As we discussed in the first part of this blog, when buying a house there are five essential things we have to keep in mind: the search for adequate housing for our needs, the signing of the sales contract and paying the price of the property, the payment of taxes associated with the sale, registration of the property in the Land Registry, and the analysis and management of costs associated with the purchase of such housing and maintenance.
(TAXES, THE REGISTRATION OF PROPERTY, AND COSTS ASSOCIATED WITH THE PURCHASE OF A PROPERTY)
In this second part we will analyze a little deeper the three issues that were still outstanding from the first part of this blog.
When we go to buy a property have to take into account that the conclusion of any contract entails the obligation to pay taxes, so you should advance to quantify the amount payable. The price stated in the deed of sale constitute the basis on which the amount of tax payable is calculated. The tax payable will be different depending on who and under what circumstances the acquisition of property is made, and these will be as appropriate VAT (4-10%), the ITP (6-8%) and AJD.
In the event that the transaction was subject to VAT, the seller will be paid together with the selling price. For other taxes must perform a reverse charge of it, and the submission of completed form with payment to the tax office may be made by both the buyer and an agency or notary. Both the ITP as the AJD must report to the tax office of the respective Autonomous Community or the Liquidation District Office (Land Registry), as appropriate, within a period of 30 days from the execution of the deed, in otherwise there will be charges after overcoming the period.
Keep in mind that paying taxes is necessary to allow be performed the inscription of rights acquired in the Land Registry.
THE REGISTRATION OF THE PROPERTY
Once we have signed the deed of sale, and eventually, the mortgage loan, and also have been paid taxes, we must register the rights acquired in the Land Registry, which is essential for various reasons:
The main reason is to obtain juridical security against third parties, since registration in the Land Registry of the property in your name will serve to on the one hand to be considered the one true owner and to obtain legal protection of their rights in the event of it was discussed by others or disturb his possession, and secondly, it is protected from creditors of the seller or other hidden charges that could have the property.
Secondly and as we have seen previously, in the event that mortgage financing is required, it is essential that the property was registered in the name of the person requiring mortgage financing, because the bank will not register a mortgage on a property not owned by the applicant.
COSTS ASSOCIATED WITH THE PURCHASE OF A PROPERTY
It is important to know what the acquisition costs of a property can generate areas well as whom should pay and who should take care of them. Let’s see the most important.
The seller is required to pay the purchase price of the property, and eventually VAT. In the event that prior to the deed has been given an amount on account it shall be deducted from the amount payable at the time of writing. It may be that to ensure that the sale will end, it has concluded an « earnest money contract, » and for that we have delivered an amount the seller which will be deducted at the time of signature, but in the event that the buyer fails to accept perform the contract as required, it would lose that amount delivered, and if the seller desist, it should return twice the amount paid by the buyer.
The real estate agency must be paid a fee whenever the purchase or service contracted is made. Importantly, in the absence of consent of the parties which expresses otherwise, such fees must be paid by the party that has contracted its services.
The notary charges the fees set out in its Regulatory Fee for the authorization of the deed of sale and eventually by the mortgage. Unless otherwise agreed, notary expenses are paid by the buyer, except for the authorization of the deed which corresponds to the seller.
The registrar of the property, also has an established Regulatory Fee, and in this case will be the consideration for the registration of acquired right, and if they have been agreed with the bank, the amount of fees for the registration of the mortgage.
The administrative agents charge only if their services have been hired, and most importantly, we demand the original invoices of the notary, the registrar of property, and the proof of payment of taxes.
In the first part of the post (Part I) we can conclude that when making an investment the first step will be the « Search of the Property » being the main aspects to consider:
The physical characteristics of the property and the legal status of same.
Once we have identified the properties on which we will make the investment the next step will be the « Signature of sale and purchase contract » with the involvement of a notary.
In this second part (Part II) we can highlight that:
The price shown in the purchase deed constitute the basis on which the amount of « tax » is calculated to pay, without which it cannot be done the registration of the right acquired in the « Land Registry ».
Registration in the Land Registry will serve to provide legal security to the owner against third parties, and that he is protected from creditors of the seller or other hidden charges that could have the property.
And finally, noted that the main costs in the acquisition of an investment will be the price, taxes, estate agent’s fees, the Notary and Registrar.
Do not hesitate to contact us if you have any questions or you need more accurate information, we will respond gladly.