[BUYING AND SELLING REAL ESTATE IN SPAIN] 245
property to be transferred and bear its cost, which may vary depending on the type of property. Can the seller get his money out of your country after the transaction (repatriation of funds)? There is no restriction to the repatriation of funds. However, in the case of transfers of real property situated in Spanish territory by taxpayers without a permanent establishment in our Country, the purchaser shall be obliged to withhold and pay to the Tax Authorities 3% or make the appropriate payment on account of the agreed consideration, as payment on account of Non- resident Income Tax imposed on the capital gain obtained from the sale of the property. If the amount withheld exceeds the effective tax due, the non-resident taxpayer is entitled to claim reimburse of such excess. If you buy real estate that is leased to one or more persons, are you allowed to terminate the lease contract(s), or which restrictions have to be considered? The tenant has a pre-emption right over the leased property unless expressly waived. Once this is cleared, property may be sold to any other third party. The buyer may not terminate the lease agreements currently in force as the transfer of a property means that the acquirer succeeds in all of the previous owner’s rights and obligations. According to the Spanish Urban Leasing Act (“ Ley de Arrendamientos Urbanos ”), lease agreements in force can only be terminated without cost when the property is going to be used to live by its owner or its family. Are you allowed to change the use of a building from residential use to office space or do you need official approval for doing so or is it not allowed at all?
Every property has a “license of use” indicating if it is for residential or commercial use. This license may be changed or amended by approval of the Town Hall (according to the Urban Plan and the individual features of the property) and by approval of the “ownership association” (“ comunidad de propietarios ”) if the building has more owners. To get a feeling as to the amount of costs involved, what costs should be considered if a foreign investor bought an existing building (and land) for a purchase price of EUR 5 million, in particular. - notarial costs: Notary Public’s costs will be around EUR 10,000-25,000. - land register: Inscription of the transfer of Property before the relevant Land Registry may be around EUR 5,000- 12,500. - real property transfer tax: EUR 200,000 (4%) - 500,000 (10%) Value Added Tax general tax rate if applicable: EUR 1,050,000 (21%) Public Document Tax when transaction is subject to VAT: EUR 20,000 (0.4%) - 75.000 (1.5%) - advising lawyer (due diligence): EUR 5,000-8,000, depending on the type of property. Due diligence over the land subject to zoning regulations would be more costly as this is a complex area of the law. - estate agent: Estate agent usual rate may vary between 3% and 8% of the transaction value, depending on the case. - others: It depends on the financing of the transaction, for illustrative purpose,
ILN Real Estate Group – Buying and Selling Real Estate Series
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