Buying a house is probably the most important investment you will ever make in your life, so if you are thinking of buying a property you are in the right place. In this post we detail 4 key aspects that you should take into account before buying the house of your dreams, so that you can be sure that you have done the right thing.
Before the public deed of sale is drawn up, a private contract is usually signed between the buyer and the seller. The private document is not obligatory or registrable in the Register, but the law considers it to be a valid contract and obliges the fulfilment of all that is stated therein.
Therefore, if you are buying a house, it is important to get proper advice before you sign anything.
In the case of a property under construction, the buyer is entitled to demand security for the amount paid so that, if the agreed deadline for delivery of the property is not met, it will be returned to him together with interest.
- Public deed of sale
A public deed is not compulsory to buy or sell a property, unless a mortgage loan is taken out to acquire it. However, the vast majority of citizens choose to go to a notary public for its reliability and legal certainty.
- Subsequent formalities
Once the deed of sale has been signed, the following steps must be followed:
- Payment of taxes and registration in the Land Registry. If you are going to carry out these formalities in person, ask the notary’s office about the deadlines in order to avoid penalties or loss of rights. You can also choose to have it processed by the notary, who will send an authorised electronic copy of the deed to the Land Registry for registration. He will then provide you with an authorised copy of the deed on official paper with all supporting documents and invoices.
- Supplies. Do not forget to put the supplies that affect the new dwelling in your name.
- Documentation and invoices. Keep all original documents, supporting documents, warranties and invoices relating to your purchase.
Do not accept lump-sum receipts; claim the original invoices from the notary, land registry and land registry office, as well as the tax payment letter.
- Expenses arising from the purchase and sale of a property
- Notarial fees: This is the notary’s invoice for his or her fees, which are set by the government in the form of a fee schedule. They are the same for all notaries.
- Minuta registral: This is the bill from the land registrar for registering the deed; it is also established by the Government by means of a tariff and is identical for all registries.
- Minuta gestoría: This is the invoice of the gestor when you carry out the formalities. You also have the right to do it yourself or have it done by the notary’s office.
- Municipal Tax on the Increase in Value of Urban Land, also known as Municipal Capital Gains Tax. By law, it is paid by the seller, who can find out the amount by contacting the town hall to which the property belongs.
Other taxes: By law these are paid by the buyer.
- VAT: For a newly built property you have to pay 10 per cent VAT on the sales price. For other types of property, the VAT rate is 21 per cent.
- AJD: If it is a newly constructed property, you will have to pay the tax of Documented legal acts (AJD), the rate of which varies depending on the autonomous community between 1% and 1.5%.
- TPO: If the property is second-hand, you will have to pay the Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, TPO), the rate of which varies depending on the autonomous community between 6% and 10%.
- IRPF: Finally, the seller will have to take into account the capital gain in his IRPF, which can be up to 27%.
Remember that our RH Privé Estates team will be happy to advise you on any questions you may have regarding the purchase of a property.