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Selling a Property on the Costa del Sol

This guide was written by Manzanares Abogados S.L. (info@manzanaresinternational.com) in collaboration with Guides.Global (office@guides.global).

It was written on 15 June 2016. The law and practice in Spain change all the time. Our guides are updated as frequently as possible - typically every three years - but may be out of date.

Our guides are prepared by professionals from many countries. They are, of necessity, both brief and general and can take no account of your personal circumstances. They are intended to be a good introduction to the subject BUT ARE NO SUBSTITUTE FOR PROPER PROFESSIONAL ADVICE, which our contributors will usually be happy to provide upon request.

The advice and opinions contained in the guides are those of the author and are not necessarily those of Guides.Global.

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The scope of this guide

This short guide is about selling your property in Spain. How to sell your property in Spain. How to find a buyer for your property in Spain. Other things you should do when you sell your property in Spain.

It describes, in particular, how to do all of these things in the area of Andalusia/Andalucía – which contains the Costa del Sol. See a map here. Please note that certain aspects of the law in Spain vary from one "autonomous community" (comunidad autónoma) lightbulb image - click here for more information on this subject to another.

Introduction

The process of selling a property in Spain is normally more straightforward than the process of buying a property in Spain, but it all depends on the circumstances and on whether the property is located on rural or urban areas.

In most cases, Spanish people simply choose an estate agent – or not - and then look after the rest themselves.

However, unless your Spanish is faultless and unless you are very well versed in the local culture, this really won't work for a foreigner and so this guide is intended to steer you through this important process.

How to find a buyer on the Costa del Sol

Simple. Choose an estate agent.

Although many Spanish people advertise their properties privately via the local press and internet, a foreigner will always benefit from the services of an estate agent:

We're not trying to create work for estate agents here, but it really is the most sensible course of action to use one.

Most estate agents on the Costa del Sol are reputable (see our Guide to Buying a Property on the Costa del Sol) but different firms do aim at different parts of the market and so it's worth doing a bit of research before you make your choice of agent. Research is, perhaps, a rather grandiose term for what you need to do. Normally you will only need to see which agents are selling most property in your area.

If your property is in a well-known and self-contained area - such as the old town in Marbella - you need to decide whether to sell it through an agent that specialises in just that area or one with a wider coverage. Generally, the best advice is to sell the property via the agents dealing with the most properties of that type in the area in question.

Obviously, when choosing an agent you need - if at all possible - to make sure that somebody in that office speaks your language fluently and, ideally, that there is a second person in the office to provide backup language skills when the first is out of the office.

Legal steps

When selling a property in Spain you - or, more likely, your lawyer - will have to do three main things:

  1. Prepare a contract and document pack

    This must be in Spanish but should ideally be accompanied by a translation into your language. This is most conveniently done by having the document in a two-column format.

    Occasionally, we find clients from (say) China who speak neither Spanish nor English well enough to understand the contract. In this case we normally recommend that the contract is prepared in Spanish and English - the two dominant languages on the Costa del Sol - and that we provide a separate translation into Chinese. We can also provide separate translations into other languages, depending upon the language skills of the buyer.

    The document pack will comprise:

    • A contract
    • A copy of your proof of title
    • A nota simple (which is an updated proof of ownership issued by the Land Registry)
    • Copies of your latest utility bills and council tax receipts
    • A copy of the Energy Efficiency Certificate (if you don't have one already, a qualified technician must produce it - the cost will depend on the size of the property, but the minimum cost is €150)
    • Any other relevant information related to the property

    In rural areas of Andalucia, you'll also need to obtain an Asimilado Fuera de Ordenacion (AFO), which is an administrative certificate confirming the legal status of the property. Your title deed must be submitted to the Town Hall along with information on the habitability of your property, utility bills, an architect's certificate etc, together with a registration fee. After consideration, the Town Hall will issue the AFO certificate, if they find the property suitable.

    As the circumstances vary and the fee depends on each Town Hall – and on whether you need to do any extra work to make the property suitable, such as legalizing a well - it is impossible to give an accurate idea on the cost in this guide. However, we can say that it is not at all cheap to get an AFO.

  2. Deal with any technical or other queries raised by the buyer

    These can take many forms; from enquiries about whether the curtains are included with the sale and when the pool was last maintained to queries about the validity of your building licence.

    Some of these enquiries will be dealt with by your estate agent. In fact, almost all of them are first directed to the estate agent. When you appoint a lawyer, then the legal issues will be sorted out between the lawyers of both parties, which will give you peace of mind as you ensure that the legal aspects are duly taken care of.

  3. Attend to sign over the title to the property

    This will be done in front of a Notary.

    If it isn't convenient to attend, you may appoint someone else to sign on your behalf by using a Power of Attorney, preferably your lawyer. See our Guide to Powers of Attorney on the Costa del Sol.

Receiving the money

As the seller of a property on the Costa del Sol you will, mainly, be interested in the bit where you receive the money.

The buyer should pay over an initial deposit of €3,000 or €6,000, and then an additional 10% of the price at the time when they sign the private contract to buy the property. The rest of the price is paid when you sign over the title to the property. See our Guide to Buying a Property on the Costa del Sol for more details.

The initial deposit is and the additional 10% can in some cases be retained by your lawyer until the final title has been signed over at which point the whole of the price (less any fees and taxes) is released to you. However, this will depend on the terms agreed on the reservation agreement and private contract.

Fees

There will be a number of fees that you have to pay out when you're selling your property in Spain.

 Item Notes Cost
Estate agent's fees If you require the agent's full service, including showing people around the property, and you appoint the agent on an exclusive basis 5%
Lawyers' fees This will usually be subject to a minimum of €1,500 0.8%
Notaries' fees This is always paid by the buyer Nil
Land Registry This is always paid by the buyer Nil
Energy Certificate These will depend upon the size of your property and the particular technician. A minimum of €150
Mortgage cancellation If there is a mortgage on the property, certain cancellation fees will be applicable (bank’s cancellation fee & Notary). 1-2%

Taxes

There could be two groups of taxes payable in Spain when you sell your property:

Local tax: Plusvalia

This is a local tax (specific to Andalucia) on the increase of the value of urban land, and the usual practice is for the seller of the property to pay it. Normally, the amount of this tax is not very high: it depends on where the property is located and the number of years elapsed since you became owners. Plusvalia has to be paid within the first month after the sale of a property. In some cases, the buyer's representative will insist on retaining this amount and he/she will take responsibility for arranging payment of this tax.

Capital Gains Tax

If you are non-resident in Spain

As a non-resident seller of a property, you are obliged by law to pay Capital Gains Tax at the time of the sale of your property in Spain. This tax is 19% of the 'profit' obtained from the sale. This is 19% of the sale value (as shown on the Title Deeds - Escritura), less the purchase price as shown on the purchase deed when you bought it and the costs incurred in connection with the purchase. The resulting gain is then adjusted to take into account the length of time for which you owned the property. The formula for this adjustment is quite complicated and depends upon a number of factors. This tax is made up of two parts:

  1. The buyer of the property is obliged by law to withhold 3% of the declared sale price (as shown on the Title Deeds - Escritura). This tax deduction is obligatory and cannot be avoided; the Notary Public will make sure that this 3% has been deducted. This amount is paid by the buyer on your behalf, and therefore he is responsible to make sure that the payment is made to the tax authorities. This tax deduction is a payment on account of this tax.

  2. If the tax (19% of the profit made) turns out to be higher than the amount withheld in the first part (above), you need to pay the difference to the Spanish tax authorities. However, if the tax is lower, you can make a claim to be refunded the difference. In either case, you are obliged to file this tax. The time limit on filing this tax is four months after the sale. In order to be entitled to such refund, you must be up to date with payment of your non-resident's tax, which is due once a year.

If you are resident in Spain

If you are a resident of Spain, Capital Gains Tax is paid together with your personal income tax, which in Spain is filed in May-June of the following year. Although you pay it together with the rest of your income, Capital Gains Tax is calculated separately, and the percentage goes from 19% to 25%, depending on the selling price.

Taxes in your own country

Depending upon your nationality, you will probably also have to declare the capital gain that you have made to the tax authorities in your own country and pay whatever tax they assess is due on that gain. However, in many cases you will find that there is a double taxation treaty between your country and Spain with the result that, typically, you will be able to deduct the tax you've already paid in Spain from any tax liability 'back home'. See our tax guide to your home country for more information.

Other things you might want to do when you sell your property on the Costa del Sol

Although it is the obligation of the new owner to change all utilities into their names, it is advisable to stop the direct debits from your bank in order to ensure that nothing is charged on your account that does not belong to you.

You may want to cancel your insurance policy in relation to the property. You may be entitled to a refund, depending on the specific terms in your policy.

Expats' Tips

Have you got experience with selling a property in Spain? Tell us about it by emailing office@guides.global.

Conclusion

Although selling your house on the Costa del Sol is always easier than buying, it is far better to seek professional advice in order to save you headaches and ensure that when you sell your property, receiving the money is the last thing you will hear from the buyer!

Other guides of interest

 Description Link 
Buying a Resale Property on the Costa del Sol
This guide is mainly about buying a resale residential property on the Costa del Sol. It covers everything from finding a property to closing the deal and looks at the legal framework that operates when you buy a property in Spain.
Buying a Resale Property in the Costa del Sol
Property Development on the Costa del Sol
This guide covers the process of property development on the Costa del Sol in Spain. It covers both large-scale and small-scale development.
property development on the Costa del Sol
Buying a Commercial Property on the Costa del Sol
This guide deals with the extra things that you will need to take into account when buying commercial property in Spain. By commercial property, we mean things such as offices, shops, bars, restaurants and warehouses.
Buying a Commercial Property in the Costa del Sol
Buying a New Property on the Costa del Sol
This guide is about buying a new house or apartment in Spain. By a 'new' property, we mean one that has already been finished but which has not yet been lived in.
Buying a new Property in the Costa del Sol
Buying an Investment Property on the Costa del Sol
This guide is about buying property on the Costa del Sol for investment. It looks at different methods of buying property for investment, the risks involved and some factors to consider when deciding whether and what to buy.
Buying an investment Property in the Costa del Sol

Readers' Comments

 

Further information?

We hope you have found this guide useful. If you need any further help, please contact us.

Manzanares Abogados S.L.

15 June 2016


 

This guide was co-authored by John Howell (Email: John.Howell@Guides.Global or John@jhco.org. Web: www.jhco.org or www.Guides.Global)

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