| FAQ Buying a Property |
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FAQ BUYING A SPANISH PROPERTY HOW CAN I FIND OUT THE MARKET PRICE OF A SPANISH PROPERTY? For a detailed analysis value of a property in spain you should hire an appraiser. They will charge you roughly 300 euros (depending on the value of the property). The appraiser uses two approaches to calculating the value of a property: They will measure the property to draw up a floor plan and calculate the square meters, then multiply this by the value per square meters in the area. This value then gets adjusted by a number of factors, such as whether the house can be moved into right away or needs renovation. They will also find similar properties that have been sold in the area recently. Regarding price per square meter for apartments, make sure whether you're dealing with m2 construido (constructed) or with m2 util (usable). Construido includes common space: stairs, air shafts, walls, etc. The difference between the two numbers can vary widely, but on average m2 construido is 27% more than m2 util. If you're getting a mortgage, the bank will require you to pay for an appraisal, though they choose the appraiser. This step comes after you pay the downpayment on the property, though, so if your offer is significantly higher than the appraiser's value, you'll lose this downpayment if you back out now. For that reason, you might want to pay for your own appraisal before paying the downpayment. THE SELLER WANTS THE DECLARED PRICE TO BE LESS THAT WHAT IM PAYING, SHOULD I DO THIS? And the broker tells you this is common practice, right? In truth, it's a known practice, but not so common. What is happening is that the seller wants to have less capital gains so they can pay less taxes. The problem for you as the buyer is that when you go to sell the property down the road, you will then have to pay more capital gains (unless you also find a buyer willing to make this deal). You will pay in taxes all that the current seller didn't pay. So why would anybody accept this? It's because some people in Spain have a sizeable amount of money tucked under their pillow that they never declared as earnings to the tax office. Giving this money as cash to the seller effectively launders it. If this is not the case with you, then don't make a deal with the seller. In fact, this should be made clear in the pre-agreement, so the seller doesn't try to force in this provision a week before the closing. IF IM BUYING A SPANISH PROPERTY CAN I SAVE ON TAXES BY CREATING A COMPANY? In some cases, yes. Example: Stan is a resident of Spain and earns a 100,000 salary from outside Spain. Stan has two choices: Pay personal income tax in Spain (if he's paying income tax elsewhere then this can be reduced). Stan is in the 42% income bracket, so he will pay around 40,000 euros. Establish an SL, and the SL pays him. Stan's company pays a corporate tax of 30% (after the first three years, this rises to 35%). However, corporate tax deductions are extensive in Spain. Stan deducts housing, car, and food for 50,000 euros. 30% of the remaining 50,000 euros is 15,000 euros, so the savings are well worth the costs of SL creation and accounting. With an SL, there are more options: money that Stan doesn't plan to spend in the near future can be put in the company reserves, making it nontaxable. WHAT INFORMATION SHOULD I GET FROM THE PROPERTY SELLER? If the property is a new construction, you should get: * A registry listing (nota simple) of the full plot of land. * The CIF and full name of the construction company. * The construction permit (licencia de obra). If the property is a re-sale, you should get: * A registry listing (nota simple) of the property. * A copy of the deed (escritura). |
