Frequently asked questions
Property Transactions in Spain
What is the new rental law in Andalucía and how does it affect me?
The new rental law in Andalucía, effective from February 3, 2016, regulates rentals for holiday purposes in Málaga province and the entire Costa del Sol. It applies to homes rented for less than 2 months and aims to ensure quality and safety standards. Rentals exceeding 2 months are regulated by the general rental law of 2013 (Ley de Arrendamientos Urbanos – LAU).
Do I need to register my property for rental purposes?
Yes, all apartments and houses available for rental must be registered in the Registro de Turismo de Andalucía. You will receive a unique license number that must be displayed in advertisements. Advertising without a license number increases the risk of inspection and fines.
What are the requirements for renting out my property?
Your property must meet certain standards, including providing a public complaints book, tourist information, important contact numbers, adequate ventilation, heating and cooling systems, user manuals for appliances, and first aid equipment, among others. Detailed requirements are listed above.
What should be included in the lease contract?
The lease contract must include the landlord’s and tenant’s names, number of occupants, arrival and departure dates, total rental price, contact person’s phone number, access details, and any rules related to the property or urbanization.
How should prices be quoted and ordered?
Prices must be quoted per night and include utilities like electricity, water, heating, and AC. The landlord decides if a deposit is required, and any advance payment and cancellation terms must be clearly stated.
Do I need to pay tax on rental income?
Yes, rental income must be declared and taxed in Spain, regardless of whether you live in Norway or Spain. Tax residents in Spain or another EU country can deduct certain costs related to the rental period. Taxes are paid quarterly, and details must be submitted at the start of each new quarter.
How is benefit taxation calculated?
Benefit taxation is based on the days the property is not rented. For example, if the assessed value of your home is EUR 100,000, a 19% tax is paid on 1% of this value (EUR 190). If the home is rented for 6 months, the tax would be half, EUR 95.
Are there any specific reporting requirements for Norway?
Yes, rental income in Spain must be declared on the tax return in Norway. The tax paid in Spain is deducted from the Norwegian tax return according to the credit method.
Can you help with the registration and tax submission process?
Yes, we provide assistance with registration, tax submission, and other related processes. Our fee for submitting the tax returns is EUR 400 + 21% VAT per year. Additional fees apply for individual tax returns.
Who should I contact for further assistance?
Please contact us at post@cdsproperty.es if you need help or have questions about any of these processes. If you purchase a home through us, we will guide you through the entire buying and renting process.
Operating Costs for Home Buyers
What are the general operating costs for a home in Spain?
Operating costs for a home in Spain can include fixed fees for the condominium, annual municipal expenses, and costs for utilities like electricity, water, TV, and internet. For second-hand homes, costs are usually specified, but for homes under construction, they can only be estimated based on similar properties in the area.
What is the IBI, and how much does it typically cost?
The IBI, or Property Tax, usually ranges from 600 to 1000 EUR per year for an apartment with 2-4 bedrooms. The exact amount varies depending on the municipality. For new homes or those under construction, the precise cost is determined after the first year of ownership.
Do non-residents have to pay income tax for owning a home in Spain?
Yes, non-residents who do not rent out their property must pay a benefits tax. The taxable benefit is generally 2% of the Spanish valuation of the property (valor catastral). For example, if the appraised value is 50,000 EUR, the taxable benefit is 1,000 EUR, and the income tax is 19% of that amount (190 EUR). If the valuation has been revised after 01/01/1994, the taxable benefit is 1.1% of the property value.
What is a community fee, and how is it calculated?
The community fee is a monthly charge for the maintenance and operation of shared facilities in condominiums (urbanizations). The fee typically ranges between 100-300 EUR for apartments and varies depending on the facilities available. The total amount is distributed among owners based on the size of their property in square meters. Detached houses (villas) generally do not have common expenses unless they are part of a gated community with shared services.
What is the Basura tax, and how much does it cost?
The Basura is a municipal waste tax that typically costs between 70-150 EUR per year.
How is electricity billed, and what should I expect to pay?
Electricity is billed based on usage. An agreement with the electricity supplier is set up for you, and payments are directly debited from your Spanish account. The cost depends on the number of days the home is used and the number of occupants, making it difficult to estimate the annual consumption.
How are water costs determined in Spain?
Water costs are based on actual consumption, measured by a water meter attached to the home. Payments are made through a direct debit agreement with the water supplier, which we can help set up.
How much does TV and internet service cost in Spain?
TV and internet services typically cost around 30-40 EUR per month. We can assist in creating an agreement with the supplier and setting up direct debit payments.
The Purchase Process in Spain
Why should I seek legal assistance when buying real estate in Spain?
The laws and regulations regarding real estate in Spain are often unfamiliar to foreign buyers. Therefore, we strongly recommend seeking legal assistance to ensure compliance with local laws and protect your interests.
What should I consider before signing a contract and making the first payment?
Before signing a contract, ensure that you can pay the full purchase price by the deadline stipulated in the contract. If you are financing the purchase, secure a binding loan commitment before entering into the contract.
What is a reservation contract, and why is it important?
A reservation contract is created by the developer for properties under construction to ensure the property is taken off the market. It should include essential provisions such as payment deadlines, the signing of the deed, and the rights and obligations of both the buyer and seller.
What should be included in a purchase contract?
The contract should detail the property’s description, the distribution of expenses and fees, the signing deadline of the deed, and the legal position of the parties in case of default. If the property is sold furnished, an inventory list should also be attached.
Can I inspect the property before taking it over?
Yes, you have the opportunity to inspect the property before taking it over, and we can assist with this inspection. If defects are found, a snagging list is created, but the signing of the deed cannot be postponed unless the property is deemed uninhabitable.
What is a completion certificate, and why is it necessary?
A completion certificate (“licencia de primera ocupación”) is issued when the building is constructed according to the building licence. The property is only legally habitable when this certificate is issued, allowing for permanent utility connections.
What is a bank guarantee, and why is it important?
A bank guarantee ensures that payments made during the construction period are secured by the bank. If the seller defaults, the paid amount plus interest must be refunded to the buyer. It is crucial that this guarantee is valid until the building is completed.
What additional costs should I consider when buying a property in Spain?
In addition to the purchase price, you should consider approximately 13.5% in additional costs, including 10% VAT, 1% legal services, 1.2% stamp duty, 0.5% notary fees, and 0.5% land registration expenses.
What are typical payment plans for purchasing property in Spain?
Payment plans usually involve an initial reservation fee (6,000 – 10,000 euros), 20% of the purchase price plus VAT upon signing the contract, 10% during construction, and 70% plus VAT upon completion and deed signing.
What services does a lawyer provide during the property purchase process?
A lawyer assists with contract preparation, obtaining necessary permits, NIE number creation, property registration, and setting up essential services. They also provide ongoing support for tasks such as tax returns, wills, and other legal matters.
What is a Power of Attorney (POA), and why might I need one?
A POA allows a lawyer to act on your behalf in Spain, helping you avoid unnecessary travel. It enables the lawyer to sign the deed, set up utilities, and handle all necessary legal procedures.
Used Housing in Spain
How does the buying process in Spain differ from Norway?
The buying process in Spain differs significantly from the buying process in Norway. In Spain, it is crucial to understand the local laws and regulations. Foreign buyers are advised to seek legal assistance throughout the process to avoid potential pitfalls.
What preparations should I make before purchasing a property in Spain?
Before purchasing, ensure you understand the local laws and regulations. It is recommended to consult with a lawyer to navigate the legalities effectively. Also, confirm your financing arrangements before signing any contracts, ensuring you can pay the full purchase price within the stipulated timeframe.
What is a reservation contract, and why is it important?
A reservation contract is typically created by a broker when buying a second-hand property. It secures the property by taking it off the market and should include minimum provisions such as payment deadlines, signing the deed, and the rights and obligations of both parties.
What should a purchase contract include?
A purchase contract, usually signed 2-3 weeks after the reservation contract, should include a detailed description of the property, expense distribution, deed signing details, and legal obligations in case of default. If the property is sold furnished, an inventory list should be attached.
Why is a technical inspection important, and what are the costs involved?
A technical inspection is recommended for older properties to identify any defects. The inspection usually costs between €800-1000 and should be completed before signing the purchase contract. This helps avoid surprises after the purchase and may provide grounds for a price reduction.
What are encumbrances, and how do they affect the buying process?
Encumbrances like unpaid property tax, rubbish tax, and condominium tax rest on the property regardless of ownership. The seller must present proof of payment at the deed signing, or the buyer’s lawyer may withhold the corresponding amount from the purchase price to settle any outstanding taxes.
What are the current costs and taxes involved in buying a second-hand home in Spain?
As of 29/04/2021, the transfer tax for second-hand homes is set at 7% of the purchase price. Unlike new builds, buyers do not need to pay the 1.5% stamp duty.
Legal & Financial Considerations
What is a bank guarantee, and why is it required?
A bank guarantee ensures that any payments made for a housing project are secured by the bank and cannot be used by the developer until the project is complete. According to Spanish law, the developer must provide this guarantee, with costs varying between 1% – 1.25% of the guarantee amount.
Why is using a lawyer important when buying property in Spain?
A lawyer helps navigate the legal complexities of purchasing property in Spain, preventing unnecessary costs or legal issues. Their services, typically costing around 1% of the purchase price, include drawing up contracts, obtaining a NIE number, registering deeds, setting up bank accounts, and handling utilities.
What is a reservation contract, and why is it important?
A reservation contract is typically created by a broker when buying a second-hand property. It secures the property by taking it off the market and should include minimum provisions such as payment deadlines, signing the deed, and the rights and obligations of both parties.
What should a purchase contract include?
A purchase contract, usually signed 2-3 weeks after the reservation contract, should include a detailed description of the property, expense distribution, deed signing details, and legal obligations in case of default. If the property is sold furnished, an inventory list should be attached.
Why is a technical inspection important, and what are the costs involved?
A technical inspection is recommended for older properties to identify any defects. The inspection usually costs between €800-1000 and should be completed before signing the purchase contract. This helps avoid surprises after the purchase and may provide grounds for a price reduction.
What are encumbrances, and how do they affect the buying process?
Encumbrances like unpaid property tax, rubbish tax, and condominium tax rest on the property regardless of ownership. The seller must present proof of payment at the deed signing, or the buyer’s lawyer may withhold the corresponding amount from the purchase price to settle any outstanding taxes.
What are the current costs and taxes involved in buying a second-hand home in Spain?
As of 29/04/2021, the transfer tax for second-hand homes is set at 7% of the purchase price. Unlike new builds, buyers do not need to pay the 1.5% stamp duty.