A 1975 Law will still affect UK property buyers as non-EU residents in Spain, for area close to the countries boarders and Military installations.

This piece of legislation is still in force and requires non-EU buyers of properties within range of strategic defence points  or the Boarder areas to obtain a special permit from the Defence Ministry. The process can take months will need criminal record checks obtained in the UK plus a lot of form filling.

In total, the law impacts about 1,560 municipalities across Spain as it also applies to urban areas close to the Strait of Gibralter, the Bay of Cádiz, the Galician coast and Spain’s borders with France and Portugal. 

The legislation states that future residents must apply for the Defense Ministry’s permit alongside documentation that includes a sworn translation of a criminal record certificate from their country, two photographs and a certified photocopy of their passport. The law was proposed within the context of the Cold War when Spain had not yet joined either the European Union or the defence alliance NATO, The application goes through the Captaincy General of Barcelona and processing has, until now, taken between two & six months.

A notary cannot issue the deed of a property to a foreigner without this documentation, a loan cannot be applied for as the banks will wait until the certification is in place.

Costa Esuri, Ayamonte, Canela (Excluding Beach area) are all affected by this legislation.

However there is light at the end of the tunnel, having completed the process for numerous buyers in conjunction with a trusted specialist property lawyer we can now expedite you through the process obtaining the certification within the fastest possible time. This is one of the great advantages ABCasa properties offers its clients, you are not just another sale for us, we take care of you every step of the way.

What taxes do I need to pay?

Generally speaking, there are two main categories of taxes you need to consider when buying a property in Spain: sales taxes and maintenance taxes.

Sales taxes are due at the time you buy or sell your property, whilst maintenance taxes are payable on an ongoing basis.

Sales taxes

Which taxes are payable depends on whether the property is a new build or a resale. There are also a number of fees due on every property purchase.

New builds

A new build is a property that is being sold for the first time. You’d normally buy this kind of property from a developer or a bank.

As a buyer, there are two taxes you’ll need to pay on new builds: VAT (called IVA in Spain) and stamp duty.

This is currently set at 10% of the purchase price, except in the Canary Islands. Here, VAT is known as IGIC (Impuesto General Indirecto Canario), and it’s 4.5% of the sale price.

You’ll also have to pay VAT if you purchase a commercial property or a plot of land. In this case the amount of VAT payable is 21% of the purchase price.

Stamp duty is normally 1% of the purchase price. However, it may vary in different regions, so it’s a good idea to check with the regional government. In Andalucia, for example, stamp duty is 1.5%, while in Murcia it’s 2%.

You’ll usually need to pay at least part of the VAT and stamp duty at the time you make your deposit, settling the rest when you sign the contract of sale.

Resale properties

A resale property is any property that isn’t being sold for the first time.

In this case, you won’t have to pay VAT or stamp duty. Instead, you’ll need to pay transfer tax (impuesto sobre transmisiones patrimoniales), which is due upon signing the contract of sale.

As a general rule, transfer tax is 7% of the purchase price. However, many regions apply their own rate of tax (which can be as high as 11%), so you’ll need to check with your region.

Land appreciation tax (Plusvalía)

Land appreciation tax is payable on every transfer of property, whether it’s a new build or a resale.

It’s a tax on the increase in value of a property since the last transfer of ownership, and it’s due to the municipality where the property is situated, within 30 days of the date of sale.

The tax is calculated as a percentage of the property’s cadastral value – the value given to the property by the municipal government – but it can vary quite a lot. Factors affecting it include the property’s size, whether it’s a new build or an old one, the number of years the seller has owned the land and even the municipality’s population.

Land appreciation tax is normally payable by the seller. However, it’s not unusual to negotiate its payment during a sale, and some vendors will insist the buyer should pay it directly, or at least refund it. You can confirm the cost at the municipal tax office (recaudación municipal) before you sign the contract of sale.

Capital gains

As a seller, you’ll have to pay capital gains tax on your profits from the sale. This is calculated as a percentage of the sale price.

Capital gains tax is 19% for non residents, while residents pay it on a sliding scale as follows:

1. 19% on the first €6,000;
2. 21% on €6,000 to €50,000; and
3. 23% on €50,000 and above

If you’re a resident, however, you can apply for tax relief; provided you’ve lived in the property for at least three years before selling it.

Normally, the buyer holds 3% of the purchase price and pays part of the capital gains tax on the seller’s behalf. As a seller, you’ll then have to file a tax return and pay the remainder within one month of the sale.

Sometimes, it may turn out that you’re due a refund. Unfortunately, tax due is payable immediately, whereas you’ll have to wait at least a few months for a refund. Either way, you’ll need to obtain proof of original payment from the buyer in order to file your return. This is a form called Modelo 211.

Other fees

Strictly speaking, these aren’t taxes, they’re still due on every property purchase and they can add up. You’ll need to take them into consideration when budgeting for your purchase or setting your sale price.

Registration fees

When you purchase a property, you’ll need to register your title deed with the land registry.

The fee will vary depending on the property and the area. However, you should expect to pay between €400 and €800. A portion of the fee is due as part of your deposit, and the rest is payable on the day you sign the contract of sale.

Notarial fees

As a rule, notarial fees are paid by the buyer. You should expect to pay between 0.5% and 1% of the purchase price.

Banking fees

Many sellers will only accept a banker’s cheque issued by a Spanish bank as payment. Most banks will charge a fee to issue a banker’s cheque, often in the region of 0.3% to 0.5% of the amount.

Obviously, you’ll need to transfer money into your Spanish account, so you should also take international transfer fees and the exchange rate (if applicable) into account. Your bank should have a schedule of fees that outlines all the fees and charges involved.

If you’re paying for your property with a mortgage, you’ll need to budget for a number of additional costs.

Most banks will want to value the property before approving your mortgage. You should expect to pay about €500 for this. Very often, you’ll also have to pay an opening fee and a processing fee.

A mortgage will also increase notarial fees.

Legal fees

While it isn’t strictly necessary, it’s a very good idea to hire a good lawyer well versed in Spanish property law to act on your behalf.

Your lawyer will explain the process to you, draft contracts, carry out any background checks, prepare the relevant documentation and generally ensure that you are not being treated unfairly or illegally.

Legal fees will vary depending on the amount of work involved. We can give you the details of several independent trusted lawyers to help with this process.

Maintenance taxes

As a property owner, you’ll need to pay property ownership tax and wealth tax, whether you’re a resident or a non-resident.

If you’re a non-resident, you’ll also have to pay income tax on real or potential income generated by your property.

Property ownership tax

Property ownership tax (impuesto sobre bienes inmuebles, or IBI), is due to your local government authority.

Because it’s a local tax, it varies from area to area. Factors that are usually taken into account when calculating the tax include whether the area is urban or rural (urban areas typically have higher taxes), the building’s age, the type of property and it’s overall size.

As a general rule, IBI is about 0.3 to 0.5% of your property’s cadastral value, which is usually about 70% of your property’s real value. You can check the total amount of tax due at your local town hall.

Covid 19 Update

Easter Sunday 12th April 2020

 Category: Covid 19 Updates Published: Sunday, 12 April 2020 16:14 Written by Michael Halligan

There has been a total of 4,167 new cases declared today and the total confirmed cases is now at 166,019. The number of patients in intensive care is was not published today by the ministry for health as they continue consolidating figures for Madrid, Galicia, Castilla y Leon and Castilla la Mancha. The number of deaths has now reached 15,238. The number of people who have recovered is 62,391.

Meanwhile in Andalusia there are 10,006 confirmed cases of which 4,950 have needed hospitalisation and 619 have needed intensive care. As of 21.00 yesterday there are 1,656 patients confirmed with Covid-19 in hospital and 366 of those are in intensive care. There have been 799 deaths (Malaga 183, Jaen 105, Granada 165, Cordoba 56, Cadiz 59, Seville 169, Almeria 36, Huelva 26). In Seville there are 2,034 cases and 955 of those required hospitalization with 127 in intensive care. There have been 169 deaths while 247 have been cured.

In Andalusia there have been a total of 799 deaths so far. A total 1,838 patients have now been declared cured.

In Huelva there are 310 cases, this being an increase of 2 new cases today, 169 have been hospitalized with 27 in intensive care. Sadly, four new deaths were reported today bringing the total to 26. The good news is 61 have now been declared cured.

 Category: Covid 19 Updates Published: Friday, 13 March 2020 21:52 Written by Michael Halligan

Updates on what is happening both locally in Ayamonte and in Huelva and Andalusia regarding the Covid 19. This is not to alarm anyone in any way but simply to keep you informed about what the official organisms are reporting and to try and curb the rumour mill that comes with these types of outbreaks.

First and foremost, the Guidelines set out by the Town Hall of Ayamonte are the ones you should follow:

• Wash hands regularly and thoroughly with soap and water or an alcohol-based solution.
• When coughing cover your mouth with a Kleenex or cough into your elbow.
• Avoid touching your eyes, nose and mouth.
• Avoid contact with people who are showing signs of respiratory illnesses (coughing / sneezing)
• Maintain a safe distance of over one metre with people with symptoms of severe respiratory infections.

The most common symptoms of Coronavirus are Fever, cough and the sensation of breathlessness. If you think you may be infected or have arrived from or been in contact with a person who is in a high-risk area contact this Telephone number 900 400 061 do not go directly to the hospital or nearest health centre. For other emergencies use these telephone numbers 061 or 112.

All Schools and Universities are now closed and will be so until the end of March. It is important to note that these children and students are not on holidays and where possible should remain at home.

The President of Spain Pedro Sanchez announced today the whole country is entering a state of Alarm as of Saturday 14^th March 2020,due to the Coronavirus outbreak. A state of Alarm means that the government can:

Limit the circulation of people and vehicles.

Carry out searches and impound items

Take over factories, workshops and premises for the use of the ministry

Limit the use of services or products to ensure the provision of basic consumer goods.

The state of Alarm will last for 15 days after which it can only be extended by the Congress approval. The last time Spain announced a State of Alarm was when the air traffic controllers went on strike in Dec 2010.

In Andalusia there have been 219 confirmed cases as of 11.00 today Friday, Malaga 111, Jaen 30, Seville 25, Cadiz 19, Granada 14, Almeria 9 and Huelva 4. There has been one death in Andalucia of a person in their 70’s who had been hospitalised in Malaga for the last two months with underlying health problems

In Huelva there are 4 confirmed cases of Covid 19 and zero deaths as per Junta de Andalucia reports today at 18.00. The first case was declared at the beginning of this week with a second case confirmed Thursday and two new cases declared today.

Access to the beaches in Ayamonte has now been closed and the Town Hall has asked people to please stay at home.

Stay safe and wash your hands.

Rental prices climb 5.1% in 2019.

But that’s not all, the price per square metre has reached unprecedented levels since 2007! Rental yields have increased over the past five years, equating to a substantial 50% increase.

The average annual rental return in Spain now equates to 5% of property value.

Buy-To-Let in Spain has proven a very successful investment for savvy investors. 

Scores of landlords make large amounts every tax quarter and you can expect to rent out nine months a year as a holiday rental, with huge landlord tax breaks of 70%, or more, on (rental) income tax.

This lenient tax relief also extends to non-resident landlords.

The income can also be used to offset overheads and maintenance expenses, including mortgage repayments. 

Pretty much, no other investment is giving a 5% yield per year as safe as this one.

BUT THAT’S NOT ALL, IT ONLY GETS BETTER!

Besides soaring rental yields, you also need to factor in the capital appreciation of the property (the increase in value of real estate over time). 

Properties in Spain have seen their value increase over the previous five years at an average rate of 5% per year, according to Moody’s.

Pro-tip: When you combine both soaring rental yields and capital appreciation, you reach the conclusion that Spanish real estate is giving a safe two-digit return. 

In plain English, that’s over a 10% yield every year safely, ideal for retirees who are afraid of sharp stock market fluctuations and seek a safe investment in bricks for their pension pot.

Spain’s property rentals smash records, climbing 5% in a year, while price per square metre also surges

Will I still be able to buy in Spain?

There are no current restrictions nor specific requirements to be a national of one of the EU countries in order to purchase property in Spain. Based on this, future British investment in Spain should not be affected by the UK leaving the European Union and British nationals would, in the current position, be able to invest in Spain should they wish to do so.

Many clients invest in a second holiday home in the sun for their own enjoyment, while others see their purchase as an investment. Spain has a lot to offer and has a great variety of tourism, from its beautiful beaches to its stunning mountains.

One point to mention is that, as a national of an EU member state, one can enter and leave, live and work in any member states without the need to apply for any permits/licences. The post-Brexit scene leaves many questions as to the future arrangements for British nationals to enter/stay in other EU member states and for EU member states nationals to enter/stay in the UK, and this is something that surely all would hope can be resolved in the best interest of all citizens involved.

Will it be more expensive to do so?

When you purchase a property in Spain, transfer tax is payable on existing properties, while Spanish VAT and stamp duty are payable on newly built properties purchased from a developer.

The current rates for both taxes, transfer tax (Impuesto de Transmisiones Patrimoniales) and Spanish VAT (IVA) and stamp duty (Actos Jurídicos Documentados) are paid by the purchaser in any transaction and the rates are applied regardless of the purchaser’s nationality or being a national of an EU member state.

Additional costs to be taken into account are the notarial fees (Spain being a notarial system, a notary is involved in every transaction as a public official who conveys the property) and Land Registry fees payable to the Local Registrar. All the above taxes and disbursements are payable regardless of the purchaser being a national of an EU member country or not and hence one would not expect purchasing a property in Spain post-Brexit to be more expensive.

Will I have the right to rent out a property I own in Spain?

The rental of properties in Spain is regulated by the Ley de Arrendamientos Urbanos and regional legislation by each of the 17 Autonomous Communities.

The main legislation, Ley de Arrendamientos Urbanos, covers the rental of a property as a main home and for other uses (e.g. temporal rentals) while the so-called “touristic rentals” or “vacational rentals” are regulated by each region/Autonomous Community and these touristic rentals can be heavily regulated in some areas.

There is no current reference nor restriction related to the landlord not being an EU national and therefore, as we stand, there would not seem to be any restrictions on rentals.

What protection will I have as a UK buyer overseas?

All property transactions in Spain are completed by the signature of a deed of sale before a Notario(Spanish public official) who conveys the property, confirms the identity of the parties and gives validity to the transfer of the property.

A Notario is a public official who acts for both parties, hence why obtaining independent legal advice and instructing a lawyer is highly advisable.A lawyer who is qualified in both countries, Spain and the UK/your country of origin and/or residency, would be the main choice for purchasers who want to protect their interests and receive advice on their investment

I already own a property in Spain, will I be at a disadvantage if I try and sell after Brexit?

Unfortunately, we do not know exactly what the post-Brexit scenario will bring and whether future Double Tax Treaty International Agreements will be signed between both countries to resolve any issues that might arise.

The UK and Spain already have Double Treaty Agreements, one in particular related to income tax, while, for example, there is no Double Tax Treaty related to inheritance tax (IHT) (although HMRC in the UK takes into account any IHT paid in Spain).

Currently we can find different tax rates that apply to EU and non-EU nationals, related to IHT and income tax. However, tax rates are in constant change and hence it would be impossible to predict the future tax position.