Follow these rules for a successful purchase of property for sale in the Canary Islands or in Spain for that fact. First you must choose the right estate agent, following this, you must find a good, helpful lawyer.
Choosing your Estate Agent
In decisions as large as buying property for sale abroad, it is eddential to the success of your property purchase and your long term happiness that you find a fair, trustworthy and reputable agent. To ensure that you are shown the right properties for you for sale in that area, it is also important to get an agent with a lot of local experience and of course plenty of properties for you to look at. Your agent should be able to provide you with investment advice, local adice, prices, rental returns, area advice and so on, helping you to find the property that you have been looking for.
Your agent should provide you with information about all the local costs for property maintenance, like comunity fees, the Annual Real Estate Tax (1311), water and electricity rates, garbage collection, aswell as Property income and wealth tax asociated with buying your dream home in the Canary Islands.
If you find the property that you have been looking for, and make the decision to buy it, you will be asked for a reservation deposit to make sure that no-one else can buy the property, which is payable immediately. Contracts are then exchanged during a roughly 10-15 day waiting period, for which you should always seek professional guidance and advice.
Legal Advice and Assistance
At this point, to the stage where you are given the keys to your new home, your lawyer will deal with the many stages involved in the process of buying property in the Canary Islands. It is imperative that your lawyer speaks good english so that he can inform you of the legal requirements that have to be fulfilled to ensure that the process runs smoothly, and that the sale is Legal in every respect. For example, the property must be registered to your name, and your lawyer must check with the Land Registry that there are no mortgages associated with the property, charges, encumbances, debts or liabilities that may cause problems in the future.
Your lawyer should discuss terms with the vendor’s lawyer, which not only includes the price of the purchase but all the completion dates, forms of payment, furniture and any other details to do with the purchase of your property in the Canary Islands. The Reservation deposit is the first payment to be made, often in writing, then your lawyer will draw up the private contract which normally means a deposit fee of 10% of the price of the property on exchange of the contract, which is not refundable and is a guarantee that you will not back out of the deal. Equally, if the vendor backs out of the deal, you are entitled to the completion of the original contract.
On the happy day when you get given the keys to your new home, your lawyer should go to the public notary to sign the title deed with the final payment to complete the payment. After this, the Local Land Register will recieve a fax from the notary to change the owner details so that the property is not sold twice. Therefore, the notary and the land register act together to help you. Your lawyer will then inform you of the relevant taxes that you will have to pay to get your new property in the Canary Islands, then the title deed will be submitted to the Land Register and your name will be transferred to the utilities and services of the property.
Here is a list of the expenses that you will have to pay to buy your property in the sun:
1. Notary, who charges according to a fixed scale, his charges may range from 500 € to 600 €.
2. Land Registry, as a rule of thumb, 40% of what the Notary charges.
The Taxes :
1. If you are buying a re-sale property you are obliged to pay Transfer Tax (ITP) at 6%.
2. If you are buying a new property or a property in the course of construction from a promoter, developer or habitual trader, then you should pay VAT (IVA) at 7% plus Stamp Duty at 0,5%.
3. The VAT (IVA) rate increases to 16% if you are purchasing plots of land, commercial premises or garage spaces.
4. Plusvalia is a tax levied by the local Town Hall based on the particular area where the property is located, on the surface area of the land, on the catastral value and on the date of the previous title deed. This tax may range from a few thousand pesetas to as much as several million pesetas on larger properties with a lot of land. By law the vendor is obliged to pay this tax but it is common practise for the parties to negotiate on who is to assume this liability. Finally bear in mind that your lawyer will charge fees for his professional services, that normally will range from 1 % to 2 % of the price plus VAT (currently at 16%).