|
If you buy your property through an Estate Agent the process should be very simple and stress free for you as the Estate Agent should be on hand to guide and help you through the purchase process. You should also be using the services of a Solicitor who will ensure that everything goes smoothly with your property purchase.
Once you have decided on the property in Tenerife that you wish to buy the first thing that you need to do is to make an offer for the property through the Estate Agents. Before you make an offer for the property you need to have your financing in place. No vendor can take your offer seriously if you are not in a position to buy, therefore if you are unable to follow up your offer by paying a deposit and signing a private purchase contract on acceptance of the offer there is little point in actually making the offer.
Once your offer has been accepted you will be expected to sign a private purchase contract and pay a 10% deposit to secure the property. If you do not have access to the full deposit in Tenerife a smaller deposit can be negotiated as an act of good faith on the condition that the balance is paid with 10 days. We supply you with a Spanish Contract and an English translation.
You should employ the services of a solicitor in Tenerife to assist you in the purchase of your property that can carry out searches on the property and ensure that there are no outstanding debts or mortgages on the property, your solicitor will also check that utility bills, community charges etc. are all paid up to date. It is important to check for outstanding debts as if they are not paid before completion they will become your debts. If you are unable to be in Tenerife for the completion of the purchase you can give your solicitor Power of Attorney so he can sign at Notary on your behalf. There are Estate Agents who say you do not need a solicitor but for the small cost and peace of mind it is well worth it, after all would you use a solicitor in your home country to purchase a property?
You must also be aware of other costs involved when you are purchasing property in Tenerife and budget for them. You should allow up to 10 to 12% of the purchase price to cover these costs especially if you are arranging a mortgage, your solicitor will advise you of the exact amount but briefly these costs are –
Plus Valia which is a tax on the increased value of the land the property is built on. This tax is actually the responsibility of the seller but sometimes the purchaser ends up paying this. You should consult your solicitor on this point. It is actually law that this is the sellers responsibility but in the Canaries it has been usual for the purchaser to pay it. However in recent times purchasers are now refusing to pay and insisting the seller pays this tax on completion. We always advise the seller that it is their responsibility.
Land Registry Costs
Notary Fees
5% I.G.I.C. plus stamp duty (New Build Property)
6% ITP Tax (when purchasing a resale property)
Completion normally takes place 4 to 6 weeks later at the offices of the local Notary, both the Seller and the Purchaser have to be present unless they have appointed representatives. If you have arranged a mortgage on the property or if a mortgage is being cancelled you might find representatives from the Bank present also. You may be asked to bring a number of Bank Cheques making up the final purchase price. These cheques could be made payable to various people such as the sellers mortgage company to pay off the mortgage or the Hacienda if the seller a non resident.
The Non Resident Seller must pay 3% retention of the sales price against Capital Gains tax that may be owed. If the Seller is Resident in Spain then there will be no retention to pay. Just having a green Residencia does not class you as resident to avoid paying this tax. You must have the relevant certificate from your accountant that you have been filing the necessary tax returns and they are up to date. If you are non resident and you have not made a capital gain on the sale of the property you could possibly be in a position to reclaim the retention. Hopefully you have been completing your non resident tax returns and your accountant can advise you on the process.
|
