Property selling in Spain: Seller’s Guide
(not guaranteed)
mci real estate offers you both a personalized service and the ability to reach people who are qualified to purchase a property of superior value. Our goal is to identify the right target group of clients and to present your property in a context that will achieve the best possible market prize.
Contact us and our listing specialists will work with you to put your property in the market as soon as possible and in the best possible conditions.
Prizing
Once you have decided to sell your property you will ask yourself what price you can achieve. You probably have an idea of the value of your property. You may happen to know that your neighbor has sold his house for a certain figure. These will be a good reference and there are issues that a professional evaluator will also take into account when estimating the value of your property. You may also know how much it will cost to build a new property like yours. This is called replacement value. You may also be aware of prices being asked for properties similar to yours in comparable locations. All of these considerations are useful in determining the price you may request for your property.
If you decide to engage the services of a real estate agent, you will want to know what he thinks of your property and have him assess its value. Most likely the agent will apply the criteria mentioned above. He will estimate the replacement value of your property and its present market value. He will use examples of comparable properties which may be offered for sale at the time or which have been sold lately. In case of discrepancy between your estimated value and that of your agent, we at mci real estate always recommend obtaining an official valuation from an independent firm of evaluation.
Fixing the right price is also important to reduce the time your property will be on the market. Some sellers argue that they are in no hurry and that they would prefer to wait to obtain, theoretically, a higher price for their property. However, they must know that the property runs the risk of “going stale” if it is too long on the market, producing the opposite effect. Buyers tend to give low offers when a property has been on the market for a long time.
If your property is overpriced, you may be committing “sales suicide”. Taking as a fact that the agent is just as intent as you are in acquiring the highest possible return on any property, by selling you on too high a price may convert your property in a white elephant, and undoing that is harder than selling it at the right price. We are living and working in a market that has seen rapid and broad expansion in the past decade. This has resulted in some owners wrongly valuing their properties, either upwards or downwards, in some cases due to advice from poorly qualified agents. To avoid unnecessary misunderstandings, mci real estate always advises owners to obtain a totally independent valuation from one of the many companies specializing in such matters and recognized nationally for their expertise and experience.
A serious real estate agent must make the seller aware of the disadvantages of asking the wrong price and will advise him to postpone the sale of the property only if he is fully convinced that prices will go up in the future and he is willing to wait.
In determining this price you must also bear in mind that a great number of properties are holiday homes or the homes of semi-permanent residents. Therefore, many buyers too have no urgency in purchasing a new property here! Mostly the buyers here follow the must-have principal and treat themselves with the pure luxury of adding a new holiday home in their portfolio.
Expenses
Make sure that you are fully aware of your tax obligations when you put your property on the market. Meet with your lawyer and tax advisor and find out your options to ensure there will be no surprises when you enter into negotiations to sell.
Lawyer
mci real estate strongly recommends you to take the advice of a lawyer during the selling process. The complexity of the process selling a property in Spain makes it necessary to hire a lawyer, specialized and experienced in property in Spain. The fees being a licensed lawyer practicing in Spain, are fixed by the professional Lawyer Bar. As a guide, and depending on the circumstances of each case, the cost will be around 1% -1.5%.
Real estate agent commission
It is customary that the seller of the property pays the real estate agent’s commission, ownership transfer expenses and taxes. The real estate agent’s commission is usually a percentage of the sales price; it may vary depending on the agent and the type of property. On the Costa del Sol, agent’s commission is usually around 5% plus 21% tax of the selling price, in most cases; it is paid by the seller.
Notary fee
Unless agreed otherwise with the buyer, notary fees are for the account of the seller, except for the cost of the first copy which is paid by the purchaser. Notary fees are fixed by law, according to a sliding scale.
Plusvalia – Capital gains tax
Another tax to be paid by the seller, although it may be subject of negotiation with the purchaser, is Plusvalia, a municipal tax on the increase in value of the land. Note that as from 1st January 2013, proof of payment of the Plusvalia tax must be provided in order to register the sale and new ownership at the Land Register Office. The taxable base of this tax selling property in Spain is based on the cadastral value of the property. This value is given to each property in Spain by the tax authorities and is divided in Land value and Construction value. The second factor that determines this tax is the period of time that the property has been owned by the seller.
Since the beginning of 2015, there has been a reform in this tax in Spain changing the taxation of the property yields. In general, the gain is determined by the difference between the values of transmission and acquisition. The Capital gains tax is 19% of the profit of the sale. This profit is the difference between the selling price and the purchase price plus all purchase-related expenses and costs on improvements of the property.
Retención/Withholding Tax
A seller who is non-resident in Spain is subject to a 3% withholding tax on account of any possible capital gains. If the seller’s liability is less than the 3% withheld at the time of the sale, the seller can claim it back from the Tax Office. If higher, the seller will have to pay the difference to the Tax Office. These here mentioned 3% retention does not apply when the vendor is subject to normal income tax for residents or to companies’ tax.
All property taxes such as the annual IBI, garbage collection tax, community fees, as well as normal running costs (e.g. electricity, telephone, water, etc.) should be paid by the seller up to date when the property is transferred to the new owner. If these cannot be calculated exactly on that date, it is customary that the buyer or his/her legal representative requires that an amount of money is left in deposit to guarantee these payments.
The information provided in this guide is intended for informational purposes only and does not substitute legal advice. The contents herein may be subject to errors, omissions and amendments. Accuracy is not guaranteed.