It’s “tapa” time!!!

While going for tapas has become a popular pastime and eating option all over the world, and many famous chefs have elevated these small, tasty portions to high art, there’s no other country on Earth that can match Spain’s tapas culture.

For a truly authentic experience go to Madrid or Granada, where the free tapas tradition is kept alive in tucked away tascas that have maintained their character through the years. The real Spanish tapeo is much more than just food. It’s a way of life, a national pastime that involves eating, drinking, and socializing in a friendly and unpretentious atmosphere.

Of course also the “tapeo” has his history, and although nobody knows for sure the true origin of the tapas, legend has it that the tapa was created by the Spanish king Alfonso X (“El Sabio”). It is said that he had become very ill, and by medical prescription he was only allowed to eat small amounts of food and a little bit of red wine throughout the day.

History further says that “once upon a time” passing an inn called “El Ventorilla del Chato” (still existing), the king wanted to relax a bit, He asked for his normal routine and treatment. As they were preparing him something to drink (a glass of Jerez wine), an air stream entered the dining room through the window, the inn was close to the beach and in order to keep the sand from entering in the glass of wine the innkeeper put a small plate on top of the glass and in this plate a piece of Spanish ham.

And what about fees?

“The clerk held in front of him a scroll with a red wax seal affixed, the kind of thing believed to make a document official – or at least expensive and difficult to understand, which, in fact, amounts to the same thing.”

Terry Pratchett

Usually when people buy a house they look for the best property for the cheapest price. Negotiations take place, offers are made and accepted. Especially with private sales no house is sold for the asking price.

But what about the legal assistance? Many real estate agents will tell you they can take care of the complete procedure. Of course I will not underrate the professional capacity of the real estate agents, but personally I believe in contracting the right people for specific professional jobs. Also most people are not aware that ANYONE can open a real estate office in Spain. No diplomas or other titles are needed.

The notary in Spain does not have the same function as in your own country. In Spain the notary just signs and certifies signatures and documents but he has a very limited responsability as far as the contents of the deed is concerned.

Buying a real estate is an important decision, you pay a lot of money for your dreamhouse, there’s a lot of legal investigation involved, and it does not seem logical that you spend € 300.000 on the purchase of a property but in order to save a couple of thousand euros trust the real estate agent to look after the legal side.

Please be aware that the real estate agent is the interested party. They want to sell and they know if the sale does not go through you may go to another agent. So if there is some important legal problem, can you really rely on them telling you this??  Apart from this they usually also represent the seller…

Just last month I assisted in the purchase of a property. A nice villa in Denia, on a 800 m2 plot. Total price € 325.000,- All paper work seemed to be in order, but when I went to the town hall they told me the town hall planned to widen the street and make a roundabout. Having in account the form of the plot (long and narrow) and the situation of the villa this meant almost 250 m2 would be taken of the plot and the house would be situated at the edge of the plot. The real estate agent and the seller knew about this but choose not to tell the buyer…

Now, how much is this legal assistance worth? Shopping around you probably will find “professionals” willing to assist you for 500 – 750 € for the whole procedure. People often believe it’s just a matter of checking a couple of documents and little more. But before you take any decision you should be aware of the work, knowledge, time, energy and responsibility involved.

It could be compared with a visit to a cardiologist. You go to the medical consultation because you don’t feel well and worry something is seriously wrong; he will ask you some questions, will probably run some tests, even if he takes his time normally in 30 minutes he’s ready, he tells you you’re fine and you leave his consultation feeling great. You pay € 300 and you leave. It would never occur to you to question his fees, after all he’s a professional… His work is also invisible in the sense that he charges you whatever he wants without giving you anything in exchange… NOT TRUE, the cardiologist will give you peace of mind and tranquility, and that is worth much more than that.

Also the lawyer is a professional. It takes a minimum of 5 years to become a lawyer, and after that the lawyer has to keep up as laws change all the time. What for you may seem like just checking a couple of documents requires a lot of preparation, experience and knowledge. And also the lawyer will give you peace of mind and tranquility.

Our work starts at the moment a price is agreed. At this point a reservation document is signed and a first amount is paid (usually between the real estate agent and the buyer). Usually € 3000 or € 5000. The house is taken off the market. Normally this is the moment most buyers start looking for an attorney to help them (unless they trust their real estate agent to do this).

This is when usually a first meeting takes place between attorney and buyers. The attorney explains the whole procedure and the exact way he works. He will make sure he has all the necessary documents from the buyer, copies of passports/NIE, bank information, contact details, and in case a mortgage is needed all the financial information.

Then he will contact the agent. The agent should give him all the required information, title deeds, proof of payment local rates, electricity and water bills, certificate of inhabitability, energy certificate, all necessary information of the sellers and whatever other information he feels necessary.

He will then start the legal investigation, he’ll go to the town hall to check the urbanistic situation, to the property register to check if there’s any debt or other legal charge on the property, to the light and water company to check all is up to date, and to the tax office to see if tax has been paid. Also very important is to find out if the description in both the property register and the tax office coincide with reality. If not, the attorney will make sure the seller updates the situation. This work is not always “visible” but extremely important. After all if something goes wrong the lawyer will be blamed…

Once all this is done the lawyer will approve the purchase. You can go ahead! The contract is made up (by the lawyer), and he will have your interest in mind. A date is fixed for the signature in the notary office and the way of payments are established as well as all other conditions.

All other preparations are made. You may have to apply for your NIE number, open a bank account, and if necessary sign a Power of attorney so the lawyer can sign the deed in your name.

The deed is signed, the keys handed over, and the lawyer will present within the established period the document of the transfer tax and the deed in the property register. Also he’ll take care of the changes of all services on name of the new owner.

As you can see there’s much more work involved than just “checking a couple of documents”.

About “Power of Attorney”

power of attorney (POA) or letter of attorney is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principalgrantor, or donor (of the power). The one authorized to act is the agent or, in some common law jurisdictions, the attorney-in-fact (attorney for short). (wikipedia)

In Spain a POA usually is signed in front of a public notary, although a POA signed in a Spanish embassy has the same validity. Also I often use POA signed in front of a foreign notary. In order to use this document in Spanish territory it should be translated in Spanish by an official translator, or – what I often do – be made up in the original language and in Spanish (in two columns), apart from that in order to be able to use it in Spain it must carry a so-called “Apostille of the Hague”. In a later post I will come back on the matter of the “apostilles of the Hague” as these are used quite a lot.

Costs of being a houseowner in Spain | part 3: “the sale”

Comes from: Costs of being a houseowner in Spain | part 2: “taxes”

Sometimes things just don’t work out the way you thought they would and for whatever reason you decide to sell. This may take sometime but at some point you will find a buyer. At that moment you must be aware that once you sell you have to pay tax on this sale. Also in case of sale you have to distinguish between the resident seller, and the non-resident seller.

For non-resident seller the buyer is obliged to retain 3% of the sales/purchase price, this retention has to be paid to the tax office on account of the benefit tax of the seller. The seller after that has to present a tax return declaring the real benefit. This real benefit will be calculated deducting from the sales price, in the first place the original purchase price, and after that deducting any costs made for example renewing the property, transfer tax paid at the moment of purchase, etc.  The non-resident seller will have to pay after that 19% (at least at this moment, may 2021, the government can change the percentage in the future), on this benefit, the 3% retained previously by the buyer will be deducted from this amount. In case the seller has had no benefit or the 3% retained is too much, the seller can apply for the money to be returned.

Sold Home For Sale Sign in Front of New House

In case you have renewed the property but you have not included this renewal in the property register (by the “ampliación de escritura de obra nueva”), you should do this before signing any sales deed. This can be used to update the value of the property, and so pay less benefit tax afterwards.

As a resident if you sell your property, if you are over 65 years old and you have lived there for more than 3 years, no benefit tax is due. If not, the sale has to be declared in your normal income tax form, and the benefit will be taxed accordingly. But as a resident in case you reinvest the money within two years after the sale in another property, the reinvested amount will not be taxed.

Apart from this “benefit tax” in most cases you also have to pay a municipal “plusvalia” tax.  This is paid on the difference of Kadastervalue of the plot at the moment of purchase and the kadastervalue of the plot at the moment of sale. Every town established it’s own rate so for me here it is impossible to give you a clear figure.

Costs of being a houseowner in Spain | part 2: “taxes”

Comes from: Costs of being a houseowner in Spain – Part 1

Also once you are a happy house owner in Spain you start paying taxes. The amount you have to pay depends on whether or not you are a resident and whether or not you have any income from your house, renting it out.

Being a resident normally you will not pay tax on your main residence, unless you rent it out as well, in that case the rental income will be added to your normal income, you can deduct the costs you have made and the costs (for instance light and water consumption) you have paid for the period the house was rented out.

As a non-resident you have to pay for the rental forfait of the property, and/or for the real rental income. The rental forfait tax is based on the kadaster value, which has to be multiplied by 1,1% or 2% (depending on when the kadaster value was established), and you pay (for the last year) 24% on this amount. If you have had rental income this same percentage will be applied on your benefit. For this tax you will not receive any notification, you have to present it yourself (or ask someone else to do this for you).

Apart from that you have to count with a couple of other taxes, the IBI tax, or “Impuestos Bienes Inmuebles”, also based on the kadaster value, and paid usually in august/september. This receipt will be send to your house, and the easiest way to deal with it is to ask the bank to deal with this automatically. Same for the “basura” tax, a municipal tax, also issued (at least in the Comunidad Valenciana) by SUMA, and also for this one the easiest way is to domicile this one.

Continued in Part 3

Costs of being a houseowner in Spain | part 1: “the purchase”

Owning a house in Spain obviously means spending money on your house. In the first place when you buy the property, apart from the `price of the house you have to pay notary costs, transfer taxes (10% of the declared value at this moment in the “Comunidad Valenciana” and the property register.

Apart from that you may choose to get professional help, a lawyer to help you with the legal side of the purchase, an architect to check the property, a real estate agent to help you find the property…

You may want to buy with  a mortgage, and even if this is not the case the bank will charge you with a fee for issuing a bankcheque….

Here I will only comment on the financial side of the purchase:

Let’s say you want to buy a nice penthouse first line beach in Javea, the house of your dreams… this property comes with a price tag, € 300.000!!!!!   WOW

You have saved some money, after all you’ve been working for 40 years and bit by bit you’ve been able to scrape together the amount of € 100.000. This means you have to get another € 200.000 from the bank, right??

WRONG

Yes, the house costs € 300.000, you have € 100.000, the difference is € 200.000. But you have not counted with the additional costs. Let’s start:

  • the price of the property € 300.000
  • Notary and register costs, let’s count 1% to be on the safe side: € 3.000
  • transfer tax: 10% of € 300.000 = € 30.000
  • legal survey / lawyer: between 0,5% and 1% (let’s say € 2.000)
  • architects survey: could be anything between € 500 and € 1.000 (let’s say € 500)
  • Bank valuation: could be anything between € 300 and € 500 (let’s say € 300)
  • costs of mortgage: starting price at € 7.500 (if you get a mortgage, rather difficult nowadays, but that’s quite another story)
  • bank cheque, could be about € 300
  • commission for real estate agent normally will be paid by the seller

So more than € 40.000 on top of the € 300.000 you counted.