The Buyers Guide to Spanish Homes
New Build & Off Plan Purchases
The team at Jason Callow Homes specialises in new and off plan purchases, homes that you will be the first owner of. This choice of property gives you greater control and flexibility of the units location and configuration. It is quite normal to be able to customise and upgrade your property if buying off plan or during construction. This allows you to change specifications and perhaps fully customise a basement area into a living space perfect for your needs.
Unlike buying a re-sale property, buying off plan homes gives you a longer period to spread the cost. Typically, with a new build property, you are given a 10 year building guarantee and all purchase instalments are bank guaranteed by law. All the modern off plan projects than jasoncallow.com sell are built to the latest eco standards and therefore are much more economical to run compared to older buildings. Features such as underfloor heating, aerothermal air conditioning/heating and home automation systems are installed as standard.
The Buying Process
Our experienced sales executives will work along-side you to hand-pick the finest properties available in the best locations to suite your requirements. There is an abundance of developments on the market, so trust us to only deliver the most relevant and best selling projects so that you can enjoy the buying experience.
(1) Online Tours and Site Visits
We have now implemented online tours and video calls across our property portfolio. This means we can show you, live, the shortlisted properties remotely giving you an insight into the project before you visit.
The Buying Process
(2) Property Reservation
So you have found your dream residence! Now we must secure the property by paying a reservation fee, normally to the amount of €6-15,000. This will remove the property from the market so that no other buyer has access to it but more importantly holds the purchase price. We will now appoint a lawyer to start the conveyancing checks on the property/development.
(3) Private Purchase Contract
This is the moment that both parties (seller and buyer) sign the Private Purchase Contract (PPC) which means both the buyer and seller are legally bound to complete the purchase. The PPC contract is normally signed no more than 30 days after reserving the property. A deposit is payable at this moment of between 20% and 30% of the sale price + IVA.
The Buying Process
(4) Mid-Construction Payments
If buying early into the construction process, it is normal that your payment plan will include a stage payment or two during the period of construction before completion. Typically, depending on the stage of construction this is 6 months after signing the PPC or is fixed on a certain point of construction e.g. finishing the structure to the roof level. This would normally be a further 10% to 20% + IVA.
(5) Completion & Key Delivery
A very exciting day for all! Both parties attend a meeting at the Public Notary where the final balance is paid + IVA. At this moment you become the official owner of your brand new home and receive the keys.
Total Purchase Costs to Budget
We advise all of our clients to budget approximately 13% on top of the property price to account for the following purchase costs involved with buying a new property:
New properties are subject to Spanish value added tax (IVA) which is 10%. This tax is paid throughout the payment plan with each stage payment.
Spanish law stipulates that all property purchases must be notarised to ensure all official documents are correct. This fee is approx. 0.3% of the property value.
Legal fees are typically 1% of the total purchase price and are payable to your lawyer to perform all due diligence by checking all the necessary paperwork and purchase contracts.
Stamp duty is required to be paid (1.2% of the property value) at the point of completion for all new build properties. It is a payment made direct to the government.
Land registry is required to be paid on all new properties and is approx. 0.2% of the property value.
Mortgage Set Up Fees
When applying for a Spanish mortgage, typically the set up fees amount to approx. 1% of the property price.
The Running Costs after Purchasing
Basura – Rubbish collection tax
IBI – Local Property tax
Comunidad – Community fees if your property is part of an urbanisation
Insurance and Utility costs
Private maintenance costs if you purchase a private villa.
Jason Callow Homes provides this buyers guide for information purposes only, it is not intended to replace professional advice and should be just used as a guide.
Tax’s After Purchase
Property Income Tax
All property owners in Spain must file an annual tax return with the Spanish tax authorities. The Tax Office calculates an annual Imputed Income as a percentage of the Cadastral Value of the property – which is normally considerably lower than the market value. The Imputed Income is typically 1.1% to 2%). The Income Tax on the Imputed Income is 24% for non-EU citizens and 19% for tax residents in the ECC.
If your property is rented, the above tax does not apply for the periods in which the property is rented. For these periods you would pay Tax on the Rented Income. Typically the percentage of tax you would pay on the rental income profit would be 24% for non-EU citizens and 19% for tax residents within the ECC.
Capital Gains Tax
When selling your property there is a tax called Capital gains. This is applicable if you sell the property for more than you purchased it for. The Tax is relevant to the seller only, and is calculated as 19% of the upturn for non-residents.
If you are a non resident in Spain, you may be required to pay a tax called Wealth Tax. This is applicable to all your assets in Spain such as real estate, bank accounts and other assets. The tax is payable when your net wealth is more than 700,000 Euros per individual, or when your gross wealth is greater than 2,000,000 Euros. Wealth Tax rates are typically between 0.2% and 2.5% in Andalucia.
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