Not everyone selling their property in Spain is leaving the country. There are times when a different type of property, perhaps in a different area, is what’s needed. What should you take into consideration if you’re not only the seller but the buyer too? Emily Clark explains.
You have a house in Spain, but now you want a different one. It might be that you’d prefer to live somewhere else or that the accommodation size or specification no longer suits your needs. People sometimes need to downsize or upgrade in just the same way as they would in their own country.
Good value at the high end of the market
We have seen an increasing number of people recently who are selling their existing property in Spain and are buying a new one. For example we have just helped a couple who bought their original property ten years ago. At the time, they had fallen in love with another house which was just a little too expensive for them. They kept to their budget and bought the cheaper option.
A couple of months ago they were delighted to see that the Spanish property they had originally wanted to buy was back on the market and at a much reduced price. So much reduced that they now realised that it was something they could afford. They didn’t lose any time and put their current house on the market, made an offer on the property and have now realised their dream.
They’re not the only ones. What we’re seeing is that people who originally bought a small property have perhaps seen their house depreciate slightly less than larger homes. The price difference between the smaller and larger property has reduced sufficiently to allow some to upgrade. An opportunity that’s proved particularly useful for those wishing to trade in their holiday home for a permanent residence.
If you are considering purchasing a property it’s important to note that complementary tax has been catching some people unawares.
Complementary tax is a percentage difference between the price you paid and what the Spanish Tax Authority says the property is worth. The difficulty arises when the low purchase price on the Title Deed in Spain does not meet the Spanish Tax Authority’s valuation of the property.
The tax levied on the difference can be from 7% to 10% as it varies between regions. The additional tax can be demanded up to four years after you originally bought the property; an unpleasant surprise after everything is settled. You should check with your solicitor at the time of purchase as to whether complementary tax might be levied in the future.
You can appeal against complementary tax if you apply in time. In our experience it has been well worth doing this as there have been many cases which have been successfully contested on technicalities. You can contact us for more information if this applies to you.
Using the same solicitor
If you are taking the decision to buy another property, consider carefully your choice of solicitor.
You should use a variety of indicators to help you decide who to entrust. Recommendation, reputation and length of time operating can all be good signs. But what if it turns out that the solicitor you want to use as the seller is the same as that of the buyer? It might not be customary practice in many other European countries, but in Spain it is not unusual to have one solicitor representing both.
To begin with, both parties need to agree that they are happy with this arrangement and to recognise the advantages:
- Errors are less likely to occur in the process
- There are less likely to be delays linked to lack of communication
- It should be easier to coordinate the timing of the sale
Might there be a conflict of interest? The law in Spain is clear. It requires the lawyer to represent the client and follow their instructions. This code of practice means that you should be able to have confidence in your lawyer and know that the law provides back up if a problem did occur.
Go for it!
The sluggish housing market has not brought many advantages with it. However, for those wanting to buy bigger, it provides opportunity and complementary tax should not put you off. Like the couple in our case study, this could be just the time to make your dream property your home.