[BUYING AND SELLING REAL ESTATE IN SPAIN] 246
read question 8 above (e.g., Paperwork “gestoría” costs, insurance costs). IV. CLOSING COSTS/ADJUSTMENTS As a result of the abovementioned, Spanish real estate operations imply some additional costs consisting in Notary and Registry fees that ensure the effectivity of the conveyance of the property. These amounts are, usually, borne by the buyer. However, the main cost that private individuals must take into consideration is the Property Transfer Tax [ Impuesto de Transmisiones Patrimoniales (ITP)], which taxes acquisitions for consideration of goods. The Property Transfer Tax varies depending on the region where the property is located, as each autonomous community in Spain has the authority to set its own rates within a specified range. Generally, the tax rate ranges from 6% to 10% of the property’s purchase price or market value, whichever is higher. This variability can significantly affect the total cost of acquiring the property. V. OTHER CLOSING DOCUMENTS Energy Performance Certificate (Certificado de Eficiencia Energética): Required by law, this document can influence the marketability and value of the property. Occupancy Certificate (Cédula de Habitabilidad): Necessary for confirming that the property meets all legal standards for habitation, crucial for both residential and commercial investments. Title Insurance (Seguro de Título): While optional, it provides additional protection against title defects, an important consideration for foreign investors who may be less familiar with the Spanish legal system.
Activity License (Licencia de Actividad): when the property to be acquired is not residential, e.g. a commercial premise or office building. VI. RECORDING REAL ESTATE DOCUMENTS Regarding the necessity of recording real estate documents, it is important to keep in mind that, despite having conveyed the real estate property according to the (teoría del título y del modo) system, the new owner of the property will not be able to enforce its legal title as holder of the property until the Public Deed of the property transmission is correctly registered in the Land Registry. Thus, the recording of the Public Deed grants erga omnes effect regarding the real estate property and the registered owner of it can enforce its position against any third party. To sum up, the Land Registry ensures that the buyer’s ownership is legally recognized and protects against future claims. The registration process usually takes 15 business days. In the event of financing the operation, the mortgage registration is mandatory. Therefore, the creation of this lien on the property is not effective until the mortgage registration is fulfilled. VII. COSTS FOR HOLDING REAL ESTATE What tax aspects are directly involved when holding a property, for example yearly land tax after the transfer of ownership and what is the percentage of it? - Property Tax (“ Impuesto sobre Bienes Inmuebles – IBI ”) is a yearly paid tax, managed by the Town Halls and calculated using the property cadaster value estimated by the Cadastral Office (Dependent of the Ministry of
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter