Lawyer Raymundo Larraín gives us an overview on the points we should cover on buying off-plan in Spain. This article is the first of a three-part series on buying & selling property in Spain.
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By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of March 2020
Spring is almost upon us, infusing nature with renewed life and painting the countryside with beautiful tones of bright yellow.
Which means the real estate high season has also arrived one more year and buyers and sellers are busy gearing up to meet expectations. It is in this context that you have fallen in love with an off-plan property in Spain and now it’s time to take the dip and sign the contract!
This short article is written with the aim to provide buyers with a basic guideline on what they should be asking a developer for. It is not meant to substitute professional legal advice.
Whilst it is possible to buy a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. Buying a house is one of the biggest investments most people make in their lifetime. So why take the risk by not obtaining proper legal advice?
Banks and notaries are not your own personal lawyers and will not carry out stringent legal checks to protect buyer’s legal interests; that is not their job. This is a common blunder buyers’ make, particularly non-resident ones.
Instruct your own independent lawyer and never under-declare; besides being illegal, you will pay a massive Capital Gains Tax bill on selling it later on. It is illegal, it is stupid and only benefits the seller, not the buyer.
Remember to store safely the following invoices on buying which can be used to GREATLY mitigate your tax bill on selling:
- Lawyer’s fees (on buying).
- Notary fees (on buying).
- Land Registry fees (on buying).
- Taxes (on buying) yes, these can be offset in full on selling
- All property-related improvements (not maintenance costs). Providing you have VAT invoices to back them up. You are welcome.
Buying Off-Plan Checklist
- Verify the plot of land is registered under the developer’s name whose contract you are signing.
- Request a copy of the developer’s Building licence.
- Request bank guarantees or insurance policy securing ALL your stage payments, including the initial holding deposit paid to the developer/estate agent. These will act as a safety net safeguarding your interim payments should the developer complete the property late, or not at all.
- Ensure the development is compliant with Coastal Laws.
- If the development is finished, request a copy of the Licence of First Occupation.
- If the development is finished, ensure you do a snagging list before completion.
- Post-completion: ensure your property is now registered under your name at the Land Registry and never take anyone’s word for it! Verify it yourself, request a nota simple.
- Post-completion: arrange payment of local rates (IBI & basura) as a direct debit against your Spanish bank account. With offplan, IBI is normally available on the following year. You will be notified in your Spanish address.
- Post-completion: if you are non-resident, ensure you pay every year your Non-Resident Imputed Income Tax (NRIIT) on your Spanish property.
“Ring-a-ring o’ roses,
A pocket full of posies,
We all fall down.” – Popular British nursery rhyme that sinks its roots deep in the Middle Ages.
At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.
Larraín Nesbitt Lawyers, small on fees, big on service.
Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at firstname.lastname@example.org, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.
Off-plan related articles
- Bank Guarantees in Spain – 8th April 2013
- Buying off-plan property in Spain – 8th of June 2013
- Snagging List Explained – 28th October 2016
- Buying property in Spain – 10 reasons to hire a lawyer – 8th November 2016
- Buying property in Spain from a developer (Off-Plan Property) – 8th March 2017
- How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
- 8 Tips on Buying Off-Plan in Spain – 8th June 2018
- Licence of First Occupation – 8th September 2018
- Tax advantages on becoming resident in Spain – The Address magazine (pages 358 – 373). December 2018
- Taxes on buying Spanish property – 8th December 2018
- Do’s and don’ts on buying property in Spain – 8th April 2019
- 8 tips on buying a home in Spain – 8th June 2019
- Home-Buyer’s Checklist-OFFPLAN – 8th March 2020
Original article published at Larrain Nesbitt Abogados: Home-Buyer’s Checklist – OFFPLAN
Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
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