council requires for all property owners.

Every property of each municipality is included in a census and a value is assigned (land value or catastral value). Based on the land (catastral) value and on a tax scale established by the municipality, an amount to be paid is obtained.

The notification for this is posted out directly to the property for the relevant period. This notification should then be taken to your local SUMA office and 'traded' for an invoice which can be paid at any of the participating banks. Once paid in the name of the owner of the house, it can then be set up to be paid by direct debit.

Spanish Solutions can provide fiscal advice, assistance and representation with all of these taxes.

7. Spanish Wills

Q: Who needs a Spanish Will?

A: Everyone who has assets in Spain, in the form of property, bank accounts or any asset which they wish to pass on to another person, should make a Will detailing exactly what they wish to happen in the event of death.

Whenever there is more than one person listed on the Escritura (Title Deeds) of a property, a Will should be made by each person.

A Spanish Will is only relative to your assets here in Spain, and would have no legality in any other country.

If you have already made a Will in another country and have specified your property abroad, this may not be recognised as having any legality in Spain. This is due to the difference in the laws governing the manner in which you can leave assets - Spain has a specific manner, which is that immediate family inherit in the first instance, whereas in the UK and Ireland you can elect whomever you wish.

In the case where a Will has been made only in the country of birth, the process of having this recognised in Spain is lengthy and time consuming, and can be expensive as the documents need to be officially translated before the process can be started. After the translations, it could be that the Will is not accepted in Spain if the manner does not follow the Spanish Law for the same.

Q: How do I make one?

A: To solicit a Will in Spain is relatively easy. At Spanish Solutions, we ask for a certain amount of information in advance of reserving the appointment at the Notary. This information is then entered into the document which forms the basis of the Will.

Each person completing a Will needs to be present at the appointment at the Notary. In front of the Notary (a legal official who witnesses documents), the Will is translated, and if everything is in order, all parties (individual, Notary, translator) sign the document. Spanish Solutions can arrange to take you to the Notary office for the appointment.

The original Will is kept at the Notary office, notification is sent to the Registry in Madrid, and an official copy is given to the individual.

Q: What happens if I die without making a Will?

A: In the case that a person dies without making a Will, either in Spain or in their home country, a certificate would need to be obtained from the General Register Office in the home country (there is an separate office for England & Wales, one for Scotland, one for Northern Ireland and one for Ireland).

This certificate then needs to be officially translated in order for the assets to be divided. Without a Will to dictate who will receive, the Spanish law would prevail. This would mean that assets would be inherited in the first instance by the spouse and then by any descendants.

However the taxes that are applicable in this case are much higher than if a Will is already in place.

Spanish Solutions offer assistance and translations in making a Will.

Financial Solutions

In Association with Spanish Mortgage Services — The Mortgage Professionals

Palmera Estates has teamed up with Spanish Mortgage Services to provide you with the essential information to obtaining a mortgage in Spain.

1. Mortgage Guide

Interest rates in Spain are still significantly lower than in the UK and other parts of the world — which means your money could go a lot further than you think. And when it comes to arranging a mortgage, you could be in for a pleasant surprise when you find out how much you can afford.

Before you begin your hunt for your ideal property with Palmera Estates, it is recommended that you take some mortgage advice with Spanish Mortgage Services. They have 20 years of experience in the financial markets of Spain and the UK.

Spanish Mortgage Services offer you a free, no-obligation consultation giving you the chance to see what kind of mortgages are on offer, establish exactly how much you can borrow, what the repayments will cost, the price range of properties within your budget, and the deposit you’ll need. Whatever your circumstances, Spanish Mortgage Services work closely with 104 lenders to tailor mortgages to your individual needs.

2. Mortgages Available

100% MORTGAGES FOR RESIDENTS PURCHASE OR REFINANCE

RE-PAYMENT MORTGAGE at 80% (Capital & Interest)

Up to 80% of the value of the property.
Up to 5 years interest only.
Rates from 4.2%.
Maximum term 35 years.

RE-PAYMENT MORTGAGE at 70% (Capital & Interest)

Up to 70% of the value of the property.
First 15 years as interest only as option.
Rates from 4.1%.
Maximum term 40 years.

INTEREST-ONLY MORTGAGE

40 years interest only facility up to 70% value of the property.
Rates from 4.1%.

SELF CERTIFICATE MORTGAGES

60% value of the property.
30 years terms available.
No age limit.

EQUITY RELEASE MORTGAGE

Up to 60% of the value of the property, including interest only facility.
Maximum term 40 years.

OFF PLAN MORTGAGES

Up to 50% of the final purchase price of the Spanish property.
Up to 2 years-interest only.
Rates from 5%.

BRIDGING MORTGAGES

Own a Spanish property and want to purchase a new one?
3 years to sell your own property.
Bridging mortgage up to 100% of the purchase price.
Interest only available.

3. Documents Required

Copy of your passport.
3 months’ personal bank statements illustrating declared income and outgoings.
3 most recent wage slips, plus your latest P60.
If self-employed:

Audited accounts for the last 2 years.
Last 2 years’ tax returns.
Letter from your accountant confirming your income and tax payments for the previous year.

Proof of any other sources of income that you may wish to borrow against.
Copy of any tenancy agreements on buy-to-let properties.
Details of any pension you may be receiving.

4. Mortgage Application Form

Complete Spanish Mortgage Services’ simple mortgage application form for a quick "in-principle" decision. You will receive a quote with no cost or obligation to proceed.