Posted by & filed under Marbella and Costa del Sol Property News..

Almost half of the Costa del Sol´s new development properties sold in 2011!

It’s the beginning of the year and the numbers and statistics start to come in.  According to the Association of Builders and Developers of Malaga (ACP) more than 10.000 new homes have been sold in the province in the course of 2011!  This is almost half of 25.000 new properties available at the start of 2011 in the province!

There are three main ingredients in this recipe for success:

First, the continuous reduction in property prices which has taken place since the end of 2008.  In the past three years or so we have seen price drops between 35% to over 50% in certain developments on the Costa del Sol.  This has made luxury properties in popular tourist areas like Marbella, extremely affordable and thousands of buyers from Northern European countries are taking advantage of this.

Secondly, many of these new development properties are being sold with extremely high finance, sometimes up to 100%.  On top of this, this high finance is available to residents and non-residents alike.  In the resale market, non-residents can obtain around 60% of finance on a property, while residents about 80%.  New properties are extremely popular amongst those clients wanting to put as little liquidity as possible on a property.

Thirdly, in August La Moncloa (Spanish Government), in an attempt to boost sales has temporarily reduced the VAT on the purchase of new homes from 8% to 4%.  This means that any person purchasing, for instance, a €300.000 property saves €12.000 on VAT.

Considering the construction cycles, many developers start to believe that if this trend continues there could be a serious shortage of new housing in a couple of years.  The situation could even get worse if we return to the normal levels of 2007, when over 20.000 new properties were sold in the province a year.

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Many of our foreign clients have asked us: What´s a NIE and what do I need it for?

A NIE, which in Spanish stands for Número de Identificación de Extranjero (Foreigner´s Identification Number) is a tax identification number assigned by the Spanish authorities to any foreigner, whether resident or non-resident, with interests in Spain or who may be contemplating taking certain actions in this country.

You will be required to have a NIE, for instance, if you are planning on buying or selling a property in Spain, if you are a beneficiary under a Spanish Will, if you want to purchase a vehicle in Spain, to be able to join the Spanish national health system, if you want to apply for a mortgage or other any other form of financial loan, or even if you wish to apply for official employment or start your own business here in Spain.

You can apply for a NIE either in Spain with the Departamento de Extranjeros (the Foreigner´s Department) at the Spanish National Police or at the Spanish Consulate nearest to you in your home country. The Spanish Ministry of Foreign Affairs and Cooperation has a list of all of the Spanish Consulates in the world.

You’ll need to file an application form and supply personal data, including an address for notifications, and state the reason for your application. You may be asked to supply supporting documentation. A photocopy of your passport – having first shown your original when making your application – is also required.

The application will be sent for processing to the police authority in Madrid responsible for issuing NIEs. It usually takes at least two months for them to issue the document.

If you are a European Union resident you may take advantage of a holiday in Spain to apply for a NIE locally.  Please bear in mind that if you decide to apply for your NIE in Spain that queues can be horrendous.

We suggest using the services of a local law firm to facilitate the process of obtaining this documentation.

Once issued, this number will be with you for the duration of your life.

* 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.

Posted by & filed under Marbella and Costa del Sol Property News..

Many of our clients have asked us: What are the annual taxes and costs associated with owning a property in Spain?

Apart from the general maintenance costs, such as cleaning, repairing, utility bills, and so on, there are a number of costs in the form of taxes and fees that are associated to owning a property in Spain.  Below you will find a list of applicable Spanish taxes and costs:

I.B.I . (Impuesto Bienes Inmuebles – Property Ownership Tax):

This is a local tax on the ownership of property in Spain, which one has to pay regardless of whether the owner is a resident or not.  This is an annual tax charged by the local town hall and is at present a percentage of the valor catastral (cadastral value).  This administrative value is usually lower than the market value, sometimes considerably so.  Set by the town hall, it may vary depending on the municipality where the property is located. The tax scale goes from 0,3% to 1,3% of the cadastral value of the property.  This value is extremely important because other taxes are based on it as well.  When buying, you or your lawyer will need to see the seller´s last receipt for the IBI payment to check the value and to be able to calculate the exact amount of the tax.

I.R.N.R. (Impuesto sobre la Renta de No Residentes – Non Resident Property Income Tax):

The National Spanish Tax Authority (Agencia Tributaria) appoints all non-resident property owners who do not rent out their property and who do not have any other source of income in Spain (for instance, interest on a Spanish bank account) with imaginary income each year of 2% of the cadastral value of their property.  This is subject to a 24,75% tax rate, however if your cadastral value has increased since 1994, the imaginary income is only 1.1%.  The tax on a property with a cadastral value of 250.000 Euros would be as follows:

Property value for tax purposes = 250.000 €
Taxable base (2%) = 5.000 €
Tax (24,75%) = 1.237,5 €

If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. In this case, the rental income is subject to a 24,75% tax.  During the period that the property is rented, the owner would not be liable for the Non-Resident Property Income Tax described above.

Wealth Tax:

As an exceptional measure, the Spanish Government through Royal Decree-Law 13/2011, of September 16, has reinstated the Wealth tax, temporarily.
Spanish residents and non-resident will have to pay, for economic goods located in Spain, but only from 700.000 €.  The tax payers affected by this tax are subject to a rate which ranges from 0,2% to 2,5% of the net asset value.
The net value is reduced by mortgage debt on the property.  Tax residents in Spain may have additional benefits, depending on their individual circumstances.

Resident Income Tax:

Non-residents living more than 183 days a year in Spain are also considered residents for tax purposes, even if they have not obtained their residence permit.  Spanish tax residents are subject to taxes that differ from those for non-residents.  Since this is a brief explanatory guide about taxes after buying property in Spain mainly for non-residents, we are not going to cover complex subject of The Personal Income Tax (Impuesto sobre la renta de las personas físicas/IRPF).
We strongly recommend that if you would like to become a permanent tax resident in Spain, you receive qualified professional advice from a tax consultant.

Property owned by a non-resident company:

When the owner of the property is a non-resident company, a special tax has to be paid. The rate applicable is 3% of the cadastral value of the property.

Garbage collection tax:

Garbage collection tax is to be paid at the local tax office.

Community Fees:

Home owners (residents or non-residents), who´s property is part of a development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the Comunidad de Propietarios (Community of Owners).   As such, this entails paying community fees for the upkeep of the communal areas.

* 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.

Posted by & filed under Marbella and Costa del Sol Property News..

Guide to buying property on the Costa del Sol:

The Buying process:
When the property has been selected and the terms and conditions of the sale have been agreed upon by all parties involved, the property must then be secured.  Normally, a €6.000 deposit fee is paid to the real estate agency, lawyer or developer and a reservation contract is signed by all parties involved to take the property off the market.
Once the lawyer has carried all necessary checks on the property, usually within a two weeks period, it is customary to sign a private purchase contract and pay a further 10% of the purchase price.
On completion, a document of deeds (Escritura Pública) will be signed by both you and the vendor before a Spanish Public Notary. The deeds can then be submitted to the land registry.  At this point, you gain full legal title to the property and receive the keys.

Legal Costs:
Notary fees are normally paid by the buyer, unless agreed otherwise. Notary fees are set by the Spanish state and the final amount you pay will depend on the value of the property you buy. A notary must be present when the parties involved, buyer and seller, sign the sale contract and escritura (the deeds).
It is advisable to appoint a local lawyer.  The lawyer will carry out a title search, and advise the purchaser on all aspects of the purchase.  Lawyer’s fees are around 1% of the final price paid for the property once the sale has gone through, plus 21% VAT.
Estate Agents’ fees vary depending on the type of property. On the Costa del Sol, it is customary for the commission to be paid by the seller. The commission is usually a percentage of the selling and this may vary depending on the price of the property. However, the fee is normally included in the sales price.

Taxes:
On new residential properties, sold by the developer, there is VAT (IVA) charged at 4% of the value, plus 1,5% Stamp Duty, and these are paid by the purchaser. However, on urban plots, commercial premises and garages (not annexed to a home) purchased directly from a developer or builder, VAT is 21% plus 1,5% Stamp Duty.
On resale properties there is a property transfer tax (Impuesto de Transmisiones Patrimoniales) according to a sliding scale, as follows:

Property price: Up to 400.000€                                 Tax Amount: 8%
Property price: From 400.001€ to 700.000€             Tax Amount: 9%
Property price: From 700.001€                                 Tax Amount: 10%

In all cases there is also a municipal tax, “plusvalia”, which should not be confused with Capital Gains Tax which the seller is liable for when the property is sold. This “plusvalia” is paid by the seller. It is a municipal tax set by the local authorities and based on the increase of the value of the land from the date the owner acquired the property to the time of the present sale.

Registration:
After signing the Public Deeds, you will need to submit them to the Land Registry Office and have your title incorporated as well as register your purchase with the municipal authority where your property is located.  This inscription is the final step in assuring your legal title to the property.

N.I.E. (Foreigners’ Identification Number):
Any non-Spanish buyer must apply for a “NIE” number from the Spanish National Police authorities. This number is required for any property transaction (buying, selling, utilities, insurance, etc).

NIE

Residence Permits:
It´s not necessary to have a residence permit to purchase a property in Spain, unless you are planning to live in Spain for over more than half a year, per calendar year. In that case, you need to apply for fiscal residence in Spain.
Non-European Union citizens who want to reside permanently in Spain must first obtain a residence visa from the Spanish Consulate in their home country. With this visa, they can apply for a residence permit. The Spanish Ministry of Foreign Affairs and Cooperation has a list of all of their Consulates in the world with information including address, telephone number and opening hours, should you wish to apply for a visa in your home country.

* 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.

Posted by & filed under Marbella and Costa del Sol Property News..

Welcome to our real estate blog on the Costa del Sol!

Dear reader,

I would like to welcome everyone entering this new feature on our website and I hope you find our real estate blog on the Costa del Sol section enjoyable, informative and interesting!  I’m excited about this new digital presence because it will allow us to expand our coverage of the Marbella and Costa del Sol Property News.

This blog will not only cover the latest news about property prices on the Costa del Sol, but it will also include a variety of articles relating to real estate, tips on buying or selling  property in Spain, lifestyle and other relevant information regarding our beautiful Costa del Sol!

If you’re looking to buy or sell, we hope you visit us often to learn about our latest news.  We hope to become your guide to all things involving real estate in Marbella and the rest of the Costa del Sol.

Interested in contributing to the blog? E-mail me. I’d love to hear from you. You can contact me on: info@surestates.com.

Max Cignetti,
Director