How to manage a Real Estate sale in Spain from abroad?
Managing a real estate sale in Spain from abroad is possible, as long as you have an expert lawyer in the field who is close to where the property is located. Basically, two main factors come into play:
On the one hand, legal advice. Given the relevance of these operations, it is always advisable to have a lawyer with experience in Real Estate Law. But your help will be even more important when the operation is processed from abroad.
Real estate lawyers can supervise the correctness of the transfer, verify that the property is free of charges and occupants and inform about the applicable tax regime. If the sale is for investment purposes, they will be able to manage the real estate portfolio. And in the event that the objective is to settle in Spain, they will be able to carry out the appropriate procedures to obtain a visa or residence permit.
The second factor at stake is the authorization to carry out the operation on someone else's behalf. In this way, the foreign buyer can avoid making unnecessary trips to Spain to manage their sale. This authorization is granted through a document known as powers of attorney.
Let's see the importance of both factors when making a real estate sale in Spain from abroad, as well as the details that should be taken into account.
Legal advice for real estate investment in Spain
Real estate investment always requires a certain knowledge of the Legal System of the place where the property is located. The most important branches in this regard are Civil Law (particularly, contracts, property and Registry) and Tax Law (which will determine the applicable tax regime).
Civil Law keys to buy a property
First of all, we must verify that the home belongs to whoever claims to be its owner and that it does not have any burden. This can be done through the Land Registry, requesting a simple note.
In the case of charges, it would be necessary to check the cost and the procedure to cancel them. For example, if we are facing a mortgage, we can subrogate ourselves in the position of the debtor and deduct the capital pending amortization from the final price of the operation, although we will need the authorization of the bank. It will be more complex to raise liens, a situation in which there is probably no choice but to pay the debts for which they are liable.
It will also be necessary to verify that the property has no occupants. Otherwise, we could find ourselves in the need to promote an eviction, which will lengthen the process of taking possession.
In the case of purchases of new construction, it would be advisable to check the condition of the building. However, in Spain there is a special liability regime for this type of sales. So the investor will be considerably protected.
Another aspect to consider will be the sale contract itself. The most common is to combine it with a deposit contract, which will guarantee that the operation is successfully resolved. These contracts should be drawn up with caution and precision, because non-compliance will lead to the initiation of claims that could lead to a lawsuit.
Keys to Tax Law to buy a property
At the fiscal level, it is convenient to know the taxes applicable to the operation. These will suppose an extra cost proportional to the purchase price.
Although in Spain there are differences in tax matters between the different autonomies, the most relevant taxes that we must consider are:
- The value added tax (VAT). It only applies to the first purchase. That is, to the acquisitions of new construction. It reaches 21% of the transmission price.
- The property transfer tax and documented legal acts (ITPAJD). It applies to the sale of successive properties. In other words, those "second hand" or, in other words, those that do not affect new construction. In general, the modality of patrimonial transfers will be applied, but in the case of surrendering the home with mortgage subrogation or in other legal businesses, the modality of patrimonial transfers could also come into play.
- The tax on the increase in the value of urban land (IIVTNU). Better known as capital gain, it is a municipal tax that is accrued on the transfer of properties of this nature. Although it is up to the seller to pay it, the truth is that sometimes a distribution is agreed, and even the delegation of payment to the buyer.
Knowing this tax system in detail will be essential to know the final price of the sale and avoid extra costs that the buyer does not have to pay.
Power of attorney to manage a real estate sale in Spain from abroad
Power of attorney is a public document that certifies that a person has authorized another to carry out certain operations on their behalf. Therefore, the powers of attorney must identify the principal and the attorney-in-fact, the start and end date of effects and the authorized operations.
A power of attorney can be more or less extensive, depending on the situation. In general, it is recommended that the power be limited to the operations to be carried out. For example, the management of the sale.
However, a general power of attorney could be granted to authorize all types of actions, or include several authorizations in the same document. For example, a real estate lawyer in Spain can be empowered to carry out the purchase, the registration in the Property Registry, the payment of taxes and the processing of the visa.
This will be the most comfortable if you want to process the real estate sale in Spain from abroad, since it will prevent the investor from having to travel to carry out any management.
How are these powers granted?
The powers of attorney in Spain are granted before a Notary Public. You will have to appear in your office and expose the details that the power of attorney must include and that we have already explained.
However, the foreign investor can also avoid this displacement if he grants the power of attorney before a notary public of his State of residence. In this case, the power of attorney will have to be translated into an official language in Spain and the Hague apostille seal must be included.
The Hague Apostille allows the authenticity of a document to be certified in a simple way, as regulated in the Hague Convention that abolishes the requirement of legalization of foreign public documents.
Therefore, the foreign investor can limit himself to hiring his real estate lawyer in Spain and send him the power of attorney before his local Notary Public. Simply with this document, the Spanish advisor will be able to start managing the real estate sale in Spain.
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