Q&A

N.I.E. (Numero de Identificación de Extranjero) is an identification number, called foreigners who settle in Spain. The number consists of 7 numbers, always starting with the letter X, and is necessary in relation to a number of actions such as:

• Buy / sell property
• Obtain mortgage
• Insurances
• Buy / sell car or boat
• Health care
• Work

The application process is a fairly simple process, but may be time consuming depending on the area in which you live. The application form can be picked up at the local police station or downloaded here. However, one may also use a lawyer’s power to give the elected lawyer the power to create N.I.E. number for his client.

The period from which the number has been searched for it can be picked up depends on which municipality has been searched. It may take from approx. 1-4 weeks. It is therefore important that the process be initiated as soon as you find the right property, when signing a shot (typically 6-10 weeks after) must be registered with a valid N.I.E.

When buying a property in Spain, the following costs must be added to the purchase price, and amount to approx. 11-13% in total:

– Transfer tax (8-10%) OR VAT (10%)
– Notary and stamp fees (1% -1.5%)
– Solicitor free (0.75-1.50%)

For all trades of real estate in Spain, the buyer undertakes to pay a percentage of the purchase price to the Spanish State. This tax is known as Transfer Tax or ITP and amounts to either 8%, 9% or 10% of the purchase price.

– 8% is valid for the purchase of property up to 400,000 € (399,999 €)
– 9% is valid for the purchase of property from 400,000 € and 700,000 € (699,999 €)
– 10% applies to the purchase of property exceeding a value of 700,000 €

Example: A property is sold for 1,250,000 €

Up to the 400,000 € is paid 8% = 32,000 €
At the 300,000 € ranging from 400,000 € to 700,000 € 9% = 27,000 €
At the 550,000 € which amounts to the remaining part of the sum from 700,000 € up to the 1,250,000 € is paid 10% = 55,000 €
The total amount will in this case amount to 114,000 €.

The buyer pays only tax on transfer, provided that the seller is not a developer or property dealer.

If, on the other hand, the seller is a developer (typically when buying a project sale or as the first owner of a new building), instead of transfer tax, VAT (IVA) + voting fee of the purchase must be paid. The VAT is set at 10% regardless of the price of the house, plus a stamp duty of 1.5%.

In addition, there is a notary and registration fee (see next section) and attorney’s fees (not mandatory). Thus, in the case of purchases of Spanish property, additional costs are expected corresponding to approx. 11-13% of the purchase price, depending on whether you buy a resale property (transfer tax) or project sales (VAT).

Usar fee can cost up to approx. 1750 €. The cost increases in relation to the number of pages or complexity of fouling (eg transcription of articles of association, payment in stages, property partially completed, etc.). As an example, an apartment that costs 300,000 euros will cost about 546 euros in a notary fee, while a property that costs 600,000 euros will cost about 678 euros in a notary fee.

Similarly, property registration fee also depends on the complexity of the deal. For example, the fee for an apartment of 600,000 €, registered in a private person’s name, and purchased without mortgages, will be deducted approximately 300 €. In the example where an apartment for the same price is registered in 2 people’s names and purchased with mortgage loans, approx. 800 €.

As a starting point, one can expect that both expenses together will amount to 1% of the purchase price.

No, there are no more fixed one-time costs directly associated with the purchase of your Spanish property. However, as elsewhere in the world, you must be aware that a number of fixed costs are required in connection with owning a property.

Community fees

A community / landowner association is a legal association of housing or landowners consisting solely of the owners of apartments in a building or villas on one road. The purpose of a community is to manage, own and maintain the common elements found in the building or property. Each individual homeowner is thus obliged to participate in the cost of maintenance of common areas and services, on a proportional basis, just like everyone else in the property. Normally, a homeowner’s percentage of costs is determined by the size of the property / land owned, divided into the total area of ​​all apartments or land. A budget for annual joint expenses is presented at the annual general meeting where the owners or their representatives must approve the budget by a majority decision of the attendants at the meeting. Expenditure may vary considerably depending on what benefits you wish but usually include wages and social security of gardeners, maintenance of common swimmimgpool, elevator operation, repair of common items, renovation, water for irrigation of gardens, electricity for lighting common areas, insurance, security guard / monitoring and administration fees. The chairman of a community is also elected at the general meeting.

An average 2 bedroom apartment in a building with shared swimming pool and a small garden would typically cost between 120-200 € per month in joint expenses. For apartments in luxury urbanizations with a large staff and many facilities, such as. fitness center, heated pool or several large pool areas, 24 hour security guard and large tropical communal gardens, the monthly joint expense can run up to 600-1000 €. In the case of an individual villa in an urbanization, the common costs are often smaller as the private gardens and any swimming pool in general are not maintained by the community, and the common costs are limited to road and grass maintenance, as well as possible security in the form of a security company.

Yearly property tax

The property tax (I.B.I.) is paid annually and is calculated on the basis of the matric or taxable value of the land on which the property is situated. The value is assigned by the Spanish tax authorities. The matric value takes into account the value of the land plus the value of the building, by type, location and usage. Each municipal councilhouse then decides a percentage of this, which is charged in connection with the local rate.

Rubbish, renovation and water charges

Basura is a garbage and renovation cost, which is determined by local authorities, depending on property type, and is paid every 6 months. It will typically be around 100-200 € per year. Water costs are settled according to water meter in cm3 and paid every 3 months (quarterly settlement). Payment is made directly to the town hall or bank transfer.

Landline phone

Your phone bill is charged monthly. The price varies depending on the equipment installed, but usually is around 15-25 € per month including an ADSL wifi connection. A 3-minute call (daytime / office hours) to any EU country costs about 0.69 € (excluding VAT). Calls to mobile numbers internally in Spain are approx. 0.16 € per minute. There are many local and national telephone companies that can offer significant savings, for those who spend some time studying the market. ADSL broadband services are available virtually everywhere and ADSL, while more and more areas are now offered fiber, which costs about 39 € (plus VAT) and upwards per month depending on the desired capacity and speed.

Cleaning

Cleaning is generally available on a full-time or hourly basis. Full-time wages range from 700 € -900 € per month, plus approx. 140 € in social security. Time-settled cleaning usually amounts to 10-15 € per hour.

Electricity

Electricity is billed monthly or every other month, depending on the area. Minimum rates apply regardless of whether you are consuming or not and the rate varies according to the amount of electricity your house could potentially use with everything on. The minimum price for an apartment is usually between 40-75 € per person. month. Charges for a villa are from about 100-150 € per month depending on the size of the electrical installation. In general, consumption costs 0.08 € per Kwh plus treasure.

Insurance

A standard insurance for an apartment worth € 250,000, with fixtures worth € 30,000, will be € 345 per person. year. For a villa worth a value of € 500,000 with inventory worth € 75,000, the price will be in the region of 1250 €.

A power of attorney is a document prepared by the lawyer and signed by a notary giving you another person (in this case the lawyer) the right to make specific decisions and act on your behalf. Creating a power of attorney does not mean that you can no longer make decisions yourself. It simply means that another person can also act on your behalf. As long as you are able to give instructions, the other person must follow your decisions and act in your interest. In short, you share your powers with another. You may revoke the proxy at any time if you are not satisfied with the proxy. By creating a permanent power of attorney, you may choose to allow the proxy to use on your behalf, including, for example. in comparison to creating a N.I.E. number, open bank accounts, dispose of your money, raise checks, sell or pledge your real estate or sign and sign contracts on your behalf. A power of attorney should be made individually so that it is adapted to your particular wishes. It may be a great advantage to establish a proxy with your lawyer, as you would otherwise have to travel to Spain at least 3 times during the purchase process, to sign contracts, and in addition, you must be responsible for various registrations in the municipality regarding water, etc. By comparison, a power of attorney normally costs between 80-140€, thus saving the client both time and money.

You need to declare your Spanish holiday rental income on your UK tax return of course.  The rental profit is calculated in much the same way as that earned from a UK property.  These are the allowable type of expenses:

These are examples of disallowable expenses:

• Improvements rather than just maintenance e.g. putting in a jacuzzi as opposed to redecorating
• Capital part of any mortgage (like in Spain)
• Costs while the property is empty
• Property sale and purchase costs

If you have multiple properties, perhaps in the UK and in Spain, you can’t lump all the profits together because of the tax relief issue discussed below.

One special thing about renting abroad is that any rent received in a currency other than sterling has to be translated into sterling at the exchange rate when the rent falls due.

The income from the rental of a dwelling is calculated as the total income received less deductible expenses and after application of a deduction of 50%.

The following are normally allowable:

• Interest and financing costs associated with acquiring, improving housing, transferred or appliances in the home.  Essentially this means the mortgage interest if there is a mortgage on the property.  If you look at the monthly mortgage statement from the bank it will split the cost between “interes” (interest) and “amortizacion” (capital) and it is the interest that is deductible.
• Taxes or fees such as property tax (IBI or SUMA) and rubbish collection
• Expenses incurred in drawing up the tenancy agreement
• Maintenance and repair expenses
• Expenditure on services and supplies to the property where these are covered by the lessor
• Expenditure on administration and community fees
• Insurance premiums

The net result is reduced by 50% if the property is rented out as someone’s main home.  The deduction doesn’t apply to rent received from commercial premises like offices or shops.   The reduction may increase to 100% when the renter is under 35 years.

On a legal note there is are two obligations that come with being a landlord when you are selling the property with a sitting tenant.  The first of these is that you must offer the tenant first refusal and give them 30 days to decide.  Secondly you must inform a third party buyer that there is a tenant and they must respect the agreement you have entered into with the tenant.

Municipal Added Value Tax (Plus Valía) is an “added value” tax based on the current value increase that has been from the seller has acquired the property, for any sale. For apartments and terraced houses with relatively small land, the amount amounts to approx. 1000 € if trade takes place within a period of 5-6 years.

For villa sales with large land, the price will of course be somewhat higher. It is the local town hall / municipality that indexes the valuation of the tax. This tax is, by default, the seller who is responsible for the payment unless otherwise negotiated. As multiple variables are used in calculating this tax, especially depending on ownership of the property, the amount may vary significantly.

Provided that a building site is located within an urbanization or an area set out in the municipal plan for such use, building permission to construct a free-standing house will already be available. Building regulations may vary, however, and as these dictate the permissible size of a possible. villa, always remember to make sure that it is legal to build your wishhouse before proceeding with the purchase of a building site. As a rule, landslides must be located in urban areas, built by between 15-30%, with 25% being the most normal.

Note that, unlike resale and project sales, neither 8-10% transfer tax or 10% VAT is charged, but a 21% VAT rate on the purchase price, when buying a building site in Spain.