Tenerife Power of Attorney
Guide to Buying and Selling Properties in Tenerife
The process of buying and selling properties in Tenerife is simple, requiring only the proper procedures, a responsible agent, attention and understanding.
Buying a property in Tenerife
After choosing the right property, and having made your offer (Note that each owner knows exactly the market value of their property, therefore the difference in the selling price and your offer represents a minimum percentage), terms and forms of payment will be agreed.
1. You will be asked to sign a Call Option Agreement or make a deposit, to purchase the property for the agreed price and complete the purchase before the deadline set by mutual agreement (only Spanish contracts are valid in Spain). Following the signing, it must be clear that if you can not complete the transaction at the agreed time, you may lose your entire deposit.
Normally you will be asked a deposit of 10% of the value of the property, and that is when the property is removed from the housing market.
If you are on vacation and do not have the money to make a 10% deposit, you can block the property on your name with a sum of 3.000Euros, until you return to your country and take the necessary steps to complete, by bank transference, the balance of the 10% security deposit of the Property.
If your purchase is a new property or an "off-plan", deposit conditions may be different and this may involve staged payments.
2. Next step, one of our employees will accompany you to a bank of your choice and help you to open a bank account in your name.
In this account, you must have the appropriate balance plus taxes a few days before the signing at the Notary.
This account will also be useful after the purchase of the property for you to debit several payments: IBI.(Property Tax), Garbage, Community Fees, and utilities like water, electricity and telephone.
3. You will have to apply for a NIE (foreigner identification number) in the police station, this is an obligatory step in the acquisition of any real or personal property in Spain and one of our staff will accompany you through the whole process.
4. We suggest you write a will, its value is not exaggerated and you can save your family from a long and expensive process in the case of death.
If you can not be here in the date of the signing at the Notary, you can appoint us as your Agent and we will do the whole process on your behalf. To do this, we must be officially authorized by a special power, called "Power of Attorney" in Tenerife.
Please note that after choosing the property, our office automatically requests a "Nota Simple" in the Land Registry. This document shows if there are charges, mortgages or liens on the property (Under Spanish law all debts belong to the property, not the person).
Also we get debt free certificates’ history: IBI. (Property Tax), Garbage, Community Fees, and Utilities (water, electricity and telephone).
All this is done to ensure that at the time of the signing, the property is free from all types of debts or charges, therefore protecting your interests.
Additional expenses to the price of the property
You must also have in your account sufficient funds to cover taxes and costs derived from the transaction of the purchase of the property (In practice, this usually is about 8.5% of the value of the transaction).
In the case of a new property, you will have to pay 5% Canarian VAT (IGIC) plus 0.75% of Property Transfer Tax(ITP.AJD).
In the case of second-hand property: Property Transfer Tax is 6.5% of the transaction value.
These amounts must be paid within one month from the date of the deed in the Notary.
You will also have to pay the notary and registration costs (approximately 2% of the value of the transaction).
If the seller is not resident or not resident for tax purposes, the 3% of withholding tax (on the declared sale price) must be paid to the tax office (Inland Revenue).
Goodwill is a tax to be paid compulsorily and although, according to the law it must be paid by the seller in each transaction, an agreement must be made to ensure it is paid with each transmission.
If foreign, you must also choose a tax representative in Spain to take charge of all the procedures and taxes of both parties. This representative will also be in charge of changes in ownership and addresses, in City Hall, collection agency, recording and Finance.
All of the above was a simple summary of the current regulations.
After Purchase Service
Registration of ownership in the Property Register.
Change in ownership: IBI. (Property Tax), Garbage, Community and Public, Services such as water, electricity and telephone.
Payment of taxes and transaction costs derived from the purchase of property (transfer tax, notary, etc.).