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Buying Guide

Buying Commercial and Residential Property through Kingsway Estates Spain S.L. means you and your finances are in safe hands. With over 17 years’ experience in the Spanish property market we and our Spanish legal representatives can ensure a safe, secure purchase and take the worry away from you. We have a wealth of local knowledge that we can share with you making your move easier and helping you to get settled in quicker and living the Costa life sooner. We know how you feel as we made the same move ourselves with young children. Our only regret is that we did not do it sooner. Please remember our reputation has been built on word of mouth recommendations, we need to look after you because we want your recommendation in the future.

Commercial Department.

Most businesses for sale in Costa del Sol will be purchased leasehold, we have over the years become specialists in this field helping hundreds of people realise their dream of living and working on the Costa del Sol. With the right advice and support buying Commercial property, lease or freehold, is basically simple and easy but be careful of the many so called commercial agents who operate from a mobile phone and without legal Spanish representation, it does go on so be aware – ask your agent how long they have been operating, ask them to introduce you to several of their clients who have previously purchased through them, and do not pass deposits over until all relevant paperwork has been scrutinised, verified and conveyed by a Spanish solicitor or reputable Gestor.

In Spain a minimum 10% deposit is required to fully secure and formalise a property purchase, at this point the property will be removed from sale and a completion date agreed. To bring a full 10% deposit with you is sometimes impractical so a smaller amount can be used as a reservation securing deposit until the complete deposit balance can be paid, we can advise on the most cost effective way to transfer from your home bank to Spain. Here’s our promise to you:

To give you a friendly personal service if you are looking at businesses for sale in Fuengirola, Benalmadena, Torremolinos, Mijas, Malaga and all along the Costa del Sol, with no pressure selling, we as the owners escort you on viewings and not commission driven sales people.

To listen patiently to your requirements and carry out informative relaxed property viewings with personal introductions to the vendors, we will try and find you a bar or business that fits your requirements and budget.

To explain in simple terms lease rental agreements or freehold purchases.

To negotiate the best possible price and terms of contract on your behalf.

To introduce you to an English speaking solicitor or gestor who will be legally responsible for managing your purchase, seeing no debts will be passed on to you.

We will also organise and apply for your N.I.E. (national identity) number and social security so you can work here legally and in some cases even receive a Spanish state pension.

License your new business and set up banking facilities.

Advise on schooling with introductions to various schools both Spanish state and International colleges who work with the British Curriculum.

Arrange for pets and furniture to arrive safely on the coast.

Assist in finding you suitable living accommodation.

We can also help with promoting your business.

We can supply you with a list of recommended and trustworthy tradesmen, promoters, radio stations, motor vehicle dealers, shop fitters, bar and restaurant constructors and reformers, drink suppliers, food retailers and importers, commercial and residential cleaners and many more individuals and companies who can help you on your way.

Here is some general information that you might find useful in understanding the purchase procedure of lease and freehold premises and running your bar or business:

Lease purchase is the most common way of acquiring business premises on the Costa del Sol. Usually a landlord will grant a new lease to you for a period of say 5 to 10 years, sometimes longer, with a fixed monthly rental amount which can only increase by I.P.C. (Spanish inflation rate) annually, over the last few years this has been between 1.5 and 4%. The monthly rental can only be increased further up to a 20% maximum if you transfer your lease or if the original lease period expires, in most cases your lease will be renewable with no further premium required but we advise you to find out for sure the renewability of the lease you are taking. The monthly rents shown are generally the amounts that the current tenants are paying. Our experience tells us that a landlord, normally Spanish, will allow you quiet enjoyment of the property and is only really interested in having a good reliable tenant who pays the rent on time.

In general operating a bar or small business on the Costa del Sol is easy with relatively low overheads compared with the UK, leases are a strong form of tenure backed by Spanish law. Public liability Insurance premiums are very reasonable along with local taxes and utility bills. We at Kingsway can help assess your monthly running costs and help with a business plan.

Bank loans and mortgages are not freely available for the purchase of leases so you should have your finances in order before you commit to a leasehold purchase, if you let us know the budget you have we can advise on the price of the businesses that you should consider, taking into account rent deposits, safety money, stock etc. In the case of a freehold purchase we can arrange on your behalf low interest mortgages subject to status – please ask for details.

You do not have to employ Spanish staff in your business if you are from an EEC member state. Wages for employees here are quite low with the average waiter, waitress or shop assistant working for around 5 to 6 euros per hour, competent seasonal workers are usually easy to find. We can advise and help you set up work contracts if required and register you for social security which enables you to work here legally and gives the benefit of an excellent health service.

Be careful if you are buying a registered limited Company in Spain as you will inherit liabilities to creditors and staff work contracts, we advise that you take advice from a laboral gestor on what your undertaking involves and what your liabilities will be.

Buying a Freehold premises: Viable freehold premises represent a very small proportion of commercial properties available for sale on the Costa del Sol. Buying a freehold can be a great investment as you can then operate a business from the premises without paying rent, use it as collateral or even sell a lease and receive a monthly rental plus a participation fee if your tenant sells the contract. A freehold sale is formally completed in Spain when the title deeds are signed before a notary (legal government licensed witness), the agreed payments made and possession given to the purchaser. You should add approximately 12% to the price of the freehold premises to cover additional costs including legal, notary and land registration fees, transfer taxes etc. The buying process is simple and transparent if you are advised correctly.

Important. Please note, with reference to the properties and businesses advertised on this site. Every effort has been made to show accurate details and information relating to property descriptions and financial information, however, a great proportion of the details relating to the properties advertised are supplied to us by vendors and therefore we recommend that you use them as a guide only. If you should pursue a purchase of any of the properties then information will be verified and full searches carried out according to Spanish law. No information shown constitutes the basis for a purchase or sale contract.

Business Transfer & Accountancy

Continental Consulting are the specialists for business transfer services on the Costa del Sol. They are able to provide all necessary help and advice to enable our clients to relax in the knowledge that all the relevant paper work has been prepared and presented in the correct manner allowing you to focus on the running of the business and not the paper work that goes with it.

Continental Consulting have prepared a service that covers all the essential elements needed when opening a new business. This includes:

*Opening a bank account

*Applying for a NIE number

*Preparing deposit contracts

*Pre inspection of the business by our technical engineer

*Checking the Opening License at the Town Hall

*Drafting or checking of the new tenancy agreement

*Checking that all the bills on the business have been paid to date

*Applying for Social Security number and registration

*Registering the individual for tax and fiscal obligations

*Presenting the paper work in the Town Hall for business name change

*Seeing through the name change process during the inspection process

*General help and advice if needed.

The service is a personal one and we spend as much time as we can with you in the initial stages of the business transfer. We are always available on the telephone and usually we are in the Benalmadena and Fuengirola areas every day for a personal visit if required.

More details can be found on our web site www.lawsinspain.com

Continental Consulting offer the services of Eurogestion for all our clients fiscal and social security needs. With their office located in the heart of Fuengirola just next to the bus station, they are easily found and Carmen Romero is an expert in the field of accounting and social security. Eurogestion will be able to advise on the best and most economical type of labour contract and answer any questions you may have in relation to preparing your quarterly accounts and your book keeping.

We look forward to meeting you in the future and working with you on your new commercial venture.

Residential Department.

It is said that buying a home is one of the biggest undertakings we will make, buying a residential or holiday home abroad therefore must be even more of an undertaking.

We at Kingsway Estates are independent and benefit by being here and keeping it simple and on top of the current property available.

We guarantee you a relaxed, unpressured, personal and professional service.

We have time to listen and have no commission only sales people.

We want you to be entirely happy and content with your purchase.

There is nothing more depressing than to arrive on the coast and find the property prices and often the beautiful looking property shown on websites or in glossy brochures do not match up to your expectations, or in fact do not exist.

We are all governed by a budget and often we are asked to exceed what would be comfortable for us in order to secure our dream home in the sun, we at Kingsway work on lower commissions than most other Agents on the coast, we are independent and therefore it often reflects in lower property asking prices.

Please consult us with your budget and desires and we will spend time trying to find you the right property at the right price.

We can help you:

Safely purchase, in conjunction with Spanish legal advisers, your home in Spain.

Advise and help with mortgages.

Advise on schools in the area you decide upon.

Introduce you to local tradesmen and builders if you require reformation or work on your home.

We are in collaboration with painters, decorators and interior designers.

We can also fully furnish your home at very reasonable prices.

We can also arrange for pets and furniture to arrive safely on the Costa del Sol.

Important. Please note, with reference to the properties and businesses advertised on this site. Every effort has been made to show accurate details and information relating to property descriptions and financial information, however, a great proportion of the details relating to the properties advertised are supplied to us by vendors and therefore we recommend that you use them as a guide only. If you should pursue a purchase of any of the properties then information will be verified and full searches carried out according to Spanish law. No information shown constitutes the basis for a purchase or sale contract.

Useful Information on Buying property in Spain.

Costs of buying property in Spain

As a buyer of property in Spain there are a number of costs and taxes over and above the property price that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax. The different cases are explained below, along with the other costs and taxes that are common to both cases.

NEW BUILD FROM A DEVELOPER (OR BANK)

VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)

These taxes apply for residential properties being sold for the first time (never previously occupied), or for commercial properties and plots of land. This is a national tax, so VAT is the same wherever the property is located (with the exception of the Canaries, which have their own version of VAT).

At present VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land.

VAT on new homes in the Canaries is known as IGIC (Impuesto General Indirecto Canario), and currently stands at 4.5%

VAT on newly-built homes rose from 4% to 10% on 01/01/2012.

The Stamp duty (known as AJD) is 1% of the price of the purchase, but might go up in some regions, so be sure to check on the latest rate. Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit. In this scenario there is no transfer tax to pay.

RESALE FROM A PRIVATE INDIVIDUAL

Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)

This tax applies if the property is deemed to be a second or posterior transfer (i.e. not the first time a newly built home is bought), and is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to ITP pro rata. However the full amount of ITP still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.

The Transfer Tax rate is ceded to the autonomous regions, who can choose to apply the general rate, or their own rate.

The general (national) rule of ITP is 7%, but many of the autonomous regions have applied higher local rates. The rate you pay depends upon the autonomous region where you buy (for more information see Transfer tax on resale homes – Impuesto de Transmisiones Patrimoniales (ITP))

Income Tax Provision When Buying From Non-residents

If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.

Costs that affect both new build and resale property purchases

Agency Fees

Estate agency fees or commissions are paid by the seller, unless otherwise agreed. If the buyer uses a search agency then search fees are paid by the buyer.

Despite the ability of the internet to bring together buyers and sellers without the need for an agent most people still use agents to find property in Spain. However you should be aware that agents charge between 2% and 15% of the sale price, depending upon the region and type of property. Unless the buyer has specifically agreed to pay the agent’s fee this cost will be built into the sale price.

Legal Fees

You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).

A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees. Be warned that some lawyers charge 1.5% or more of the sale price, which is a rip off. Even 1% can be unreasonably high given the work that is involved in a straightforward purchase of an expensive property with no legal complications. Your best option is to try and find a good lawyer who is prepared to charge on an hourly basis. Legal fees for a purchase without any complications and charged on an hourly basis should be in the region of 1.000 to 2.500 Euros.

Mortgage costs

If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.

Notary Expenses

Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate Notary fees as being 1% of the purchase price declared in the deeds of sale. In many cases however Notary fees are more like 0.5% (or less) of the price declared in the deeds.

Property Registry Inscription Fees

Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.

Other Costs

Bear in mind that it may be prudent to carry out a survey of the property and that this will have a cost.

In Summary, allow for up to 15% of the purchase price in taxes and other costs.

If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved. In this case transaction costs might reach between 10% and 12% of the value of the property purchased.

Banking Costs

To pay for the property, you will more than likely need to write a banker’s cheque. In order to do that, you will need to open an account in a Spanish bank and transfer money from the bank in your country. The cost of transferring the money can go up to 0,4% of the amount transferred. The banker’s cheque will most likely cost 0,5% of its amount.

Furniture Costs

Once you own a property you will need to furnish it. The cost of furnishing a property depends entirely upon what you want. However as a very general rule of thumb a 2 bedroom apartment will cost around 10,000 to 15,000 Euros to furnish nicely if you buy everything new. Of course there is no limit to how much you can spend, though you can also get away with less than 10,000 if you are on a tight budget (all from IKEA, for example).

Costs of owning property in Spain

There will of course be costs associated with owning a property in Spain. Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills, rubbish collection, and so on. These will be determined by the size and type of the property you buy. Obviously a large villa with a garden and pool will require much more effort and cost to maintain than a small apartment. For cleaning a figure of 10 Euros an hour is fairly typical throughout Spain.

Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Spain face.

Property Ownership Tax (Impuesto Sobre Bienes Inmuebles – IBI)

A local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall the tax rate goes from 0.4% – 1.1% of the valor catastral depending on the Spanish region.

Annual Wealth Tax (Impuesto Sobre Patrimonio)

This tax has been changed several times in recent years. For the latest situation see Spanish Wealth Tax (Patrimonio)

Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR)

Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.

Not rented out
Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 25% of 2% of the valor catastral of the property.

The tax on a property with a valor catastral of 700,000 Euros would be as follows:
Property value for tax purposes = 700,000 Euros
Taxable base (2%) = 14,000 Euros
Tax (25%) = 3,500 Euros

Rented out
If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident). In many cases non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain.

Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.

Community Fees

Owners of property that is part of any development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the community of owners, know as the Comunidad de Propietarios. This will entail paying community fees for the upkeep of the common areas, and any other services that the community vote for. The fees will vary according to the magnitude of the common areas, the costs of maintaining them, and the services that the community vote for. A budget for annual community expenses is approved by majority vote of all owners (or representatives) who are present at the annual general meeting of the Comunidad de Propietarios.

Insurance

Household insurance will vary according to the circumstances of the owner and the type of property. However it should be born in mind as a cost that all property owners will face.

NOTE: Costs to bear in mind when selling a property in Spain.

Plusvalia

A special reference should be made to the local capital gains tax – known as Plusvalía. This is a local / municipal tax that only applies to the increase in value of the land upon which urban properties are built, and that is levied at the time of transfer of such properties. It is calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount to be paid will depend on how long the seller has owned the property: the longer the period of time during which the seller has owned the property, the higher the amount of tax.

This tax should be paid by the seller, though it is possible for sellers of resale property to try to shift the burden of this tax to the buyer. This practise is unheard of in regions such as the Costa Brava and the Costa Dorada, though quite common in the Costa Del Sol.

Capital gains tax

Spanish capital gains tax rates on property and other assets
If the vendor is a non-resident, there is also a Spanish withholding tax retention, which the buyer pays directly to the tax authorities, to cover the vendor’s capital gains liability

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