‘Ask the Experts’ about property sales in Marbella and on the Costa del Sol
Browse through our ‘Ask the Experts’ archive files to find the answers to questions you may have about property sales from property buyers and property sellers.
Questions from property buyers
Questions from property sellers
Property Buyers' Replies
Q. We’re re-locating to Spain but don’t want to rush into buying a property only to find out later we’ve made the wrong choice. What’s your advice? Claire, Surrey
A. Re-locating overseas is always a big move. If you were purchasing a holiday home, it may be easier to make a quick decision, especially if you enlist the help of a knowledgeable sales agent. But if you are intending to retire for good, or are re-locating the entire family, then choosing your home requires careful thought.
If children are involved, the location of appropriate schools may be paramount; or it may be important to be close to shops, banks and other amenities, such as golf courses or the beach.
To improve your chances of finding the property that’s perfect for you, you may want to research the characteristics of various local areas, the availability of properties and pricing levels.
If this is the case, it may be wisest for you to rent for a year before buying, in order to spend time making an informed choice.
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Q. We don’t really understand the different taxes we’ll have to pay on our new holiday home once we move in. Can you explain them to us? Geoff and Susan, Manchester
A. There are three main taxes you will pay each year.
The first is ‘impuesto bienes sobre inmuebles’ (IBI) levied by your local Town Hall or ‘Ayuntamiento’. Similar to UK Council Tax, it may include rubbish (‘basuras’) collection, although this can be charged separately.‘IBI’ is based on your property’s official registered value or ‘valor catastral’, and can vary from around 100 euros per annum for small rural flat, to over 3,000 euros for a villa in an exclusive area.
Your local Town Hall can advise the amount you’ll have to pay, or you could ask to see the previous owner’s bills. It’s advisable to set up a direct debit with the Town Hall to have ‘IBI’ and ‘basuras’ amounts automatically deducted from your bank account when due.
The second tax, ‘rendimientos del capital inmobiliario’ or ‘imputed income tax’ is payable by non-residents on rental income your property is deemed to yield each year. You may never rent out your property, but the Spanish tax authorities assume you will, and calculates 2% of your ‘valor catastral’ as rental income, on which you will pay 25% tax per annum. For a ‘valor catastral’ of 150,000 euros, expect to pay around 750 euros.
And finally, there is the ‘Wealth Tax’ called ‘impuesto sobre el patrimonio’ which is levied by the Spanish tax authorities on all non-residents’ property and assets in Spain.
For example, on a property worth 300,000 euros, the wealth tax payable would be about 730 euros or 2.4%. If in doubt about your tax liability, always consult a qualified tax advisor with experience of the Spanish tax system.
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Q. We’ve been asked by our estate agent to pay a large reservation deposit for the property we want to buy. Is this normal practice and can we get it back if we have to? Eric and Jane, Sunderland
A. It is common practice for the purchaser to pay the vendor’s solicitor or sales agent an initial reservation deposit, usually about 6,000 euros. This deposit effectively takes the property off the market and reserves it in your name, thus preventing anyone else from purchasing it.
It is only refundable to you if the vendor fails to fulfill their obligations under the sale contract, or if you have been given misleading information about the property that means you would not have agreed to the purchase if you had known about it. Otherwise this amount is deducted from the final agreed selling price at contract stage.
If you yourself, for whatever other reason, decide not to proceed with the sale, then you will forfeit this deposit.
The deposit is a way of ensuring that serious buyers are able to reserve a property in their name while they proceed with drawing up the sale contract.
One note of caution, however, please only pay this deposit to the vendor’s lawyer or sales agent, not to the vendor direct, and make sure you have a signed initial reservation deposit form, or similar, by way of receipt.
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Q. We’re not sure whether to go for a new property or a resale. Which is best to buy? Paul and Mary, Wolverhampton
A. Over the past few years there’s been much hype about ‘off-plan’ buying on the Coast. Whilst the best new developments in the right areas can still produce a good return on investment, property buying that focuses solely on a high return in the short run can be as specialised as investing in the stock market.
The ‘resale’ market has made a strong comeback in recent times, showing that buying an existing property is an equally attractive option. Advantages such as the property’s immediate availability for your own use, as well as the potential for rental income, may ‘win’ over having to wait up to three years for your building work to finish.
With a resale, you can also see exactly what you’re purchasing and where. If located in an established area amongst other built properties, you can rest assured that nothing much will change over time; least of all a new development to block your cherished view.
Whatever you decide to purchase, whether it’s a new penthouse or an existing villa, do please speak to your estate agent to ensure that it’s the best option for you, given your budget and personal requirements. And remember that investors these days are wise to view their property investments abroad in the longer, rather than the shorter, term.
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Property Sellers' Replies
Q. When I listed my apartment with a local agent, the Sale Agreement said the buyer is responsible for all costs except the ‘plus valia' tax. What exactly is this and why does the seller have to pay it? Colin, Dorset
A. The buyer and seller of a property are actually free to negotiate a contract on whatever basis both parties agree. However, it is normal practice for the seller to be responsible for the ‘plus valia’ tax (and any outstanding mortgages or debts on the property), and for the buyer to pay all other costs relating to the sale.
The ‘plus valia’ tax is assessed on the change in value of the land since the property was last sold, and it varies according to the amount of land you have and how much its value has increased.
An apartment would have less land than a villa, for instance, and would attract less tax.
Similarly, if the property had changed hands recently then, again, there would be less tax to pay. You can find out the amount of your tax bill by enquiring at the tax department of your local Town Hall, or by asking your legal adviser to do so on your behalf.
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Q. We’ve had our villa on the market for months now and still haven’t sold it. We put it on with several agents to increase our chances, but haven’t had many viewings at all. Can you advise us what to do? Mike and Jenny, Glos.
A. Selling any property depends on a number of different variables, the most important of which are price, market forces, the condition of the property, and marketing exposure.
Firstly, re-evaluate the sales price of your villa. Is it realistic and comparable with similar properties in your area? If you’re not sure of the true value, you could ask your bank for an independent mortgage valuation.
Normally market prices are between 10% and 20% higher.
Also, take into account that the market is ‘slow’ at the moment. Fewer buyers are chasing an ever increasing choice of property, so it’s important you ensure your villa is not only attractive in terms of price, but is also being presented in the best light.
First impressions really do count so, unless your villa is being sold for refurbishment, make sure that it is well decorated (a neutral scheme is best) and appears well maintained. Always keep gardens and pool areas neat and tidy, and clear away any unnecessary clutter or excess furniture.
Next, select two or three key estate agents in your area and ask them how they would go about marketing your property. When an agent knows there are many other agents with the same property there is often less interest in individually promoting it, so develop a more personal relationship with a chosen few, and see if you can achieve a better result.
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Q. Is now a good time to sell my apartment? Edward, Walsall
A. At present there is a large number of apartments on the market with many owners wishing to re-sell their property, particularly if it is ‘off-plan’ and they are nearing completion.
Coupled with the fact that a further huge amount of new ‘off-plan’ properties is presently under construction this means that a considerable volume of apartments will be available on the market for some time to come.
With less potential buyers currently visiting the Coast, supply most certainly outstrips demand, and it’s very much a “buyer’s market”. Some prospective buyers are no doubt being attracted by other overseas destinations being promoted at low prices, whilst others are perhaps being more conservative in general about buying a second home abroad.
If you are still wondering whether or not to sell your apartment, think whether you would sell it at a lower price to give it a competitive edge, or perhaps consider waiting until the market improves and generate yourself some rental income in the meantime.
Why not discuss your options further with a good local estate agent, or talk to a reputable rentals company about which rental alternatives might be best for you.
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