Understanding all the terminology needed when moving to a foreign country can be daunting and a real pain to get your head around. The process of buying a house adds to the complexity and paperwork of course. A lot of the paperwork can be be obtained yourself if you read upon each subject and don’t mind queueing over and over again in different administrative offices where the staff don’t always speak English.
Of course the other option is to pay a relatively small fee to a dedicated expert and they can advise you on exactly what you need, when you need it and in many cases can do all the legwork for you. If you prefer the latter option, we can put you in touch with our experts that can make the process a lot easier for you.When buying property or managing your tax affairs, MIA Property Boutique recommend that you consult an independent tax expert and solicitor who specialises in the process of conveyance.
Here is a brief summary of some of the terms you will come across when moving to Spain and when buying and selling property in Spain.
The ayuntamiento is the town hall, this is the most basic political organization with it’s members being elected by the citizens.
The Agencia Tributaria is the Spanish tax authority, the English version of the website can be found here.
The Catastro is the system to deal with mainly the description and boundaries of all properties in the country. Property details such as property size, plot size, coordinates etc., are registered with the Catastro for mapping land boundaries and calculating council tax.
Registro de la Propiedad
The Spanish system that deals with the legal ownership of properties in Spain, the history of who owned the property, whether there is an outstanding mortgage on the property etc.
Plusvalia is a tax levied on a property when it is sold and is typically paid by the seller of the property. The amount to pay depends on the valor catastral of the property and should be paid within 30 days of the property sale.
The valor catastral is a value calculated for tax purposes (the cadastral value). It is an estimated value of the property relative to when the property was last re-valued and is calculated based on it’s purchase price, size, condition, lease details etc, and adjusted locally based on a coefficient for the town where the property is registered.
La Escritura is the Title Deeds of the property.
Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados
The tax levied on the purchase of re-sale property (as opposed to new property) payable by the buyer. The amount payable varies from 7-10% depending on the autonomous region
Impuesto de Bienes Inmuebles
IBI (Impuesto de Bienes Inmuebles) is an annual property tax that is payable by all owners of property in Spain, much like the Council Tax in the UK. The IBI tax is based on the Valor Castal of the property. When purchasing a property your lawyer should make sure that there are no outstanding IBI payment due on the property.
Impuesto Sobre El Patrimonio
IP (Impuesto Sobre El Patrimonio) is considered a wealth tax. Property owners may be subject to pay IP, depending on the value of their home. Check with your tax independent adviser.
Número de Identificación de Extranjero
The NIE (Número de Identificación de Extranjero) is the national identity for foreigners and is required to pay all taxes, buy or sell a property, buy home insurance , open a bank account, start a business, register with social services, paid employment etc
A gestor is a person who handles transactions and paperwork. Some gestors specialise in law others in accounting.
Impuesto Extraordinario Sobre El Patrimonio
IRPF (Impuesto Extraordinario Sobre El Patrimonio) is personal income tax, the taxed levied on any income generated through paid employment etc.
Impuesto Sobre El Valor Añadido
IVA (Impuesto Sobre El Valor Añadido) is the equivalent to VAT (Value Added Tax). The current rate for most goods and services is 21% (selling land for property development for example), however some products are totally exempt from IVA, such as state education, museums and libraries. Other goods and services such as basic foods (fruit and vegetables, potatoes, bread, milk) benefit from a reduced rate of 4%.
Certificación Sobre las Deudas con la Comunidad de Propietarios
This is a document that certifies any debts on the property and should be signed by the president of the community of owners and the administrator. The vendor is responsible for producing this certification and presenting it to the notary when signing & exchanging contracts.
Empadronamiento is the process of registering on the electoral roll, allowing you to vote in the local elections and the Ayuntamiento receives a level of funding for public services based on the number of people empadronado (registered). A valid certificate may be used as proof of address, however the certificate is only considered valid if issued in the previous 3 months. It may also be required when registering your children in a school, for getting married or when buying a car.
The notary – an official that neither represents the buyer nor the seller of a house sale; a notary is required to officiate the signing of contracts. Notary fees are calculated on a sliding scale ranging from 0.3% to 4.5% of the property value.