A selection of Frequently asked questions.
What is a sales agreement?
A private document signed between the buyer and seller. Your Lawyer will raise this for you. It must state the following points:
• Details of the buyer and seller with ID Details and address
• A legal description of the property
• The purchase price
• The form of payment and currency to be used in the transaction (banker’s draft, cash, etc.)
• The completion dates and penalty clauses if these dates are not met (usually, if the buyer withdraws after signing the contract he could be liable to pay double the amount of the deposit). Your Lawyer will advise.
What if there’s still a mortgage on the property?
If there is a mortgage on the property it will be canceled on the same day that you sign at the Notary. Before the signing date at the notary, your lawyer will inform the holding bank to prepare the cancellation costs and the amount that the seller still owes. On the day of the signing, a banker’s draft will be made out for this outstanding figure including the costs and paid to the bank representative. This figure will then be deducted from the purchase price when paying the seller. The bank will then register the cancellation of the mortgage.
Is it easy for a foreigner to obtain a mortgage?
Yes. So long as you can submit the financial information the bank requires in applying for a mortgage, the bank will provide you with details of what is required. Often builders will offer you a mortgage if you purchase a new property.
What does a foreigner need in order to buy a property? The first thing is to apply for an N.I.E. (Number of Identification for Foreigners), which is basically an ID card anybody with a financial interest in Spain or the Canary Islands is required to have. It is also required for setting up utilities etc. You’ll also need to set up a non-resident bank account, which is a simple process, but we will handle all these administrative procedures for you at no charge to you if you are purchasing with us.
Will we have to pay tax when selling a property?
Yes, if you are a non-resident you will have to pay 3% of the new declared value as retention to the Spanish Tax Office, but provided your accounts are in order you could? get most of this back within five or six months. You will also have to pay 18% of the capital gains as Income Tax, i.e. 18% of the difference between the price you paid for the property and the price you’re selling it for. You would be wise to appoint an accountant in these matters.
Do I need a Lawyer? Yes, we strongly recommend that you appoint a Lawyer, we can recommend a good lawyer that can assist you in all matters if you do not already have one. Your Lawyer will have your interests at heart and will ensure that your purchase is a safe one, any deposits will be held by your Lawyer, this is the best option for you and one we strongly recommend.
If you have any questions please email us we would be happy to help.
info@tenerifesunproperties.co.uk
