General Procedures for the Purchase or Sale of a Property in Tenerife
There are many ways to find your ideal home or investment property in Tenerife and it all depends on your personal situation. Our estate agents can help you find what you’re looking for by identifying your “must haves” and “would likes”. We also give you a realistic appraisal of how far your budget can stretch after all negotiations on sale price, taxes and fees are taken in to consideration.
There is no hard sell with us, just reliable and sincere advice!
Not only do we sell properties, we offer ongoing support which often result in us having long lasting relationships with our clients. Our ongoing services include insurance, tax returns, banking, translations and more.
If you are selling your property in Tenerife, we can give you an informed and realistic market appraisal. We won’t promise anything we know we can’t deliver! TIBC are proud to work alongside other estate agents on the island which means your property will get full exposure to different demographics. We pride ourselves on our marketing, photography and video tour abilities and always aim to give your property the best chance of selling fast...
First impressions mean everything!
TIBC are also able to give you an accurate figure on what you, the vendor, will be left with after fees and taxes and if you are a non-resident, we can also submit your 3% retention reclaim if we calculate that you will be eligible to do so.
We are also experienced in dealing with properties with debts and properties which need an inheritance to be carried out.
If you would like more information on buying or selling property in Tenerife, please email the office.
Prior to the contract
Once you have found your home in the sun, we will apply for a “Nota Simple” from the land registry which describes the property, identifies the owners and lists any debts such as mortgages which are associated with the property. We also carry out debt checks on the owners so the new owners aren’t left with any surprises moths down the line after the date of their purchase!
Once everything comes back ok (within 24 hours of applying for these checks), we draw up the sales contract and agree on a sale date. If the buyer or purchaser are not able to get to the notary on that date, we can arrange for either party to give us a power of attorney to sign on their behalf.
To reserve a property, we usually ask for the amount of what the “legal costs” would be. For example, on the sale of a property at €100,000, we will ask for the stamp duty of 6.5% so €6,500 plus €2,000 (estimate for notary and land registry) plus €1,605 if the buyer chooses TIBC to carry out their conveyancing. So in this case, the deposit would be €10,125. Legal costs are usually around 10% on top of the sale price.
A date is agreed for signing the title deeds (Escritura) in a local notary. These funds are normally made by bank transfer to our clients account, where the funds are held until the day of the sale, when a bankers drafts or transfers will be prepared.
Again, under normal circumstances, the funds will be received by us, then forwarded on to Currencies Direct, (after we have set up the sellers account with them - if the seller requires the funds to be paid in any other currency other than Euros). If you are the buyer, please talk to Currencies Direct to discuss your time frame for payments to be made.
If you require finance to complete your purchase, and the mortgage is to be taken in Euros, we can arrange this for you with our bank BBVA. BBVA is a leading Spanish Bank and many of the staff speak English, they can help you with the procedure, or you can obtain a list of requirements from us, and allow us to present the documents for you.
The bank will require that your account be open and has a balance of at least 500€ to pay for the official valuation which is done by an independent valuer. Once the mortgage request has been agreed, you will be given a document which spells out the terms and conditions of the mortgage offer. They may request that you take out insurances with them, they are not legally allowed to push you or that their offer depends on you taking insurances with the bank. Spanish law does not allow the banks to push you into taking their insurances.
If you are the sellers and the note from the land registry shows that you have a mortgage on the property, but you have previously paid this off, then you must arrange for the bank to sign a set of mortgage cancelation deeds. They are not legally required to do this when you pay off the mortgage, but they are legally required to do so when you request it. If you have paid off the mortgage but it is still noted in the land registry, this will delay the signing of the sale deeds, as the buyer will require the land registry search to come up clean.
If you have not yet paid off your mortgage and are using the funds from the sale to do so, you should inform your bank, apply for a certificate of balance on the mortgage which will be valid on the day of signing the sale deeds and arrange for the bank manager to be present at the signing of the sale deeds, to put his pen to paper which he will only do if the seller has a bankers draft for the amount outstanding. The bank will charge you for cancelling the mortgage and this should be factored into your figures.
As the seller, you will be required to obtain the last bills for the property and a community certificate to prove that these are up to the date at the time of sale, you owe them nothing. If you do, then the buyer will retain the outstanding and it then becomes his responsibility to make sure that the community are paid. The same can be said for any of the bills, such as electricity, water etc etc.
Prior to the visit to the notary, both parties will agree the price of the property to be declared on the title deeds. Some people ask for a lower declared value, a) this is illegal 2) it may cost you less in stamp duty, but it could result in more being due at the point of sale of the property in Capital Gains Tax, which is currently levied at 19% for EEC residents and 24% for non EEC citizens. You also risk the tax office chasing you for unpaid tax, fines and possible money laundering charges.
If the seller is resident, the 3% Retention will not be withheld at notary providing he can supply a certificate of fiscal residency which can be obtained from the tax office. However, if the seller is over 65 and selling his primary residence and there is capital gains, he should talk to our office to arrange a legal avoidance of payment of capital gains.
The seller will also be required to provide an energy efficiency certificate, this will show you how efficient the property is, and will be valid for 10 years. You will also require this if you intend to sell or rent the property.
It is our recommendation that all property owners make a Spanish will, the normal layout for this is an open will, where one partner leaves the property to the other, with a substitute being named, however, you may wish to leave it directly to your children and avoid one set of inheritance tax. Again there is a method of avoiding payment of inheritance tax. Our company can write an insurance policy covering the inheritance tax. As always this is only a “Guesstimate” and it may be that your inheritors will have to pay a little, or there may be a little over. To our knowledge we are the only company offering this service.
Your Spanish will, should only relate to property in Spain, if British, the will can include UK law preferences.
Powers of attorney
You may decide to have our company sign the property deeds for you, and this will generally allow for the purchase or sale, but you can give a general power of attorney, which means that should there be a need to do inheritance deeds on your inheritors behalf, we can do so, or if you wish us to deal with the property in your absence.
You may also decide that you want to write a mutual power of attorney, i.e. husband to wife and vice versa. You should only grant this type of power if you can trust the person with your credit card in the middle of a shopping centre.
If the property is a new build, you will require certain documents from the builder such as the bulletin for the electricity, a habitation certificate etc etc to be able to have these services and this can take about 4 weeks to complete.
If we are doing the change over for you, our names will appear in your title deeds, which is the authorisation that the utility companies will require.
If the property you are purchasing is a second hand property, we need the copia simple from the notary to be able to change over the utilities to your name, and this can take time.
Electricity: If the last check on the wiring was done over 10 years ago, then you will have to have a new bulletin, this will be done by a registered electrician, and can cost around the 400€ mark if no work is required. If this document is not required, then the change over is relatively simple.
Water: If the property does not have a declaración de responsabilidad then you will require an architect to prepare this for you and can cost around the 1200€ mark. Again this depends on when the last change over took place and the municipal district where the property is built. Carmelo in our office will be able to give you more information on this. If this problem does not exist, again change over can take time, but eventually the bills will come out of your bank account, and will be in your name. Normally the town hall provide you with a document which is their official acceptance of the change over of the water supply licence.
Rubbish: Change over is relatively simple, however the first bill needs to be paid in cash before a direct debit can be set up. Payment of rubbish is normally due in January and June, so please remember that you will be required to pay a visit to the local SAC office to make this payment. Take your bank details with you, so that they can then set it up to come out of your bank account.
If the property is on Amarilla Golf, you will also be required to pay a sewer tax, this works the same as the rubbish collection tax.
Rates: Although the rates are generally paid to the Consorcio office, these cannot be set up to come out of direct debit until the first one that appears in your name is paid. We will present the documents required to change the name and we will add you to our list so that the rates bill comes to us. Many clients wish to keep this system in force as it makes payment of taxes much simpler.
We recommend that you set up an online account with BBVA. We will sit down with you to get the account open. You will need your passport and a mobile telephone number. Once we have the account number, you will need to visit the bank with your passport, and proof of income (using original documents only) for the account to become active. We will talk you through the procedures of obtaining debit cards, on line banking etc. We will require a copy of the account paperwork so that we can program your tax payments and set up your direct debits for you. By opening an account via our office on line, you will not be charged bank charges nor charges for your debit card, whereas if you open the account at the branch you will be charged if you do not meet their criteria for money received into the account, use of the direct debit and transfer systems and use of cards. (correct at time of writing).
If you are new to Spain, we will help you to obtain your NIE numbers. The NIE is the key to everything in Spain, you cannot purchase a property, take out insurance, buy a car, basically anything without one. If we hold your power of attorney and it includes a certified copy of your passport and the permission to apply, then we will be able to do this for you, otherwise you will have to make a personal visit to the police station to obtain the number. NIE numbers (computer glitches permitting) can be obtained on the same day.
If you are to still reside in another country, you will be required to pay non resident taxes, should you require us to do this for you, we normally inform our clients in January of the amount, take the funds in February. We then have to wait 56 days for the funds to be completely cleared, at which point we can pay the taxes for you. Copies will be available in our office from June onwards.
If you are coming to reside in Spain, then we can hold your hand through the application process and we will put you on our list to do your residents tax returns. As the rules for residents tax returns change annually please see Jo in our office as she will have a list of the up to date requirements, she can also help you to take yourself off the British tax register to avoid double taxation. Please see Carmelo for help with obtaining the residencies and applying for Spanish national health cover. You may wish to take out private medical insurance, please see Dani information.
We are exclusive insurance agents for Liberty Seguros who provide the number one insurance for Ex-Pats. We will supply you with a quote while we are preparing the documents of purchase/sale. We also advise all property owners to take out an inheritance policy. If you are purchasing a car in Spain, we advise you to bring a certificate of no claims bonus with you as Liberty will respect your no claims from your home country as long as it refers to insurance you had in the past 12 months.
Our aim is to make the purchase or sale of your property as smooth as possible and to have you as our clients for many years to come.
From the whole team here at TIBC, we wish you all the best of luck in selling or buying your property in Tenerife. We hope we can welcome you personally to our fortunate isle and support you throughout your time here!
Tel: 0034 922 730 210
Useful email addresses:
General enquiries - firstname.lastname@example.org
Non Resident Tax Returns (Jill Ashton - Director) - email@example.com
Resident Tax Returns (Jo Underhill) - firstname.lastname@example.org
Private Medical Insurance (Dani De La Cruz) - email@example.com
Obtaining ID (Carmelo De La Cruz) - firstname.lastname@example.org
Mortgage Clausula Suelo Reclaims (Teresa Jay) - email@example.com