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Buying Property in Spain Pannone

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Buying Property in Spain Pannone Powered By Docstoc
					A BEGINNER’S
GUIDE TO
PURCHASING
PROPERTY IN SPAIN




www.pannone.com
A beginner’s guide to purchasing property in Spain




                                                                          CONTENTS



                                                     Introduction - Buying a property in Spain .................................................................................................................................... 4
                                                     Types of purchase .......................................................................................................................................................................... 5
                                                       Existing Properties
                                                       New Properties (“off plan”)
                                                       Auction
                                                       Timeshare
                                                     NIE - Número de Identificación de Extranjeros (Foreigners’ identification number) ................................................................ 6
                                                     Stages of a purchase....................................................................................................................................................................... 7
                                                     Preliminary Contracts: ................................................................................................................................................................... 8
                                                       Existing Properties
                                                       New Properties (“off plan”)
                                                     Legal checks: ................................................................................................................................................................................... 9
                                                       Title search
                                                       Planning consent
                                                       Bank guarantees
                                                       Licence of First Occupation
                                                       Charges
                                                       Coastal laws and land grab
                                                     Completion and the Deed of Sale (Escritura de Compraventa) .................................................................................................. 11
                                                     Power of attorney: ......................................................................................................................................................................... 12
                                                       Notarisation
                                                       Legalisation (apostille)
                                                     Ownership structures: .................................................................................................................................................................... 14
                                                       Individual
                                                       Company
                                                     Inheritance Laws ............................................................................................................................................................................ 16
                                                       Domicile and Residence
                                                     Wills and Estate Planning .............................................................................................................................................................. 18
                                                       Gift of property
                                                       Life interest
                                                     Mortgages ....................................................................................................................................................................................... 20
                                                     Taxes ................................................................................................................................................................................................ 21
                                                       Income tax (Impuesto sobre la Renta de no residentes)
                                                       IBI (Impuesto sobre bienes inmuebles)
                                                       Wealth tax (Impuesto sobre el patrimonio)
“Prompt and efficient. You have been                   IVA (Spanish VAT)
                                                       Stamp duty
the best firm we have used. You                        Transfer tax
                                                       Capital Gains tax (CGT)

genuinely cared about our situation                    Plusvalía
                                                       Inheritance tax (IHT)

and worked to help us. Thank you.”                     Gift tax
                                                       Tax Summary table
                                                     Costs and Expenses ........................................................................................................................................................................ 28
                                                     Final Word ....................................................................................................................................................................................... 29
Pannone Client                                         Conversion Guide
                                                     The Pannone LLP Service ............................................................................................................................................................... 31
                                                     Annexes ........................................................................................................................................................................................... 32
                                                       General Advice and Tips for Buyers of property in Spain
                                                                                                                                                                                                                                                                 3
                                                     NIE application form ...................................................................................................................................................................... 34
A beginner’s guide to purchasing property in Spain




BUYING A PROPERTY                                                                                                                     TYPES OF PURCHASE
IN SPAIN


Spain has a surface of over 195,000 square miles (500,000 km2) and almost
3,084 miles (5,000 km) of coastline. Though more than twice the size of
Great Britain, its population is roughly one third smaller.

A country of infinite variety                        existing country property, villa or an   differ from those with which they       EXISTING PROPERTIES                    balance paid only at completion.         TIMESHARE
and character, coupled with                          apartment in a seaside or mountain       are familiar.                           You may decide to buy an existing                                               A timeshare is a form of ownership
an agreeable climate, it is not                      development.                                                                     property from a private individual     Completion of the sale cannot take       or right to the use of a property
surprising that so many people buy                                                            In the following pages, we briefly      or company that has been already       place until the actual property is       most often an apartment in a co-
second homes there or move to                        Despite occasional bad press and         outline some of these differences       been built for some time and owned     built. The length of time can vary       ownership development where
live there permanently. Outside                      the recent downturn during the           and identify the main pitfalls. This    and occupied by previous owners        greatly and the contract period is       multiple parties hold rights to
the large cities, the relative under-                recession, buying a property in Spain    introductory booklet is not, however,   (segunda mano).                        usually between 1 to 3 years before      use the same property and each
population of Spain means that                       need not be a traumatic or overly-       intended to be a comprehensive                                                 the property is completed.               timeshare owner is allotted a period
these visitors or new residents                      worrying exercise provided that the      guide and buyers should therefore       In this case the actual purchase                                                of time. These were once very
are easily accommodated and                          buyer understands and accepts that       obtain individual advice before         could be completed within an agreed    Your personal lawyer should check        popular but this form of ownership
welcomed, whether they buy an                        the legal procedures in Spain may        embarking upon any transaction.         timescale by both parties (seller      that all necessary building licences     has diminished in popularity over
                                                                                                                                      and buyer) after checks have been      and permits are in place and that        recent years possibly as a result
                                                                                                                                      carried out to confirm that the        you also receive a bank guarantee        of bad publicity and a change in
                                                                                                                                      property complies with the existing    or insurance certificate which           preference to buyers wishing to
                                                                                                                                      local building regulations and that    protects your deposit and instalment     own the freehold, benefit from year
                                                                                                                                      the seller is up-to-date with the      payments so that these are repaid        round holidays, permanent use
                                                                                                                                      payment of local taxes, community      in the event that the property           or potential rental income. Extra
                                                                                                                                      of owners’ fees (if the property is    construction is not completed.           care should also be taken on this
                                                                                                                                      part of a complex or development)                                               type of purchase owing to the legal
                                                                                                                                      and all utilities.                     AUCTION                                  implications of owning a share in the
                                                                                                                                                                             Properties can be bought at an           property only and potential issues
                                                                                                                                      NEW PROPERTIES (“OFF PLAN”)            auction also and this has increased      when trying to sell this as there may
                                                                                                                                      These are generally properties under   in popularity during the economic        not be as many buyers prepared
                                                                                                                                      construction or recently built and     recession period with the growth in      to invest in a share ownership
                                                                                                                                      not previously owned. Some buyers      the number of distressed properties      structure.
                                                                                                                                      prefer these as they can specify to    available. Extra care and advice
                                                                                                                                      some degree their own requirements     should be taken in such purchases
                                                                                                                                      and design input. Many believe         as there may be charges and other
                                                                                                                                      this type of property has a higher     encumbrances attached to the
                                                                                                                                      potential investment or return as      property and independent legal
                                                                                                                                      they only pay a relatively small,      representation is essential as such
                                                                                                                                      pre-agreed deposit at the outset       properties are acquired at the buyer’s
                                                                                                                                      followed by instalment payments,       risk. It would also be necessary
                                                                                                                                      agreed with the developer, whilst      to have finance in place and
                                                                                                                                      the property is being built with the   immediately available.

                                                                                                                                                                                                                                                              5
A beginner’s guide to purchasing property in Spain




NIE - NÚMERO DE                                                                                                                     STAGES OF A PURCHASE
IDENTIFICACIÓN DE
EXTRANJEROS
(Foreigners’ identification number)




The NIE is an identification and tax                 subsequently result in postponed        between issuing on the same day or     As in the United Kingdom, the           may vary greatly in content and      Completion takes place in the
number which is required and used                    completion dates.                       a few days later.                      purchase of Spanish property is         appearance.                          presence of a local Notario (Spanish
in all dealings with the Spanish tax                                                                                                usually achieved in two stages; a                                            Public Official) and with signature
authorities. We recommend that                       WHAT DOES A NIE LOOK LIKE?              In person, in the United Kingdom       form of preliminary contract and        Before signing any paperwork,        of the purchase deed (Escritura de
you apply for your NIE as the initial                The NIE document itself is an A4        at one of the Consulates (London       later by signature of a completion      the buyer should ensure that he      compraventa).
step as early as possible, before                    sized piece of paper on which are       and Edinburgh).                        deed. Here, however, the similarity     understands the document offered
viewing properties, when considering                 detailed the holder’s full name,        You will need to attend one of the     ends. The preliminary contract          to him and that it contains all      Once the deeds are signed, the
undertaking a purchase in Spain.                     date of birth and NIE (foreigner’s      consulates in person to submit your    used in England, for example, is very   the appropriate clauses for his      relevant taxes must be paid before
                                                     ID number). It will bear an official    application. We understand that        different from the types of contract    protection. Pannone LLP can review   the deed can be duly registered at
This ID number is legally required for               stamp. The number (NIE) itself          this process is currently taking an    used in Spain.                          the contract, explain its terms to   the local land registry where the
non-Spanish nationals for a variety                  starts with a letter and is followed    average of 1 to 3 months once the                                              you and negotiate with the seller    property is located.
of purposes; whether you wish to                     by seven numbers and ends with a        signed NIE application form and        In Spain there is no one single form    should it be necessary to request
buy land, have inherited a property in               letter eg A1234567Z.                    other documents have been stamped      of preliminary contract used for        any amendments or additions for
Spain, want to apply for a mortgage                                                          and sent to Madrid for processing.     all sales and the different types       your protection.
or open a bank account, you will
need a NIE.                                          THE APPLICATION                         By power of attorney, in the
                                                     An application for a NIE can be made    United Kingdom
A separate number is required                        in various ways:                        Contact us for further information.
for each individual, named buyer,
beneficiary or executor of an estate,                In person in Spain at a national        The process of obtaining the NIE,
before they can sign a public deed in                police station.                         though relatively easy, can be time-
the presence of a Spanish Notario.                   The police station attended should      consuming and costly, whichever
Consequently, it is just as important                be the one most closely located to      option is taken. Pannone LLP can
to obtain this ID number as early                    where you have or intend to have        assist with this process.
as possible in the course of any                     your property in Spain. This can
transaction in Spain.                                involve the applicant queuing for       NIE registration and activation
                                                     several hours at the station in order   Once NIEs are issued they need to
Many people do not know that they                    to submit the application in person     be registered and activated with
need a NIE, often through being                      before being given a receipt and        the Spanish tax office. As part of
poorly advised. Residents and non-                   having to return in person to the       the Pannone NIE service, we can
resident foreigners alike need such a                station to collect the NIE document     arrange for this to be carried out
number to carry out any activity in                  in due course. The time to process      on your behalf by a gestor (form of
Spain which has tax consequences.                    the application will depend on the      tax agent/official normally involved
Delays in obtaining this ID number                   local police station that deals with    in property transfers in Spain to
can have serious consequences and                    the application and can vary            deal with payment of taxes and
                                                                                             registration of deeds).
                                                                                                                                                                                                                                                        7
A beginner’s guide to purchasing property in Spain




PRELIMINARY CONTRACTS                                                                        LEGAL CHECKS




EXISTING PROPERTIES                                  buyer has not decided whether or        LAND / TITLE SEARCHES                    changes to your property once you        These monies should be held in a
Once a price is agreed a verbal                      not to purchase the property as         These would be carried out by your       have bought it. If you fail to get the   special bank account opened for
contract exists and you may then be                  it would give him the possibility       independent lawyer, if appointed,        appropriate planning permission, you     this purpose and separate from the
invited by an estate agent or seller                 of withdrawing from the sale by         before you enter into any private        will not have the correct paperwork      developer’s general account.
to sign a document usually entitled                  forfeiting the fee paid.                contract (stage 1).                      which would be essential in the
contrato privado de compraventa.                                                                                                      event of a resale. Without this it       It should be expressly stated in the
Such a document frequently consists                  NEW (“OFF PLAN”) PROPERTIES             Your lawyer will verify that the         could be difficult or impossible to      contract including specific clauses
of a printed form with sections                      When purchasing a new property          person selling the property to you is    re-sell the property.                    regarding the guarantee and the
completed by the agent. There are                    from a developer, you would be          the registered legal owner. This is                                               deposit.
many such contracts in operation,                    invited to sign their purchase          not always the case and, in Spain,       Always ensure your lawyer has
some being more favourable to the                    contract and that there is              unregistered property still exists.      checked that the property complies       A buyer should be given the bank
buyer than others.                                   little room to negotiate the            Your legal representative can also       with local regulations and is not in     guarantee or insurance certificate
                                                     terms. Nevertheless, we always          verify the description of the property   breach of planning laws. Should          with details of the amount of money
It is advisable not to sign any                      advise buyers to have the terms         and any charges and encumbrances         you fail to do so, you could discover    in question.
document without first having it                     and conditions checked by an            registered.                              that your property did not have or
checked by an independent solicitor                  independent lawyer to ensure                                                     had not been built in line with the      LICENCE OF FIRST OCCUPATION
of your choice and/or prior to any                   that there are no onerous clauses       The Notario will also ask for a land     consent granted. The ultimate            The Licence of First Occupation,
surveys and legal checks being                       of which you are unaware and to         registry search against the property,    sanction for such non-compliance         Licencia de primera ocupación, is
carried out on your behalf.                          negotiate, where possible, with the     however, this will be carried out and    would be demolition of the property      a licence issued by the Town Hall
                                                     developer the addition of any special   provided at completion (stage 2).        at your expense!                         which is granted once building works
Once signed, these contracts are                     clauses should this be needed to                                                                                          have been completed, and allows
binding. In such cases the other                     protect your interest.                  PLANNING CONSENT                         BANK GUARANTEES                          buyers to live in a property. If one is
party can force you to complete the                                                          Spain, in common with most               The Aval Bancario (Bank Guarantee)       not issued it could be an indication
sale and it is not always possible to                The contracts in use include            European countries, has strict           and insurance contract were              of underlying legal problems.
get out of the contract simply by                    contratos de arras (reservation         planning laws. Many buyers               established by law in 1968 with
forfeiting your deposit.                             contracts) and contratos de             unwittingly fail to check that their     the intention of protecting buyers       This licence confirms that the
                                                     compraventa (sale contracts).           property does not fall foul of the       acquiring off plan property.             property has been completed and
In some cases the sellers may                        Provision is made for deposits          planning regulations and can find        The developer must guarantee the         that complies with the original
offer you an “option to purchase”                    and stage payments to be held,          themselves in difficulties with their    return of the deposited amounts          building licence issued to build the
(contrato de opción de compra)                       in specially-designated bank            local town hall.                         plus interest, through an insurance      property and that the property is
whereby the buyer pays a fee                         accounts, for the protection of the                                              contract or by a bank guarantee,         habitable and fit for use.
to have the right to purchase a                      buyer; the developer or seller also     Regulations vary from town to town       if construction work does not
property rather than entering into a                 has an obligation to provide bank       and co-ownerships so, if in doubt,       commence or finish within the            It is possible to complete a purchase
formal purchase agreement. These                     guarantees or an insurance policy to    check with your local town hall. The     agreed timescale.                        without this Licence but without it
contracts may be of interest if the                  protect such deposits and payments.     same applies if you wish to make                                                  you may be unable to have access

                                                                                                                                                                                                                         9
A beginner’s guide to purchasing property in Spain




                                                                                              THE DEED OF SALE
                                                                                              Escritura de Compraventa




Legal Checks cont'd



to utilities at the property and be an               agents with the power to force           The second stage of a transfer of       In general, a Spanish Notario will       can be sent to the land registry for
impediment to obtaining a mortgage                   land owners to sell their land at low    ownership is completion formalised      not advise upon or explain the           registration.
other than one offered by the                        prices or to pay high charges for        by signature of the deed of sale.       contents of the deeds in advance
developer.                                           installation of an infrastructure.       Spanish law requires that this deed     to a buyer. Buyers are therefore         The sale is deemed to have taken
                                                                                              be executed in the presence of a        advised to take independent legal        place at this completion stage
Our advice to clients is not to                      This has resulted in many high profile   Notario in Spain.                       advice from suitably experienced         but registration of the deed at the
complete the purchase without such                   cases and scandals in recent times                                               lawyers before any such document         land registry is a key element of
a licence.                                           and numerous protests against            On completion, any deposit paid         is signed. Be very wary of a mere        completion as any buyer will not
                                                     the Valencian regional government        should be taken as part of the          translation of any document as           have the benefit of protection from
CHARGES AND UNPAID BILLS                             which has been taken to the              purchase price. The balance of          this may be insufficient or even         potential third party claims until the
Your independent lawyer should                       European Union.                          monies will be due and from the date    inaccurate. It is unlikely to contain    actual registration formalities are
carry out the aforementioned land                                                             of signature the buyer will be the      an explanation of the actual legal       concluded.
search and checks to see if there                    However, this only affects land          legal owner of and responsible for      meaning and implications of clauses
are any encumbrances, mortgages,                     designated as rural land and,            the property.                           or references to particular Spanish      If taking a mortgage to purchase the
seizures or other limitations or any                 therefore, if you buy a house built on                                           laws. A translator cannot and is not     property your lender will normally
debts arising from a failure to pay                  land legally designated as urban land    For many, it is not convenient or       employed to identify missing clauses     deal with the payment of the taxes
the dwelling tax (IBI) or communal                   this should not be a problem.            possible to go to Spain to attend       which should be added for the            and registration of the deeds to
charges.                                                                                      the Notario’s office just to sign       buyer’s protection nor to explain the    make sure that they register their
                                                     Another check to be carried out if       the Spanish deed of sale. In such       legal implications of the documents      interest and charge on the property,
If the property forms part of a                      you are buying near the seaside is to    circumstances, they can grant power     they translate.                          however, your lawyer will be able to
co-ownership, he should also                         make sure that the Spanish Coastal       of attorney to a third party, who                                                supervise this and confirm the actual
request a certificate issued by the                  law (Ley de Costas) passed in 1988       could be a friend, their lawyer or a    The original signed deed is retained     registration for you.
administrator of the community of                    does not affect your property. This      gestor, for example, to sign the deed   by the Notario in his archives and an
owners as proof that the seller has                  was approved with the aim of             of sale in their name and on their      official copy (copia auténtica) of the
made all payments re communal                        protecting the Spanish coastline and     behalf.                                 same is produced which is then sent
charges due to that date or                          of providing public access to this.                                              to the land registry for registration,
completion. A buyer can sign a deed                  Therefore, it prohibits construction     In the case of properties forming       recording ownership of the property
of sale without this but it would be                 within certain limits and also           part of a multiple development          in the name of the buyer and new
at his own risk.                                     establishes some limitations on the      such as an apartment block, the         owner. The Notario can inform
                                                     actual buildings.                        Notario will also draw up estatutos     the land registry electronically of
COASTAL LAWS AND LAND GRAB                                                                    de la comunidad or co-ownership         the sale; he will not, however, deal
In Valencia the so called “land-grab”                                                         rules. These are often lengthy and      with the actual registration of the
law (Ley Reguladora de Actividades                                                            complicated documents.                  deed on behalf of the buyer. Your
Urbanísticas), permits private                                                                                                        lawyer should organise payment of
developers to act as urbanisation                                                                                                     the necessary taxes before the deed

                                                                                                                                                                                                                        11
A beginner’s guide to purchasing property in Spain




 POWER OF ATTORNEY




 To avoid having to travel to Spain                  broadly drafted powers of attorney        (signed) in the presence of the            document copies is a frequent
 purely for the signature of the deeds,              where the person granting the power       notary who will in turn confirm that       requirement. Once a document has
 buyers may opt to sign a Spanish or                 gives authority to his representative     it was duly signed in his presence         been notarised by a Notary Public,
 bilingual power of attorney in the                  to buy any properties at any price.       and he will also sign, stamp and/or        it may need to be legalised. In the
 UK, Poder notarial de compraventa,                  Unless the buyer is happy with this       seal the deed.                             UK, this means that the Notary’s
 in the presence of a Notary Public.                 or there is any specific reason behind                                               signature and seal are certified by
                                                     it we advise our clients to avoid         Though the practice is less common         the Foreign and Commonwealth
 The requirement for it to be signed                 such generic powers which are open        today, the notarised deed and              Office. Once satisfied as to such
 in the presence of a UK Notary                      to misuse so that they are better         attachments may be bound or                authenticity an apostille (legalisation
 arises as a result of the Spanish                   protected and with greater control        sewn with ribbon or tape, with the         certificate) will be attached to the
 legal requirement that a power of                   of the powers granted.                    notary’s wafer seal (paper or waxed)       document.
 attorney be signed in the presence                                                            impressed over the ends of the
 of a Notario; this public official                  Before a power of attorney can be         ribbon to prevent the possibility of       If the country in which it will be
 confirms the identity of the person                 used in Spain it also needs to be         pages being substituted without            used is not party to The Hague
 granting the power of attorney and                  duly legalised by the Foreign and         breaking the seal or binding. The          Convention, the notarised and
 the legality of the document.                       Commonwealth Office with the              notary may also impress his seal on        apostilled may need to be legalised
                                                     apostille in accordance with The          each individual page.                      by the Consulate of said country.
 A power of attorney or proxy                        Hague Convention.
 appoints a third party (often a friend                                                        Once notarised, if the deed is to
 of the buyer who is conveniently                    NOTARISATION                              be used in Spain, it will need to be
 resident in Spain or more commonly                  Notarisation is the act of a notary       legalised.
 a gestor, agent or lawyer) to sign the              public and is authenticated by his
 deed of sale on behalf of the buyer                 signature and official seal, certifying   LEGALISATION (“APOSTILLE”)
 in the Notario’s office at a time                   the due execution in his presence of      An Apostille is an official legalisation
 convenient to the Notario and to the                a deed, contract or other document        certificate applied to documents
 seller.                                             or verifying a fact of which the          by the Foreign and Commonwealth
                                                     notary public has certain knowledge       Office (FCO) so that they will be
 We would normally advise that any                   eg the identity of the signatory.         valid for international use and
 power of attorney be as specific as                 This formality is often required for      recognised in member states
 possible and that it should contain                 documents which are to be used            without further legalisation in
 details of the property to be bought                overseas or for certifying document       accordance with the 1961 Hague
 together with the price (or at least                copies as authentic copies.               Convention.
 the maximum that you are prepared
 to pay for the property) so that you                In the case of a power of attorney,       Notarisation of documents to be
 are protected. We often see very                    the document must be executed             used overseas or for certifying

                                                                                                                                                                                    13
A beginner’s guide to purchasing property in Spain




OWNERSHIP STRUCTURES




The structure or title is an important               property to pass directly to children    The company vehicle has for a
aspect of the purchase to be                         on death of an owner could take          long time been put forward as the
considered at the earliest stages,                   control (and potentially profits on      panacea to reduce any potential
before any contracts are entered                     sale) away from a surviving spouse.      Spanish inheritance tax liability,
into. The reason for this is that a                                                           however, there are some important
change of ownership structure at a                   Every case is different and requires     tax considerations to be taken into
later date, though not necessarily                   specific legal and tax advice both       account from a UK perspective and
impossible, may be an expensive                      in the UK and Spain; UK domiciled        so it would be wrong to assume that
exercise as the Spanish tax                          owners would need to consider any        this is the best vehicle to purchase a
authorities normally tax any transfer                impact on their potential UK tax         Spanish property.
of ownership when property changes                   liability.
hands.                                                                                        Only in very specific cases, might it
                                                     Ownership in life interest (usufructo)   be advisable to purchase a property
INDIVIDUALS                                          could help reduce a future               through a company rather than in
This is normally the most common                     inheritance liability but UK tax         an individual’s name and it would be
way of purchasing property in Spain                  advice would be required before this     necessary to study all the available
where the actual owners register the                 structure is put in place re Spanish     options to establish whether this
property in their personal names.                    property to ensure that it did not       was an appropriate choice.
                                                     impact negatively on UK tax liability.
The property could be bought in a
sole name, jointly with a spouse/                    COMPANY PURCHASE
friend, with children or by a group of               The decision to purchase a property
people.                                              in the name of a company is a
                                                     complex issue and would need to be
A possible disadvantage to buying                    investigated looking at the particular
the property in a sole name is the                   circumstances of the individual case.
potential future inheritance tax
liability on the whole value of the                  There have been numerous different
property upon the owner’s death.                     options in the past being by way
Including a spouse or children as                    of an off-shore company which
registered joint owners may help                     would have a higher tax burden in
reduce this liability in the future but              Spain, a SL (Spanish limited liability
it is also important to bear in mind                 company) or an English limited
that they would be joint owners with                 company. All have tax implications.
rights of ownership and allowing

                                                                                                                                       15
A beginner’s guide to purchasing property in Spain




INHERITANCE LAWS
AND OWNERSHIP




It is always prudent to plan ahead                   can be open to debate. Indeed,           DOMICILE AND RESIDENCE                necessarily consider this before         consciously severing many of their        being ordinarily resident and vice
and consider how overseas laws                       in certain cases, the Spanish            In many countries the terms           they leave the UK but it is worth        ties to their domicile of origin.         versa. Expert, specialist tax advice
could affect your estate once you                    courts have applied Spanish law          “residence” and “domicile” are        considering certain key factors as a     People often mistakenly believe that      is essential in order to be certain of
are gone in order to protect your                    to distribute a deceased English         interchangeable referring to                                                   they have changed domicile when,          a person’s position both at home
loved ones. Fortunately, in general,                 owner’s assets. This therefore needs     one’s home but, in common law         UK ex-pat’s continuing liability to      legally, they have not.                   and abroad.
English law can apply to the                         to be considered at the earliest stage   jurisdictions, including for UK       UK tax will depend on his residence,
succession of an English national                    possible by existing or potential non-   nationals, they are different legal   ordinary residence and domicile          Domicile of Dependency: Children          A person’s country of domicile and
who has property in Spain.                                                                    concepts and can significantly        status.                                  aged under 16, would acquire a            their residence, whether these are
                                                     Spanish owners of property in Spain.     impact on their tax liability.                                                 “domicile of dependency” which is         both the same or entirely different
This, however, is by no means                        An important point to consider is                                              In the UK, many factors affect           the same as their parents’ but the        locations, can impact considerably
definitive or entirely clear cut and                 domicile and residence.                  Many people relocating abroad         domicile but broadly speaking, this      child’s domicile of origin is still the   on their liability to taxation.
the law applying to such an estate                                                            (“ex-pats”) from the UK do not        is considered to be where you have       domicile acquired at birth (or on
                                                                                                                                    your fixed and permanent home to         adoption) and not necessarily where
                                                                                                                                    which (when absent) you intend           the child is born. Once over the age
                                                                                                                                    to return. Entirely distinct from        of 16, the child can also acquire a
                                                                                                                                    nationality or residence, you can        domicile of choice.
                                                                                                                                    only have one domicile at any given
                                                                                                                                    time.                                    Residence: The definition of
                                                                                                                                                                             residence is no less complicated for
                                                                                                                                    Domicile of Origin: In English law,      tax purposes and once again varies
                                                                                                                                    everyone has a domicile of origin        from country to country. One of the
                                                                                                                                    which is usually that of their father    criteria taken into account in the
                                                                                                                                    (if their parents were married when      UK is a person’s physical presence
                                                                                                                                    they were born) or the domicile of       within the UK during a particular tax
                                                                                                                                    their mother, if not. This remains       year. There are general guidelines
                                                                                                                                    their domicile of origin throughout      regarding this and, if present for 183
                                                                                                                                    their lives and cannot be changed.       days or more, they will be deemed
                                                                                                                                                                             resident. Some countries also
                                                                                                                                    Domicile of Choice: It is possible,      determine residency by reference
                                                                                                                                    however, for a person to acquire a       to other factors, such as home
                                                                                                                                    “domicile of choice” by moving to        ownership, family and financial
                                                                                                                                    live abroad with the intention of        interests. Ordinary residence in
                                                                                                                                    settling there and making it their       the UK, however, requires habitual
                                                                                                                                    permanent home for the rest of           residence in the UK and confusingly
                                                                                                                                    their life. This would usually involve   a person can be resident without

                                                                                                                                                                                                                                                                17
A beginner’s guide to purchasing property in Spain




WILLS AND ESTATE
PLANNING




As previously stated, in general,                    accept a valid English Will or Codicil   A Spanish Will is normally signed in     GIFT OF PROPERTY IN SPAIN                On death, the life interest expires
English law will usually apply to the                that deals with the disposal of          the presence of a Notario Público in     It is also possible to dispose of        and absolute ownership of the
succession of an English national                    Spanish assets.                          Spain, who notarises the Will, retains   Spanish property by way of a lifetime    property reverts to its legal owner
who has property in Spain but this                                                            the original and registers it at the     gift (inter vivos). Tax advice would     eg children from a first marriage. UK
is not set in stone. What is certain                 There is no need to formally register    Madrid Wills Registry.                   be required both in the UK and Spain     tax advice would be required before
is that whether or not the owner is                  a UK Codicil or Will in Spain or to                                               regarding the taxation of the gift.      such a structure be put in place to
resident in Spain, all real, immovable               have them notarised but they must        Where it is not convenient or                                                     ensure that this does not have a
property situated in Spain will                      be validly executed in accordance        possible for a Testator to travel to     LIFE INTEREST OR USUFRUCTO               negative impact on UK estate and
always be subject to Spanish                         with English law.                        Spain to complete these formalities,     This is the right of enjoyment and       tax liability.
inheritance tax and the tax rate can                                                          signature of the Spanish Will            use of a property whilst not the legal
be as high as 81.60%.                                We would advise that any clause          can take place in the presence           owner of the real estate.
                                                     relating to Spanish property is          of a UK Notary Public. In such
Property owners can deal with the                    carefully drafted by a specialist        circumstances, it must then              The person who benefits from this
devolution of their Spanish assets                   Spanish property lawyer in order to      be legalised at the Foreign and          has the right to enjoy the use of the
either in an English Will or Codicil or              avoid any potential future problems      Commonwealth Office in the UK            property for life eg this could be a
in a Spanish Will.                                   regarding the interpretation of the      for use abroad and sent to the Wills     spouse in second marriage.
                                                     English Will or Codicil in Spain.        Registry in Madrid for registration.
It is essential that the Testator
ensures that any Wills made in                       On death, it is usually necessary to
different countries/ jurisdictions                   provide certified or sealed copies
such as both England and Spain,                      and translations of the English Will
do not conflict with each other                      or Codicil and the English Grant
and that they deal with the assets                   of Probate. For this reason, it is
in each country without one Will                     usually more cost-effective to have
inadvertently revoking the other.                    a short Codicil dealing with overseas
                                                     property to translate rather than a
This helps to avoid complications                    potentially lengthy tax planning Will.
regarding the particular law that will               It may also be necessary to provide a
apply to the succession and should                   Certificate of English law.
minimise potential problems at a
later date.                                          Spanish Will (bilingual):
                                                     Many people opt instead to make
English Will or Codicil:                             a Spanish Will dealing with their
In practice, for an English national,                Spanish assets.
the Spanish authorities will normally

                                                                                                                                                                                                                        19
A beginner’s guide to purchasing property in Spain




MORTGAGES                                                                                                                             TAXES




There are numerous differences                       changing in accordance with the          but it would increase costs at the      INCOME TAX                               rateable value or the value for tax     The 8% rate applies to certain goods
between legal procedures in the                      vacillations of the housing market.      time of purchase as notarial, land      If property is let, income tax           purposes that it is given by the tax    and services including the purchase
UK and Spain but the major factor                    In current times of recession, lenders   registry and tax costs in the region    (impuesto sobre la renta) may be due     office). The IBI varies from town to    of a newly built property but, for
is that Spain operates within a                      have considerably tightened up           of 1% 1.5 times the amount of the       in Spain. This must also be declared     town and is normally 0.4% to 1.3% of    2012 only, this has been temporarily
notarial system. Consequently,                       their criteria including not only the    mortgage would be incurred.             in the UK by UK residents and an         the aforementioned cadastral value.     further reduced to 4%.
all documentation in relation to                     loan to value amount but have also                                               allowance granted for the tax paid
mortgages and property must be                       established a more conservative          As in any country, tax must             in Spain.                                WEALTH TAX - EL IMPUESTO                The 4% rate applies to goods
signed in the presence of a Notario.                 valuation system allowing for            unfortunately be paid in Spain also.                                             SOBRE EL PATRIMONIO                     considered to be basic necessities
                                                     potential depreciations and personal     Many people find the property tax       The Spanish tax year follows the         El impuesto sobre el patrimonio         such as certain food and reading
Spanish mortgage interest is mostly                  circumstances.                           is lower than their average rates or    calendar year, running from 1 January    was abolished in Spain in 2008 but      material (newspapers, magazines or
based on the Euribor, the base                                                                council taxes payable in Britain. The   to 31 December. The declaration          reinstated for 2011 and 2012.           books).
interest rate set by the European                    A mortgage on a property could           following are the principal taxes to    and payment is due annually within
Central Bank.                                        reduce any future tax liability (eg      be aware of.                            the month of January for the             Individuals have an allowance of        In addition to the general regime,
                                                     inheritance or annual wealth tax)                                                previous calendar year.                  700,000€ each plus an additional        there are special cases where other
Various types of mortgages are on                                                                                                                                              300,000€ for their main residence       Spanish VAT rates and rules apply
offer including fixed, variable or                                                                                                    For non-residents rental income is       if it is situated in Spain. Therefore   such as travel agencies, antiques and
mixed interest rates whilst interest-                                                                                                 taxable at a flat rate of 24.75% with    a couple purchasing a property          agricultural or livestock production.
only mortgages are not as common                                                                                                      limited deductions. A tax specialist     in Spain would benefit from an
in Spain as in the UK.                                                                                                                or accountant can assist with the        allowance of 700,000€ each but          Some professional activities are
                                                                                                                                      tax return process if required.          would only receive the additional       exempt from Spanish VAT such as
Another aspect to consider is the                                                                                                                                              300,000€ main residence allowance       financial and insurance institutions
personal liability that the person                                                                                                    Even if a property is not let,           if they were Spanish residents and      and agency commissions as well as
taking the mortgage offers. The                                                                                                       owners may find themselves being         not holiday home owners.                doctor’s and dentist’s fees.
borrower not only engages his                                                                                                         charged a deemed rental income
responsibility with regard to the                                                                                                     tax (Rendimientos del Capital            IVA - IMPUESTO SOBRE EL VALOR           In the Canary Islands, a special
mortgage and monies borrowed with                                                                                                     Inmobiliario) of 2% of the cadastral     AÑADIDO (SPANISH VAT)                   tax known as IGIC is applied at a
a guarantee provided by the property                                                                                                  value (valor catastral) or 1.1% if the   Spanish VAT (a sales tax or value       standard rate of 5%. This is the
in Spain but also is personally liable                                                                                                cadastral value was revised after 1      added tax in the UK) is called IVA -    Impuesto General Indirecto Canario.
with his worldwide assets. There are                                                                                                  January 1994.                            impuesto sobre el valor añadido
different proposals being considered                                                                                                                                                                                   A special duty on imports and
at present in Spain on this topic with                                                                                                IBI - IMPUESTO SOBRE BIENES              As of 1st July 2010, the standard       certain goods in the Canary Islands
a potential move towards real estate                                                                                                  INMUEBLES                                rate of IVA is 18% with reduced rates   is also payable. The recent tax
guarantees only so a change in this                                                                                                   This is an annual local tax similar      of 4% and 8% applying to certain        reforms introduced a special VAT
area is something to look out for.                                                                                                    to rates and it is calculated on the     goods or services.                      consolidation regime applicable to
Lending criteria are constantly                                                                                                       cadastral value of a property (the                                               corporate groups.

                                                                                                                                                                                                                                                               21
A beginner’s guide to purchasing property in Spain




 TAXES CONT’D




STAMP DUTY - IMPUESTO                                Capital gains tax in Spain is payable     INHERITANCE TAX                          The following personal allowances are available (per recipient):
DE ACTOS JURÍDICOS                                   on the sale of land or buildings and is   Inheritance tax is paid in Spain by
DOCUMENTADOS                                         called impuesto sobre la renta de no      each beneficiary and not by the
This tax applies to both new                         residentes, ganancia patrimonial.         estate. Therefore beneficiaries are            KINSHIP GROUP                      PEOPLE INCLUDED                                   ALLOWANCE
property purchases where the                                                                   liable to pay inheritance tax in Spain
property is purchased from the                       It is also payable on the sale of         but only for the Spanish assets that      I                      Direct descendants under 21                           15,956.87€
developer and to mortgages. It is                    shares and certain other personal         they will inherit.                                                                                                     + 3,990.72€
calculated at the rate of in the                     property.                                                                                                                                                        for each year under 21
region of 1% of the value of the                                                               It is relatively complicated to                                                                                        Max allowance of = 47,858.59€
property for the purchase and 1% of                  On the sale of a principal residence      calculate and depends on the              II                     Direct descendants over 21, spouse, ascendants        15,956.87€
approximately 1.5 x the value of the                 where the seller has been habitually      value of the estate, the degree of
                                                                                                                                         III                    Other collateral relatives to 2nd and 3rd degree eg   7,993.46€
mortgage.                                            resident up to the time of the sale,      relationship to the deceased and the
                                                                                                                                                                brother, uncle, nephew
                                                     no capital gains tax is due.              pre-existing wealth / assets of the
TRANSFER TAX ITP (IMPUESTO                                                                     beneficiary (tax payer).                  IV                     More remote family or unrelated persons               Nil / 0€
DE TRANSMISIONES                                     Capital gains tax for non residents
PATRIMONIALES)                                       is charged at 21% on any gain made        There are individual allowances for
When purchasing a property from                      and there is a retention of 3% of the     each class of heir and the tax rate
an individual and not directly from a                purchase price which any buyer is,        is progressive, varying from 7.65%
developer, transfer tax applies to the               by law, obliged to retain and pay to      up to a maximum of 34%, though in
transfer and not Spanish VAT (IVA).                  the tax office on account of CGT for      the case of remote relatives or non-
                                                     a non resident seller.                    relatives, the final amount could be
Transfer tax is regulated by each                                                              doubled (the sum could be multiplied
regional government and varies from                  PLUSVALÍA                                 x 2 or more, up to x 2.4).
6% to 8% of the value of the sale.                   This is a local tax, impuesto sobre el
                                                     incremento de valor de los terrenos
The buyer is responsible for the                     de naturaleza urbana, due on a sale
payment and the payment is due on                    or inheritance of a property and is
completion and before registering                    payable by the seller or beneficiary.
the purchase deeds at the land
registry.                                            It varies from town to town and
                                                     is calculated on the increase in
CAPITAL GAINS TAX (CGT) -                            value of the urban land between
IMPUESTO SOBRE LA RENTA DE                           the former acquisition date and the
NO RESIDENTES, GANANCIA                              disposal of the property.
PATRIMONIAL.

                                                                                                                                                                                                                                                      23
A beginner’s guide to purchasing property in Spain




                                                                                                                      TAXES CONT’D




Once the personal allowances are deducted the tax liability is calculated applying the following progressive rates:   The relevant co-efficient which        be requested, if necessary, within       There is no double taxation treaty for
                                                                                                                      takes into account the degree of       certain fixed timescales. The            inheritance tax purposes between
                  BAND (UP TO)                                    TAX RATE %             CUMULATIVE TAX € EURO        relationship with the deceased         penalties for payments outside that      England and Spain but the Revenue
                    € EURO                                                                                            and the beneficiary taxpayer’s         period are time linked and start at      does usually give a credit for
                                                                                                                      pre-existing net wealth (for non-      5% if paid within the following 3        inheritance tax charged by another
                                  7,993.4                                      7.65                     611.50
                                                                                                                      residents, pre-existing net wealth     months. The rate increases to 10%        country on assets situated in that
                              15,980.91                                     8.50                      1,290.43
                                                                                                                      is calculated only on the basis        if the IHT due is paid within the        country.
                             23,968.36                                      9.35                      2,037.26        of Spanish assets) is applied to       following 6 months, 15% if within
                               31,955.81                                   10.20                      2,851.98        calculate the final inheritance tax    12 months or 20% plus interest           GIFT TAX (IHT)
                              39,943.26                                    11.05                      3,734.59        liability.                             thereafter.                              If a lifetime gift is made, the
                                                                                                                                                                                                      beneficiary may be liable to pay
                              47,930.72                                    11.90                      4,685.10
                                                                                                                      Inheritance tax should be paid         Until the taxes are paid it is not       gift tax. Gift tax is determined by
                               55,918.17                                   12.75                      5,703.50        within 6 months of the date of         possible to register the change of       the local tax offices and may vary
                              63,905.62                                    13.60                      6,789.79        death (otherwise further charges and   ownership of the property at the         depending on the area in which the
                              71,893.07                                    14.45                      7,943.98        interests may be charged). A further   land registry nor to receive any funds   property is located.
                              79,880.52                                    15.30                     9,166.06         6 months’ extension can                deposited in a Spanish bank.
                              119,757.67                                   16.15                     15,606.22
                            159,634.83                                     18.70                     23,063.25
                            239,389.13                                     21.25                     40,011.04
                             398,777.54                                    25.50                    80,665.08
                             797,555.08                                    29.75                    199,291.40
                                    excess                                34.00                              -



              PRE-EXISTING NET WEALTH € EURO                                             GROUP
                                                                                I & II      III            IV
                                                     0 — 402,678.11             1.0000     1.5882        2.0000
                                     402,678.11 — 2,007,380.43                  1.0500     1.6676         2.1000
                                 2,007,380.43 — 4,020,770.98                    1.1000     1.7471        2.2000
                                                     > 4,020,770.98             1.2000    1.9059         2.4000


                                                                                                                                                                                                                                               25
A beginner’s guide to purchasing property in Spain




TAX SUMMARY TABLE




                  TAX                                    PAYABLE BY                                    AMOUNT                                      TAX                      PAYABLE BY                                      AMOUNT

Income tax                                      Owner of the property          •	   24.75% of gross rents without any deduction on     Transfer tax                Buyer
Impuesto sobre la renta                                                             rental income                                      •	   New property                                            8% of value of property
                                                UK residents –Do not forget    •	   2% deemed letting income of cadastral (fiscal)          IVA - impuesto sobre                                    In the region of 1% stamp duty
                                                to declare this Spanish             value of property or 1.1% for certain properties        el valor añadido                                        18% for commercial properties, parking spaces or
                                                income to the Revenue also.         for non rented holiday homes                            (Spanish VAT)                                           purchases of building plots from a corporation or
IBI                                             Owner of the property          Contact the local Town Hall for details                                                                              property developer
Impuesto sobre bienes
Inmuebles                                                                                                                                                                                           Canary Islands:
(local Council tax)                                                                                                                                                                                 5% of value of property +
Capital Gains Tax (CGT)                         Seller                         21% for non residents                                                                                                0.75% stamp duty
impuesto sobre las                                                                                                                     •	   Resale                                                  Approx. 6-8% of value of property depending on the
ganancias de capital                            UK residents –Do not forget to 3% of purchase price withheld by buyer and paid              ITP (Impuesto                                           area where property is located.
                                                declare this Spanish income to directly to tax authorities                                  de transmisiones
                                                the Revenue also.              A further payment or refund may be required.                 patrimoniales)                                          6.5% (Canary Islands)
                                                                                                                                       Stamp duty                  Buyer (new property only)        In the region of 1%
Plusvalía                                       Seller                         Contact the local Town Hall for details                 (new property)
(local Capital Gains Tax)                                                                                                              Impuesto sobre Actos
                                                                                                                                       Jurídicos Documentados
                                                                                                                                       (AJD)
                                                                                                                                       Inheritance Tax (IHT)       Each beneficiary                 Progressive rates - depending on relationship of
                                                                                                                                       Impuesto sobre sucesiones                                    beneficiary to deceased
                                                                                                                                                                   UK residents –Do not forget      7.65% - 34% and up to 81.6%
                                                                                                                                                                   to declare this to the Revenue   Allowance of almost 16,000€ for a spouse and direct
                                                                                                                                                                   also.                            descendants.
                                                                                                                                       Gift tax:                   Donee (beneficiary)              Allowances and %vary depending on the areas where
                                                                                                                                                                                                    the property is located.




                                                                                                                                                                                                                                                          27
A beginner’s guide to purchasing property in Spain




COSTS AND EXPENSES                                                                                                   FINAL WORD




                                                                                                                     Purchasing a home in the UK is a major undertaking, financially and
                                                                                                                     emotionally; purchasing in another country with unfamiliar laws and
                                                                                                                     language is equally stressful.
   In addition to tax, there are a number of expenses that will be due in any property transaction in Spain. These   REMEMBER!                             CONVERSION TABLE
   could include any or all of the following:
                                                                                                                     •	   Be sure you know what you             ACRES           HECTARES           METRES          YARDS
                                           CONCEPT                                  AMOUNT                                are signing;
                                                                                                                                                                2.47 acres    1 hectare (ha)    10,000.00 m2
                                                                                                                     •	   Never write anything on a
                                                                                                                          contract unless you are sure         0.247 acres         1 are ( a)     100.00 m2
     Transfer tax (IVA / ITP)                                 See tax table
                                                                                                                          that you understand fully          0.00247 acres    1 centiare (ca)         1.0 m2
     Land Registry fees                                       Variable and usually 0.25% of value of property             both the content and legal
     Notario’s fees                                           Variable and usually 0.5% of value of property              implications of what you are
                                                                                                                          writing;                               1.00 acre                       4 ,046.9 m2    24,840 sq. yds
     Independent legal advisor:
                                                                                                                     •	   Obtain independent legal               0.50 acre                        2 ,023.5 m2   22,420 sq. yds
     •	      Solicitor                                        Variable                                                    advice before signing anything         0.25 acre                        1 ,011.7 m2   21,210 sq. yds
     •	      Abogado                                          Variable                                                    or making an offer
     •	      Gestor                                           Variable
                                                                                                                     ... to ensure that the transaction                                           0.8361 m2           1 sq. yd
     Power of attorney in the UK:
                                                                                                                     proceeds as smoothly and                                                           1 m2    1,1960 sq. yds
     •	      Notarisation fee - Notary public                 Variable (depending on Notary public)                  efficiently as possible.
     •	      Legalisation (apostille)                          £41 approximately
             Foreign and Commonwealth office fee/rapid service
     Surveyor’s fees (if required)                            Variable
     Bank charges                                             Variable
     Mortgage fees                                            Variable
     Estate Agency commission                                 Variable (usually in the region of 2% - 5%)
     Foreign Exchange




                                                                                                                                                                                                                                 29
A beginner’s guide to purchasing property in Spain




                                                     THE PANNONE SERVICE




                                                     This booklet is not intended to be     and inheritance planning, letting      For further information on our
                                                     a comprehensive guide to buying        your Spanish property, etc.            services please contact Pannone
                                                     Spanish property but merely aims to                                           at the address below:
                                                     make the reader aware of some of       Whether you are a private buyer,
                                                     the more important aspects.            a property developer or you are        PANNONE
                                                                                            planning to acquire business or        123 Deansgate,
                                                     Pannone LLP can advise upon all        commercial premises in Spain,          Manchester,
                                                     aspects of the transaction from        Pannone LLP can take the worry out     M3 2BU
                                                     preliminary contract through           of the transaction.
                                                     to completion and can help the                                                Tel: 0161 909 3000
                                                     potential buyer to avoid the           The information contained in this      Fax: 0161 909 4444
                                                     problems which can arise from          booklet is believed to be correct at   Email: spain@pannone.co.uk
                                                     unsatisfactory contract conditions     the time of printing. As, however,     www.pannone.com
                                                     or the unforeseen consequences of      the booklet contains only a brief
                                                     Spanish inheritance law. We liaise     summary of the main provisions of
                                                     with the chosen Notario in Spain at    the law concerning the purchase
                                                     every stage of the transaction and     of property in Spain, Pannone LLP
                                                     aim to ensure that our client does     cannot be held responsible for any
                                                     not sign any document without fully    errors or omissions. Readers are
                                                     understanding its contents.            therefore advised to seek individual
                                                                                            advice.
                                                     As part of Pannone Law Group
                                                     EEIG, Europe’s first multi-national
                                                     grouping of lawyers with its closely
                                                     associated member firms and many
                                                     other contacts throughout Spain,
                                                     Pannone LLP are ideally placed to
                                                     provide a comprehensive service.
                                                     Our services are not limited to
                                                     dealing solely with the purchase of
                                                     property in Spain. Many ancillary
                                                     matters may be dealt with as
                                                     required, such as setting up Spanish
                                                     property owning companies and
                                                     commercial companies, Spanish tax


                                                                                                                                                                     31
A beginner’s guide to purchasing property in Spain




ANNEXES




GENERAL GUIDELINES AND TIPS                            5. Consider the exchange rate          C. Before signing the preliminary                •	 a power of attorney, if           Make sure the appointment is
FOR BUYERS OF PROPERTY IN                                 implications – one-off and          contract                                             required                         made in good time and keep the
SPAIN                                                     ongoing - and speak to              Have the contents of this contract               •	 confirmation of the               appointment.
                                                          foreign exchange companies          checked and explained to you                         balance of the purchase
A. Before setting off for Spain                           re options, as well as to your      by independent, specialist legal                     price plus Notario’s fees        Ensure you know where the office is
  1. If possible, seek preliminary                        bank.                               advisors, ensuring you are aware of                  and taxes (so that monies        if going in person.
     legal advice even before going                                                           the legal implications and that the                  will arrive in Spain in good
     to Spain. Pannone LLP would                     B. When you have found your              contract includes any particular                     time).                           F. After the escritura de
     be pleased to assist from the                   dream home                               clauses or conditions you require,         5.   Make sure the funds are               compraventa has been signed
     earliest stage.                                   1. If possible, inspect the property   details of any items which you                  transferred in full in good time         1. Obtain temporary proof
  2. Consider whether the property                        carefully, including loft and       consider to be included in the                  to your legal representative                of ownership (copia de la
     should be purchased in a single                      cellars, etc., as you would in      purchase price eg building materials            and that all bank charges in                escritura).
     name, in joint names or in the                       the UK. Look for evidence           on the property, furniture, etc., and a         the UK and Spain are deducted            2. Obtain authentic copy of the
     name of a company, bearing in                        of damp, dry rot, subsidence        clear indication of the boundaries of           at source, not from the                     deed of sale (copia auténtica”)
     mind Spanish laws and taxes.                         cracks, woodworm, etc. If           your property outlined, if possible, on         money transferred or that the               in due course.
  3. If you are to seek a mortgage                        necessary arrange to have a         a “plan catastral”.                             bank drafts to be handed on              3. Arrange for transfer of any
     to finance the acquisition,                          survey. The contract will state                                                     completion are organised. If                goods and furniture to Spain, if
     compare mortgage rates and                           that you are purchasing the         D. Post contract and before the                 there is a shortfall, it will delay         required.
     conditions, lending criteria,                        property as seen and you may        escritura de compraventa is signed              completion.                              4. Consider asking a neighbour
     etc., of various lenders or                          have no recourse against the          1. Deal with any mortgage                6.   Arrange insurance on the                    or appointing a caretaker in
     mortgage brokers in the UK                           seller at a later date for any           application in good time                   property in your name to come               Spain to forward any post (to
     and/or Spain to ascertain                            problems which arise.                 2. If a company is to be formed,              into effect from the day you                avoid missing notification of
     in advance what you can                           2. Inspect the surrounding area             deal with all formalities as               become the legal owner (at                  important documents etc),
     afford to buy (including eg                          for possible problems eg                 quickly as possible.                       completion).                                inform you of any problems
     fees, renovation costs). Life                        unpleasant smells, noise, rights      3. Agree a completion date and           7.   Open a Spanish bank account                 or damage to the property (to
     assurance is usually essential                       of way across your property,             arrange travel/accommodation.              to facilitate payment of bills,             facilitate insurance claims and
     with Spanish lenders though                          etc.                                  4. Request the Notario and                    etc, by direct debit.                       carry out urgent repairs).
     certain banks may offer special                   3. Ask at the Ayuntamiento                  your legal adviser to provide                                                       5. Arrange to connect utilities,
     arrangements for suitable                            (Town Hall) about any                    in advance the following             E. Signature of the escritura de                  set up direct debits
     clients.                                             development plans for the                information:                         compraventa                                       (domiciliaciones bancarias) and
  4. Find out which documents will                        area (eg a motorway, airport,             •	 a certificado de no              This takes place at the Notario’s                 arrange for bills to be sent to
     be required to support your                          nuclear power station, refuse                 infracción urbanística”         office in person or by power of                   your home address is possible.
     loan application (some may not                       tip, etc.).                                   from the town hall              attorney.
     be readily available).                            4. Never make under the table                •	 a draft deed of sale
                                                          payments as this is illegal.

                                                                                                                                                                                                                             33
NIE
Information Form




                   PRIMARY CONTACTS
                   Lindsay Kinnealy
                   Head of International Property
                   Telephone: 0161 909 4215
                   Email: lindsay.kinnealy@pannone.co.uk

                   Susana Lajusticia
                   Associate, International Property
                   Telephone: 0161 909 4939
                   Email: Susana.Lajusticia@pannone.co.uk




                   www.pannone.com
www.pannone.com

Pannone LLP is a limited liability partnership registered in England
and Wales with number OC317202. Authorised and regulated by
the Solicitors Regulation Authority. Authorised and regulated by
the Financial Services Authority. A list of members is available
for inspection at the registered office together with a short list of
those non-members who are referred to as partners. We use the
word “partner” to refer to a member of the LLP, or an employee or
consultant with equivalent standing and qualifications.

				
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