Released on: September 12, 2008, 9:28 am

Press Release Author: Shaun - Look-Tenerifeproperty

Industry: Real Estate

Press Release Summary: "Purchasing a property is a daunting task even when you do so
in a familiar environment, so when you come to purchase in a foreign country the
doubts and worries are ten fold. We have created a simple guide to the main FAQ´s
that you would need answering when entering into a property purchase"



Press Release Body: THE CONTRACT

Once you have decided on a property, a contract will have to be drafted and you need
to make provisions for the deposit. The standard deposit is 10% of the purchase
price. The deposit is payable upon signing a Purchase/sale Contract or an Option
Contract (Contrato de Compraventa o Opción de Compra), which will include a
completion date and transaction conditions which usually contains an assurance by
the vendors that the property is sold free of charges, tenants and mortgages. We
strongly recommend that independent legal advice is sought with the drafting of the
Option Contract or Purchase/sale contract.

Once both parties have signed this contract and the deposit has been paid, you have
secured the property. This is a binding contract for both sides with penalties for
breaking it or for failing to honour the terms of the contract.


PAYMENT AND SIGNING OF DEEDS:
The next stage is to complete the purchase at the Notary’s office. Usually, within a
month or so, you will be ready to make the final checks before signing the Title
Deed (Escritura Pública de Compraventa) in the presence of a Spanish Notary
(Notario) who certifies that the contract is officially made. The notary does not
certify that all statements are true, only that the parties have sworn to them.
There you will be required to pay the balance of the purchase money, taxes and
Notary’s fees.

NOTARY CHARGES:
These are collected by the Notary for preparing the deed and presiding of its
signing. His fees are fixed by law and are based according to the value of the
property.
Please note that all professional fees including the notary’s and land registry
charges are subject to 16% VAT.
PROPERTY REGISTRATION FEES:
Registration fees are charged by the Land Registry Office to inscribe the new deed
into your name. These are based on the official registered value of the property.
The length and complexity of the deed and other factors are also considered. The
fees do not exceed 1% of the registered value. It is not advisable to try and do
this yourself unless you are experienced and speak Spanish fluently.
TAXES: (PROPERTY TRANSFER TAX OR IGIC (VAT)
The property transfer tax is levied on resale properties. The General rate for this
tax is 6% but in some regions, such as the Balearic Islands, Cataluña and Valencia,
etc. the rate is established at 7%. This should be verified beforehand.
If you purchase a newly built property from a developer you will pay a different tax
called “I.V.A.” (VAT) which is charged at 7% of the purchase price plus 0,5% stamp
duty.


LOCAL MUNICIPAL TAX (PLUSVALÍA):
This tax is based on an officially assessed increase in the value of the land since
the last time the property was sold. This can be quite small if purchasing an
apartment, but expensive on a villa with a large plot, which has not changed hands
for years. Find out the exact amount from the Town Hall. Do not confuse this tax
with the vendor’s capital gains tax on his profit on the sale.
In accordance with Spanish law, the purchaser is responsible for transfer tax or
(I.V.A. + stamp duty when buying from a developer), plus Registration Fees and
Notary’s Fees.

OUTSTANDING DEBTS:
If there are any debts, outstanding mortgages, unpaid Community fees etc, then you
should make sure that the debts are paid by the vendor before paying him the
purchase price and signing the Deed of Purchase/sale, or you can deduct the amounts
owed by the vendor from the purchase price to be paid and settle the debts on his
behalf. This should be agreed between the parties.


WITHHOLDING TAX:

If you buy a property from a non-resident person or a company, you must withhold a
3% of the value declared on the deed and pay that amount to the Spanish Treasury
(Tesoro Público). The Spanish Treasury makes it the purchaser’s responsibility that
this amount (3% retention of the purchase price) is paid to the Tax Authority on
account of any Capital Gains tax generated by the vendor with the sale.


Web Site: http://www.look-tenerifeproperty.com

Contact Details: Look-TenerifeProperty
Carr del sur 130
los Cristianos - Tenerife - Spain
press@look-tenerifeproperty.com