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Selling in Spain
Moving on or moving up, get the most from your property
Selling a property
When you decide to sell your property the first thing you need to do is ensure that your house is ready to sell, you need to stop looking at it as your home and start looking at it as a commodity which you want to get the most money for.
Now your house is ready to put on the market you need to make sure that your paperwork is in order, here´s what you need to have on hand:
Using a Currency Exchange Company
- When you agree to buy or sell a Spanish property you will know the price in euros but the actual cost (in Sterling) of the property will depend upon the exchange rate that you get when you buy or sell your euros. It may seem obvious but many people are often shocked by the cost implications of a sharp move in the exchange rate.
- Once an offer on the property is accepted you are exposed to a currency risk until you secure a price to buy or sell your euros. If you wait the cost of the property will fluctuate on a daily basis (either become cheaper or more expensive).
It is the seller’s responsibility to ensure that all the paperwork is up to date on the house and this includes the legalisation of any modifications to the property and the provision of an up to date habitation and energy rating certificate. If there is a mortgage on the property this will be cancelled on the day of the sale and a charge will be made by the bank for doing this.
If you plan to go back to the UK and leave the house for sale with an agent or representative it´s imperative that you leave keys and contact details. If you have concerns about your availability in coming back to Spain in order to finalize the sale this is also a good time to think about leaving power of attorney, this is quick and easy to do and could save you the air fares and inconvenience of coming back to Spain at short notice.
- You have several ways of buying or selling euros, obviously if you are buying you might have to get some euros in advance for the deposit but then you have time to decide on a strategy for the balance.
- When you are ready to buy or sell your euros the best thing to do is have a chat with your currency exchange broker and see what they recommend. There are several ways that you can do a transfer.
- You can agree to an exchange rate on a particular day, they will tell you how many pounds sterling the euro amount is worth and it’s all done via bank transfers.
A Buyer Has Been Found...
What Happens Next?
Once a sale has been agreed in principle the buyer or their representative needs to prepare the paperwork in order to secure the sale and ultimately take it to the notary for completion. The things they will be requesting and the problems they are looking for include:
- A Nota Simple is requested on the property. This document, obtained from the Property Registry (Registro de la Propiedad), checks that the property is free of debt, is properly registered to you, and the description of the property matches the deeds (to avoid surprises about missing square metres, wrong road numbers etc.).
- A deposit is paid and a private contract is drawn up between the seller and buyer. Sometimes if the buyer needs a little more time to finalise their finances (obtain a mortgage etc.) a holding deposit is paid in order to take the property off the market for an agreed amount of time. Normally this is between 1,000€ to 3,000€ and this reserves the property for a period of 2-4 weeks. Once the buyer’s finances are sorted they then pay the balance of the deposit which is 10% of the agreed asking price. At this point a private contract is drawn up between the seller and buyer in order to protect both parties. The typical agreement in Spain is if the buyer backs out of the contract, they lose the deposit paid; if the seller backs out, they have to pay back double the deposit. Once the contract is signed the deposit is handed over.
- A notary date is set. The sale of the property is done before a notary on a date agreeable to all parties. On the day of the sale both parties meet at the notary, the deeds are translated and details verified, if you cannot speak and read Spanish you need to take a translator with you who will sign the deeds to state that they have been translated accordingly.
- If you’re not in a rush you can agree to an amount to be bought or sold at a set exchange rate using a forward currency contract. You ask your currency broker to watch the rate for you. It is usually best to decide on the “worst rate” you are prepared to accept and stick to this so that if things go wrong you don’t go below a certain level. You can also establish a target price (which should be realistic and not too “greedy”).
- Once the rate hits your set target the exchange will be automatically triggered. This is a good way to do it so you know exactly what you are going to get.
The following must then be presented at the notary:
- Original NIE Number and passport if non-resident in Spain
- Original resident card or Residencia certificate and passport if resident
- Fiscal certificate (if applicable)
- Original Power of Attorney (if applicable)
- Old escritura (house deeds)
- Last SUMA bill stamped as paid from the bank
- Community certificate showing fees paid up to date
- Habitation certificate
- Energy Rating Certificate
- Mortgage cancellation (if applicable)
- Buyers payment
- Keys to the property
Once the deeds have been checked and agreed upon the buyer and seller sign the contract; beneath their signature the notary signs, along with the translator and the sale is complete.
- If you are planning to make regular transfers then you can set the rate for up to two years at a time, this can work for or against you according to how volatile the market is.
- It is a good idea to shop around when buying currency. Don’t assume that your bank will give you a good exchange rate, but equally don’t assume that the cheapest broker will be best either. You need to find a broker who will offer competitive prices, offer a high level of personal service and have a robust and efficient payments team so that your money arrives safely and on time.
Seller's Financial Responsibilities
Money is normally held from the seller to cover the following (usually this is held from the original 10% deposit paid):
- One of the biggest headaches when sending money to Spain is the frankly ‘greedy’ and unjustified receipt fee charged by the Spanish banks (which can be up to 1% so beware), ask your currency exchange company about receiving charges as many of them have agreements whereby handling charges are waived.
But what does that actually mean?
- SUMA (council tax) – In the year that you sell your house you are liable for payment of the SUMA bill, even if you sell on 1st January, this is because all taxes in Spain are in arrears!
- Plusvalia – a 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 date of the sale. The local authorities determine the amount of plusvalía to be paid for each house sale in Spain, depending on the area where the property is located. The market value or sales price of the property does not have an effect on the plusvalía tax.
- Retention for non-residents – as a non-resident in Spain 3% of the declared value is retained, however the Capital Gains Tax is calculated at 18%. An accountant will pay the tax on your behalf and once paid petition the tax office to see whether any of the tax can be refunded.
- Fiscal Representation – if you are a non-resident and have to pay the above taxes then an accountant needs to be employed in order to present and then try to re-claim the taxes from the hacienda (tax office).
What happens after the sale?
What next?
At the point of sale a fiscal representative will be appointed to you (normally your representative) and it is their responsibility to ensure that all taxes on behalf of both the seller and buyer are paid within 30 days from the date of signing the deeds. Once all the taxes are paid the new deeds are presented to the Land Registry and the ownership of the property is transferred into your name (this can take between 2-3 months).
All the utilities also need to be changed over into your name and direct debits set up from your nominated bank account.
Using a Currency Exchange Company
- When you agree to buy or sell a Spanish property you will know the price in euros but the actual cost (in Sterling) of the property will depend upon the exchange rate that you get when you buy or sell your euros. It may seem obvious but many people are often shocked by the cost implications of a sharp move in the exchange rate.
- Once an offer on the property is accepted you are exposed to a currency risk until you secure a price to buy or sell your euros. If you wait the cost of the property will fluctuate on a daily basis (either become cheaper or more expensive).
Don't Take a Currency Risk
- You have several ways of buying or selling euros, obviously if you are buying you might have to get some euros in advance for the deposit but then you have time to decide on a strategy for the balance.
- When you are ready to buy or sell your euros the best thing to do is have a chat with your currency exchange broker and see what they recommend. There are several ways that you can do a transfer.
- You can agree to an exchange rate on a particular day, they will tell you how many pounds sterling the euro amount is worth and it’s all done via bank transfers.
- If you’re not in a rush you can agree to an amount to be bought or sold at a set exchange rate using a forward currency contract. You ask your currency broker to watch the rate for you. It is usually best to decide on the “worst rate” you are prepared to accept and stick to this so that if things go wrong you don’t go below a certain level. You can also establish a target price (which should be realistic and not too “greedy”).
- Once the rate hits your set target the exchange will be automatically triggered. This is a good way to do it so you know exactly what you are going to get.
- If you are planning to make regular transfers then you can set the rate for up to two years at a time, this can work for or against you according to how volatile the market is.
- It is a good idea to shop around when buying currency. Don’t assume that your bank will give you a good exchange rate, but equally don’t assume that the cheapest broker will be best either. You need to find a broker who will offer competitive prices, offer a high level of personal service and have a robust and efficient payments team so that your money arrives safely and on time.
- One of the biggest headaches when sending money to Spain is the frankly ‘greedy’ and unjustified receipt fee charged by the Spanish banks (which can be up to 1% so beware), ask your currency exchange company about receiving charges as many of them have agreements whereby handling charges are waived.