Good legal advice is an important part to purchasing anywhere and just as important in the Canary Islands.
In truth it is not absolutely necessary to employ the services of a lawyer when purchasing property in the Canary Islands and many local purchasers, who feel confident in handling the paperwork and the officials themselves, with the help of GoldAcre Estates, do not use a lawyer). If you are an overseas buyer, GoldAcre Estates advise that you DO employ a lawyer. We also recommend that the lawyer is local, based in the Canary Islands and speaks your language. Lawyers on the islands have a ready knowledge on the property law, taxes and the property. Employing a foreign lawyer deprives you of this expertise.
You or your lawyer must run a check to ensure that your property is purchased with a full freehold title, free of encumbrances, liens, charges or debts and that all payments of contributions and community charges are paid up to date.
GoldAcre Estates can recommend you a number of respected lawyers who we have worked closely with over many years and have found to be efficient and diligent. These lawyers are completely independent of GoldAcre Estates and of course you are free to use any lawyer you choose.
A "Power of Attorney" can be given to your lawyer so reducing the need for you to visit the islands as often, and ensure that documents are signed on time. It is not advisable to give a POA to anyone other than your lawyer, spouse or a person you trust implicitly.
Once you decide to purchase, you will be required to sign a "Reservation Contract". At GoldAcre Estates if you are an overseas buyer this will be in Spanish and English. If English is not your first language we will endeavour to translate this through your lawyer, at an extra cost. At the time of reserving the property we will advise you as to when the "Purchase Contract", should be signed, usually about 28 days after signing the reservation contract and of the amount to be paid at this time. This 28 day period allows the lawyer to complete initial searches and ensure there are no outstanding debts on the property.
"Formal completion and exchange" is carried out in front of a Notary and at this time the final payment for the property is made and the property passes to the new owner. The title deed will be sent to the Land Registry in the new owner's name. A Notary is a lawyer who has had special training and passed examinations to qualify them to cover a large range of legal matters not just property transfers. Once a document is signed by a Notary he becomes legally responsible and is duty bound to enter the details into public records.
Final registration may take several months to work through the system but your lawyer will handle this for you and arrange for things like utility accounts to be set up.
This is a brief insight into the legal system for purchasing land and housing in the Canary Islands and we would be happy to explain more 'in depth' or put you in contact with a reputable, qualified lawyer. For more information please contact us on 0034 928 53 50 44 or email firstname.lastname@example.org.
Every government has to raise taxes and, unfortunately, that is also true in the Canary Islands though we benefit from lower taxes than most of Europe because of the Canary Islands status as an "EU Outermost Region", which means that we are outside the European Union Value Added Tax (VAT), area which means that the islands are allowed to set their own taxes.
As a 'Rule of Thumb' budget for an additional 10% on the price to cover all the taxes and other costs associated with purchasing. If you are taking a Spanish mortgage it will be slightly more, if you are paying cash, it will be slightly less.
The 10% rule is an easy, quick calculation to make while you are searching, so that you are viewing real estate within your budget. Nevertheless, when you finally decide on a place and before you make a reservation deposit, we will provide you with a written outline as to the exact costs, including the extra costs and taxes (this will also provide information on how it can be financed and how much it will cost to upkeep).
All that said, when you buy a property these are the main taxes you will be liable for...
Purchase Tax is levied at two rates:
*On a resale property there is a transfer tax of 6.5% based on the declared purchase price.
*On a new property you will have to pay VAT, or IGIC, as it is known in the Canary Islands, at a rate of 5% of the purchase price. This tax is paid on each stage payment during the build and will be detailed in the purchase contract. Additionally the government charge an additional 0,75% document tax or stamp duty.
You will also be expected to pay notary fees, property registration fees and mortgage acquisition charges if applicable.
GoldAcre Estates can recommend independent, qualified experts on Canarian Tax Law who through their knowledge can help you save money on taxes. View our recommended experts who have represented our clients for many years..