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Re-Sale or New Construction?
When choosing a property for sale in the Costa Blanca, Spain you will be faced with the decision of buying a new construction property or a re-sale property. Both of these types of purchases have their own benefits.
Re-Sale Property
The main benefit for you buying a re-sale property is that you are buying exactly what you see, without the waiting time for the completion of the property, and you can often move into your new home in the Sun in roughly one-month after you have signed the contract. Re-sale properties are also sold partly furnished or sometimes fully furnished. However, the down side of a re-sale property is that the layout of the house may not be right for you, like the bathroom tiles or the kitchen etc.
New Construction Property
With a New construction property, you are able to choose the layout and design to suit your needs and desires, making the property of your dreams. The downside of new construction properties is the time that it takes to complete the contract and to make the relevant stage payments.
Reserving the chosen property
If you find the property for sale in the Costa Blanca that you have been looking for, you first pay a Securing Deposit (which usually amounts to £ 2000). After you have paid this, the property is taken off the market and once your lawyer (Abogado) has performed all the relevant checks on the property, and after a 30 day period, you will sign the title deeds (Escitura) with the vendor in front of the Notary on an agreed day.
Should you decide to buy a new construction property for sale in the Costa Blanca, you are also asked for a deposit of around £ 2000 to reserve the plot. Following an inspection of the properties background by your lawyer, he will then draw up the contracts for the construction of the property. With New construction properties there are usually stage payments to be made, listed within the contract, along with time limits and obligations for both you and the Vendor.
Conveyancing of the property
This is carried out by your lawyer (Abogado).
The final completion date
When the happy day arrives for the completion of your costa Blanca property, you, your lawyer and the vendor meet infront of the Notary and sign the title deeds (escitura). Following the signing, the notary sends a copy to the land registry who then change the deeds into your name. If you are buying re-sale property in the Costa Blanca, there is a transfer tax to be paid on the same day. Notary fees vary from town to town.
Obtaining your NIE number
Your NIE number is an identity number given to foreigners who wish to buy a property in Spain, your lawyer can make all the necessary arrangements.
Land registry
Here, your escitura is updated with your name, and where your lawyer carries out his searches on the Property. The fees are very similar to that of the notary.
VAT on purchasing property
In Spain, VAT is called IVA. IVA is applied to all new properties. IVA comes in different bands, which are listed here:
· 16% on plot only
· 7% on new ready built properties
· 7% on plot with construction
Taxes on re-sale properties
If you buy a re-sale property for sale in the Costa Blanca, you will not pay VAT, however, you will be liable to pay a transfer tax, which amounts to 7%, which is paid to the Notary on the day of signing the escitura.
Plus Valia Tax
This tax is similar to Capital gains tax and is paid to the local authority on the increase in value of the land since the last purchase. This tax is ONLY based on the increase in value of the Land, not any buildings that have been erected upon it. The payment of this tax is the responsibility of the vendor, but the vendor may try to get you to meet this amount. For this reason, you should be aware of where the contract stipulates who pays 'todos los gastos' (all the expenses of the transaction), which includes the Plus Valia tax.
Some Useful terms:
Escitura - Title deeds
Abogado - Lawyer
Notary - Impartial witness to signing of documents in regards of purchase
Registro de la propiedad - Land registry office where escitura is signed and checks made
IVA - VAT
Transfer Tax - 7% tax payable on re-sale property
Plus Valia - Local tax that is calculated on the rateable value of a property
Hacienda - Spanish tax authorities
NIE - Identification number for foreigners
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