Selling a property

[Si Tie]

Hi

Does anyone know what costs are involved in selling a property on the island.  It is worth a little
less than we paid for it so no profit,  thanks

[Cotillo_Tom]

As a general rule of thumb, ten percent is about the average. Negotiate with the estate agent as the 5% they usually ask for is flexible, particularly if you agree sole agency with just one agent. 

The general rule of thumb doesn't quite work for very low value or very high value properties .

Tom.

[Davew]

I sold my place in March this year.

The Estate Agent charged 5% which included the legal work normally performed by a solicitor.

3% of the gross sales price is retained by the Spanish Government to cover any unpaid taxes (this may only apply to non residents?), it is usually repaid 2 - 3 years after completion less any capital gains tax. 

The Ayuntamiento charge (Plus Valia) a fee depending on the value of the property and length of ownership, for us this was 950 Euros.

Capital Gains Tax at 19% is payable calculated as follows:

• Sales price - estate agent fees + plus valia + accountants fees. The copies of cheques. fees etc. should be copied into your original purchase contract or the final statement from your solicitor from your purchase – they are required as evidence. If you don’t have a receipt for the bank charges the bank can print a copy of the statement pages that show the bank charges – they charged me 3 Euro to print it.
  

Less

• Original Purchase price + solicitors fees + notary fees + taxes + bank interest - you cannot take into account any improvements that you have made to the property i.e Kitchen, furnishings etc.  
  

We used an accountant to do the capital gain and 3% reclamation documents and filing for 300 Euros.

You need to declare the CTG on your UK tax return although there is no tax to pay in the UK.

The owner of the property on 1st January is responsible for the IBI and Basura payments for that year.

Endesa and the water companies are slow at switching accounts (took the about 4 weeks for us) you may be billed after completion and have to reclaim from the new owners

Dave

[Spitfire58]

Interesting reply Davew, Why did you have to pay the council anything ?? & what was it for ?? Never heard that one before !!

[Davew]

Found this on a website which explains it

The plusvalía is a local (municipal) tax charged by the town hall on properties when they are sold. It is calculated on the rateable value of property and the number of years that have passed since the property last changed hands. The objective is to tax the increase in the value of the land on which the property stands, some of which is due to improvements to the area carried out by the local government and the community at large.

The base for this tax is the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount due in tax will depend on how long the seller has owned the property: the longer the period, the higher the amount of tax.

[Spitfire58]

Another way of Spain screwing a completely unjustified tax out of everyone !!!
If the property is “freehold” which is standard there I believe then any increase in land value on the land that the house is built on is an added value to the homeowner.
Just another absolute scam !!!

[Sam]

Negotiate with the estate agent as the 5% they usually ask for is flexible, particularly if you agree sole agency with just one agent.

5% is quite a chunk of your Money for them to stick it on a few websites and hope for the best.

[Cotillo_Tom]

You are right Sam, 5% is disgraceful (bearing in mind how little they do) and the average rate in the UK is between 1 & 1.5%. However, you will find that 5% is what they charge!!

Tom.

[Spitfire58]

With all the internet connections these days. It would therefore seem to be appropriate to do some “home” marketing with all the Facebook pages etc

[Sam]

This looks pretty interesting.

It is worth a little less than we paid for it so no profit

You're saying no profit because is worth a little less, I guess in euro. And there won't be any capital gain in the eyes of Spanish taxman.

...

You need to declare the CTG on your UK tax return although there is no tax to pay in the UK.

...

I'm not sure what was the GBP/EUR exchange rate that time so I'll go with the one we had when we bought our place. Let's say 1.35.
These days the exchange rate is 1.15 (I know, I'm an optimist). So if somebody bought their property in Spain for 100K euro (cash) (£74K) and sell it now for the same price of 100K euro, there isn't any capital gain to pay in Spain. But this Money is now worth £87,000 in the UK. That's £13,000 extra. How will the HMRC see this?
It would be alright if you've paid some CTG in Spain. But that's not the case in this example.