In Spain, the sale of a property is a regulated process. We have a team of experts at hand to offer advice on how to proceed with selling in Spain, what to avoid and assistance in marketing your property. Below is a brief outline on the basic procedures of selling in Spain.

Choosing an agent
The first step is to appoint some professionals to help you. Unless you are prepared to pay for your own advertising and promotional material, this means choosing an Estate Agent to value and market your property for you, and appointing a Solicitor to handle the legal side of the sale. If you are planning to buy another property, you may also wish to speak to a Financial Advisor about mortgage options.

Many people forget to appoint a Solicitor until a firm offer from a potential buyer suddenly jolts them into action. But there are several things a Solicitor can do to help prepare for a speedier sale. And experience shows that it's a good idea to be ahead of the game, especially if you are buying another property at the same time. This is covered elsewhere in the Guide.

Do I really need an Estate Agent?
This depends on whether you have the expertise, time, patience and resources to do it yourself. Estate Agents don't charge you a penny unless they sell your property. You only pay for results, and a good Estate Agent will draw in more potential buyers than you would otherwise be likely to attract.

There is also the convenience of having someone else to field calls, to weed out time-wasters, and to act as a go-between in tricky negotiations. An experienced Estate Agent can offer advice and expertise, too, if you have problems with a chain, say, or receive multiple offers. The Agent will have seen these many times before, and be able to handle things to your best advantage.

Remember: no up-front payment is required with Estate Agents. And the Estate Agent you appoint will be working for you (the Vendor), not for your eventual Buyer. This is worth keeping in mind if you are buying another property at the same time: the Estate Agent's chief duty is to the Vendor - who will eventually be paying his or her fee - and not the Buyer.

Price And Conditions
Before meeting the first buyer, you must have decided on price and conditions for the sale. We recommend you establish two sums in your mind: the asking price that should give room for negotiations with the buyer, including eventual sales commissions, and the bottom price that is the net you will want to receive for the property, under which you are not willing to sell.

Seller should beware of agents who limit themselves to telling them only what they want to hear: too many agents purposefully overvalue homes to get a listing, and then let their sellers down over a period of time. Agencies with solid reputations do not want to lose these reputations and as such will not overvalue a property in this manner.

Payment Terms
We recommend that you sell cash, unless as a resident, you should want to spread the income from the sale over several years for fiscal reasons. Payment terms make the matter complicated. You should not give title to the property in the buyers name before having received the total sales price. It is not wise to give the buyer, or his representative, a key and right of use of the property before he has paid completely. If he moves in and stops paying, you have to take him to court to get him out. On the other hand, the buyer may not have the full amount available, needing to sell another property or get a loan from the bank. He will want some guarantee for the deposit paid in the meantime.

Legal Paperwork prior to selling
You should have copies of your title deed (escritura) and a "nota simple" from the property register, ready to show to any interested buyers, so that they can see you are still the owner of the property and that there are no outstanding debts related to the property. That paper is a very good selling point. In addition, you must have the latest receipts, for the local rates (Impuesto de Bienes Inmuebles), for electricity, water and fees to the Community of Owners.

If you are selling the property furnished, you must prepare a complete list of furniture and even photos of the most important pieces.


Non-Returnable Deposit
On signing a private contract, you as the vendor, should insist on getting a non-returnable deposit of 5-10%, for taking the property off the market. This is normal. If the buyer is willing and able to pay a bigger amount when signing the contract, without this constituting the full price, the solution may be the following: The 5-10% non-returnable deposit is paid to you, while the rest of the money is paid into the clients account of a lawyer or a bank, with clear instructions that at the signing at the notary's office, when the rest of the total purchasing price and title deed is signed in the name of the buyer the money from the lawyer/bank account be paid to you.

New Notarial Rules
According to the new Notarial Rules, the notary now has the obligation to check the registration of the property being sold, before the signing of the deed. Additionally, he must fax the new title deed immediately to the property register. This is good legislation, and vendor and buyer should make the notaries comply with their obligations.

Legal and fiscal obligations

Fiscal Obligations

The fiscal obligations for a foreigner selling his property in Spain are the following:

* make sure that the transfer taxes on the new title deed and the municipal Plus Valía tax is being paid.

* pay the local rates on the property up to the property transfer date.

* pay capital gains taxes on the sale.
We have explained this in detail in our Short Information on Capital Gains Taxes (also available from F.I.P.E.). It is very important for any vendor to read this Short-Information carefully and make the appropriate calculations.

Legal Obligations
Your legal obligations is mainly to give a clean title to the new buyer and then to inform the town hall, the bank, the electricity company, water board and your fiscal representative in Spain that you no longer have any property. The new buyer should be advised to present himself instead.

Real Market Value Must Be Declared
Furthermore, you should be aware that Spanish law states that the real market value must be declared in any new escritura, and provides sanctions if they find a value has been declared at less than 80% of the real market value.

What Is The Market Value?
What is the market value? Not necessarily your sales price, since you can sell above or below the market value. The best way is to make an evaluation of the property value. If you then declare no more than 20% less of the value, you should be safe. if you are a non-resident - the retainer withheld by buyer for part of the price to be paid to the Treasury; all this is consequence of seller's obligation to pay tax on revenue obtained in Spain.

Are You A Resident Not Intending To Buy Another Property?
If you are a resident in Spain, and do not intend to buy another property here after you sell your present home, it may be advisable to give up your residency before selling the property. You can do this by taking your residence permit to a police station with a foreigners department, and get a receipt for having returned it. You are then a non-resident and can act as such. You may not be permitted to take up the residency again before 3 years have passed.

Decisions To Take Before Selling Up And Returning To Your Home Country
Before taking the decision to sell up and return to your home country, you should investigate the following points carefully:

* will you be covered by your national health services when going back?

* how and when will it be best for you to change to the tax system of your home country?

* how to invest the proceeds from the sale of the property in Spain, to get maximum benefits from your capital?

Capital Gains Tax.
In accordance with Spanish law, non-resident sellers must pay 35% capital gains tax at the sale of a property in Spain. Purchasers are always obliged to withhold 5% of the SALE / PURCHASE price at source and at the sale moment in the name of sellers who are considered non-fiscal residents by the Spanish Inland Revenue. The rest up to the above mentioned tax rate should be paid by the sellers within 4 months from the sale date. In the event that sellers owned the sold property for longer than 10 years back counted from the 31stDecember 1996, they should be able to claim most (or all of it) of the 5% retained tax and paid by the buyers. We should heavily recommend you to get legally assisted by Spanish professionals, tax consultants and solicitors who will advice and analyze what to do and how much the whole transaction will cost you.

Plus Valia (“Incremento de Valor de Bienes de Naturaleza Urbana”).
According to Spanish law, this local rate is supposed to be paid by the vendors, unless a clause stating otherwise has been added to the Private Purchase contract. This tax is calculated on the increased value of the land since the previous sale and it can be estimated by the Town Hall beforehand.

SELLING FEES

Legal fees - We can organise legal representation for 1500 euros plus the mandatory 16% V.A.T. Outstanding debts - The cancellation of outstanding debts is the vendor’s responsibility, including the cost to terminate any mortgages on the property and the logical registration of them at Land Registry Offices.

Estate agents - This fee normally differs for each individual property.

N.I.E. (Numero de Identificación de Extranjero).
All non-residents will require this number if they are about to have any transactions with the Spanish tax authorities, i.e. Owning a property, a vehicle or an interest earning bank account. Your legal representatives can apply and achieve this number for you.

Spanish Will. It is advisable to make a Spanish Will for all your assets here in Spain, even though it is not a legal requirement. It will always have to be signed in the presence of the Notary Public and your Legal representatives should assist you with this important legal matter.

The above information is intended only as a guide and is subject to errors, omissions and changes. Their accuracy is not guaranteed.