Have you wondered what are the expenses associated to selling a property on the Costa del Sol?
As an owner, there are a series of costs involved when selling a property in Spain. These are divided into expenses and taxes. On the Costa del Sol, it is customary that the seller of a property pays the real estate agent´s commission, mortgage cancellation if applicable, their own legal advice, ownership transfer expenses and taxes.
The real estate agent´s commission is usually a percentage of the sales price. This percentage is generally around 5% of the selling price, but it may vary depending on the agent and the size and type of the property.
If you have a Spanish mortgage on your property on the Costa del Sol, you should bear in mind that most banks in Spain impose a cost for early mortgage cancellation. Normally, this fee is 1% of the value of the mortgage and payable to the bank before completion at notary. This fee is payable by the seller. Recently however, and only in some cases, we have witnessed the discharge of this fee by bank managers when the vendors negotiated the cancellation of the mortgage.
We strongly advised to hire a Spanish lawyer to help you during the selling process. A lawyer will assist with gathering all the documentation necessary to complete the sale of your property, will help you cancel any utility bill, revise the private purchase contract and assist you with completion at notary. Most charge around 1% of the purchase price in legal fees.
A vendor who is non-resident in Spain is subject to a 3% withholding tax on account of any possible capital gains. Capital gains tax is 21% of the profit of the sale. This is paid normally, via the solicitor, by submitting Form 211 to Hacienda, within one month of the sale.
The profit is the difference between the selling price and the purchase price plus all purchase-related expenses and costs associated with improvements of the property. If the seller’s liability is less than the 3% withheld at the time of the sale, the seller can claim it back from the Tax Office by filling the Form 212 with Hacienda within two months. If higher, the seller will have to pay the difference to the Tax Office by filling up the same form.
One of the taxes that are paid by the seller, unless agreed otherwise with the buyer, is the “Plusvalia”. This is a municipal tax on the increase in value of the land. The amount to be paid will depend on how long the seller has owned the property. The longer the period of time during which the seller has owned the property, the higher the amount of tax. It is important to know that if the seller does not pay this “Plusvalia” tax, it will fall on the property.
The I.B.I. (Impuesto Bienes Inmuebles – Property Ownership Tax) is a local tax on the ownership of property in Spain and garbage collection tax, together with the community fees (if any), as well as normal utility costs such as electricity, water, etc. should be paid by the vendor up to date when the property is transferred to the new owner.
If these are not paid by the day of notary, it is customary to do a calculation between the legal representatives and an amount is discounted from the sales price and left in deposit to guarantee the cancellation of these payments.
Please do not hesitate to call Sur Estates, should you require further information.
* The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues. The contents herein may be subject to errors, omissions and amendments.
