Buying Process in Tenerife
Buying Process in Tenerife
So, you want to buy your dream home here in Tenerife; but first you need to know what to expect. Here we give you a simple explanation of the process and costs of buying a property. If you need further advice or have any questions please use the link HERE. Please note that, unlike some other agents, we will help and support you through the process outlined below at no extra cost.
Unlike the U.K. Spain has a notary system for buying and selling property, making a Will or enacting a power of attorney. Notaries are independent legally-qualified officials. This page explains how a property is transferred, with both vendor and purchaser appearing together before the notary for sellers to hand over the keys, and for buyers to hand over the money. Both sign the Escritura (title deeds) and the notary oversees and signs to confirm that the transaction has taken place and is legal.
As part of the procedure, the Notary will verify that the property is legally owned and registered to the vendor, that it is free of all costs and charges, and that it comes with vacant possession. If you are unable to be in Tenerife to sign in person, then you can allocate a representative by specific Power of Attorney to sign on your behalf.
However, please note that Notaries do not confirm the specific legality of the property being transferred and so it is still necessary to undertake a full and independent conveyance beforehand. After completion, the taxes due on the transaction are filed with the tax authorities, the Escritura submitted to the Land Registry, and the costs disbursed. These costs, which include taxes, the cost of the Notary and land registry fees, are paid by the purchaser when the Escritura is signed at Notary. To ensure that you have sufficient funds to complete we advise you to allocate 10% in addition to the agreed purchase price. Any over-allocation will be refunded at the end of the procedure when the final Escritura is returned a few months later.
Tax: You will pay 6.5% for resale properties or 7% on new properties.
Notary Fee: This will vary depending on the value of the property, and should be between 500 and 1000 Euros.
Land Registry: Your new property must be registered in the municipal land registry and the fee should be around half of the Notary fees.
Don’t forget that, in addition to these expenses, you will have ongoing costs to maintain your property legally. These include utilities bills, annual local and national taxes, and community fees if the property is part of a complex.
You should allow for:Water: This is usually paid directly to the water company and is charged according to metered usage.
Electricity: This is normally paid directly to the Electricity Company and is also charged according to metered usage.Rubbish: This is usually paid directly to the municipal authority and is charged annually or half-yearly depending on municipality.
Rates: These are payable annually, usually in May/June. The rate depends on the size, location and age of your property, and is currently calculated at around 0.45% of the rateable value.
Community Charge: This is a maintenance charge payable by owners of properties which are part of complexes. The amount you pay will depend on the various facilities and features of the complex, e.g. lifts, swimming pools, gardens, security, lighting, etc. It is advisable that you factor this cost into your regular outgoing payments for upkeep of your property.
Income Tax: Residents and non-residents owning property or investments in Spain are obliged to file annual tax returns. The basic income tax rate is 19% for 2016. Income tax is applicable to declared and notional rental income. This notional rental income is assessed on non-residents even if they do not let out their properties; it is based on an assumption of a certain level of undeclared rental income deemed to be 1.1% of the property value defined as the highest of the price declared on the Escritura.