Which Documents are Needed to Sell your Property in Spain
Selling your house: what you need to know
You’ve decided to sell your house in Spain. A drastic decision! You will be saying goodbye to one of your properties. This decision comes with costs, uncertainty, doubts, time, energy, and emotions. Later in this blog we will talk about the costs that are involved with this. But let’s start with the necessary paperwork.
Below you find an overview of the documents that are required for selling your house.
Title Deed of the property
A highly important document to change the ownership of the property in the land register. When there’s a purchaser for your house, your lawyer will ask you for a copy of the title deed. Beware: a copy! The original is not needed. Do not wait until the end. It’s best to ask for this copy when placing your property on the market. Do not panic if you cannot find it. There are several ways to request a copy of the deed. If you bought the property with a lawyer, chances are he or she will have a copy. If you bought it with a mortgage, you can ask the bank if they still have a copy. And if not, the notary you used may be able to provide a copy. If you’ve forgotten the name of the notary, chances are you will find it on the Nota Simple. The title deed is important for drawing up a private purchase-sale contract, to calculate and declare taxes, and to draw up the sales deed.
The Energy Certificate
Since 2013 you need an energy certificate. Without this document, it’s impossible to sell your property. The Energy Certificate is a report that indicates the efficiency of the energy use of a house. The house gets a score from A to G, with A being the most efficient. A qualified certifier issues this certificate. In addition to the efficiency rating, the owner receives advice on how to improve energy efficiency. A certificate is valid for 10 years unless changes have been made to the house. Costs of this examination depend on the size of the house and vary between 100 and 500 euros. The costs are for account of the seller. It’s possible to deduct these costs from the capital gains tax. MNM CostaBlanca works together with a qualified and reputable company to require the EPC.
Proof of Mortgage Cancellation
When the mortgage is paid off, it is sufficient to show the document that proves this. If the mortgage has not yet been repaid, you must cancel the mortgage and pay it. This way the new owner can register the property in their name. This is done at the notary's office upon registration of the sale.
Latest paid invoices
The seller must provide copies of the last paid invoices. Think of gas, water, electricity and so on. Payments must be up to date to be able to sell the house.
IBI (Impuesto sobre Bienes Inmuebles) is the Spanish real estate tax that is levied annually. Every owner of real estate has to pay IBI. It applies to residents as well as non-residents. The IBI varies from one municipality to another. The taxable value of the property is the basis for the IBI. The seller must provide a certificate proving that the IBI payments are up to date. The IBI is paid once a year. Seller and purchaser make a private agreement on the amount of IBI each party has to pay (pro rata).
Declaration of Habitability
A document stating that the house meets the habitability requirements of the municipality. The town hall issues these documents to a builder when they complete a new build. They expire after 5 years. Subsequently, the owner of the property must renew the document. In such case, the Town Hall will issue a "licencia de segunda ocupación". This is an important document because the purchaser cannot take over your water contract if you do not have this.
Documents relating to the urbanisation
This only applies if you’re selling a house in an urbanisation with shared common facilities. In this case, there is a homeowners' association. Each homeowner in the community has to pay common costs. These costs cover things like the maintenance of gardens, swimming pool, gym, and the building itself. The manager of the urbanisation has to issue a certificate of payment. The purchaser should receive a copy of the statutes and regulations of the owners' association.
Thus, this is all the paperwork you need to sell your property. But what about the costs of selling a property? Who pays what? Let's have a look at this important topic.
Costs for selling a property
Costs for acquiring the necessary documents (seller)
If you’re not in the possession of the right copies of the abovementioned documents, then you must certainly acquire these documents. And of course you’ll have to pay for them. But, as mentioned earlier, without these documents you won’t be able to sell your property.
Capital Gains Tax (seller)
The Capital Gains Tax is tax on the profit that you’ve made with the sale. Thus the sale price minus what you’ve paid for it according to the notarial deed. The rate of this tax varies, depending on the amount. In 2021 you pay either 19, 21, 23 or 26%. It’s possible to deduct certain costs, such as brokerage charges, from the amount before you make the calculation.
You’ve been living in Spain as a resident for more than 3 years and you are going to reinvest the money from the sale of your main home to buy another main home. In this case you won’t have to pay CGT. Provided that you’re going to be living in your new main home for at least the next three years. If you are over 65 years old, you won’t have to pay this tax. If you’re selling a house that you’ve bought before 1995, you can also get a tax reduction. Rules and regulations are constantly changing. Therefore, we recommend contacting a financial advisor.
Withholding for non-residents (seller)
You’re selling your house, and you’re a non-resident. In such case, the purchaser of your property must withhold 3% of the sale price in the notarial deed. The purchaser must pay this amount to the "Hacienda" (the Spanish tax authorities). If the tax liability is less than 3%, the seller can claim a refund.
A tax based on the increase in value of the land on which the property sits. The calculation of the plusvalia is based on three things. Firstly, on the location of the property. Secondly, on the value of the land in the land register. And thirdly, on the period of ownership of the property. You pay this tax at the local town hall. The law states that the seller pays the plusvalia. However, if both parties agree, the purchaser can also pay the plusvalia.
Brokerage commission (seller)
If you use a brokerage firm to sell your property, you must pay the agreed commission. The seller can deduct this fee from the capital gains tax.
Costs for cancelling the mortgage (seller)
Of course this only applies when you have a mortgage on the property, the costs incurred are notary costs, property registry fees and possibly a redemption fee from the bank that provided the mortgage.
Notary costs (purchaser)
These are the costs relating to the deeds (Escritura). The sale price mentioned in the deed determines the compensation.
Transfer tax (purchaser)
The transfer tax, ITP, varies from region to region and is set at 10% in the Valencia region (Costa Blanca North). You pay this tax when you buy an already existing property.
In case of new construction, the purchaser does not pay ITP but IVA (VAT) of 10%. On top of the IVA, you also pay an extra purchase tax, AJD (Actos Juridicos Documentados) of 1.5%.
Real estate appraisal costs (purchaser)
If a purchaser needs a mortgage, the bank must make an appraisal of the property. This appraisal is for the account of the purchaser.
Don't complicate the whole sales process by not having the right documents. Make sure you have all the necessary paperwork ready.
A realistic price
Do some of your own research on this subject. And listen to our advice as brokers because we know the market. If your property looks good and the price is in line with the market, you cannot lose.
One final piece of advice: do not become overwhelmed or stressed. MNM CostaBlanca knows the business down to the last detail. We will help you sell your property from A to Z.