Advice on buying Tenerife Property

Appointing a Spanish Registered Abogado (Lawyer) in Tenerife

Tenerealty always insist that all of our clients use the services of a Spanish Registered Abogado (Lawyer) and all deposits and monies are paid directly to the Lawyer, not to our agency.

It is vital to appoint an independent lawyer in order to safeguard your interests during your Tenerife property purchase.

The lawyer will then thoroughly carry out all the relevant searches on the Tenerife property, obtaining all the necessary paperwork, to confirm that there are no outstanding debts or embargoes on the Tenerife property and that it is fully legalized.

The lawyer has the responsibility to gather up-to-date receipts for all utilities and services and to see that there are no outstanding debts on the property in Tenerife.

These documents include:

Nota Simple (Confirmation of ownership and any mortgages or embargoes)

I.B.I. (Local council rates)

Electricity and water receipts up to date

Community fees receipts up to date, signed and approved by the President of the community of owners and the secretary

Copy of the property title deed (Escritura)

Without the original of these documents on the day of completion a Tenerife Notary will not sign the deed unless it is clearly stated that you are aware that certain receipts were missing.

Should there be an outstanding mortgage on the property, this will be cancelled and the cancellation registered on the same day that you sign at the Notary.

NIE number (Numero de Identificacion de Extranjeros)

The lawyer will assist in obtaining your NIE number.

This is a simple process which is needed to register the Tenerife property. An NIE number is also needed to change the household bills into your name, i.e. Water, Community charges, Electricity, Telephone, Rates etc...

Applying for a Bank Account in Tenerife

We work closely with all of the Spanish banks in Tenerife and can help you to open an account at the bank of your choice here in Tenerife.

Help is also on hand to set up Direct Debits for your household bills, so you have peace of mind that all your bills are being paid whilst you are not here in Tenerife.

Buying a Property in Tenerife

You have found a property you wish to purchase what next?

We will then introduce you to one of our Spanish English speaking fully licensed qualified Abogados lawyers who will oversee the whole real estate purchase procedure for you, taking ALL of the worry out of the process of buying property in Tenerife for a relatively small cost.

The Lawyer will require a few hours of your time to explain the process to you and answer any questions you may have and organize the various things necessary whilst you are in Tenerife.

The vendor and the purchaser must sign a contract which will include a completion date and the method and dates of payment.

Once you have decided on the property you wish to purchase and the terms and conditions have been negotiated with the vendor then a deposit of 10% of the purchase price is required to secure the property and as official confirmation of your intent to purchase that property.

The remaining 90% is payable on the signing of the title deeds before the Notary.

If you are purchasing a new construction in Tenerife then the constructor will ask for stage payments to be made on the Tenerife property. These can vary dependent on the constructor. Normally an initial reservation deposit is required; this is then normally made up to 10% within 30 days of the contract date. The balance of the monies will be in stage payments, which are usually a further 30% on commencement of the foundations, 30%, once the construction reached roof level and the final 30% on completion at the time of signing the escritura (Title deeds).

Your appointed solicitor will then carry out all necessary searches on the property; to ensure that it is owned by the vendor, it has planning permission, there are no outstanding debts or charges on the property.

Once the searches on the property are satisfactorily completed and the deposit has been paid in accordance with the terms and conditions of the contract then the title deeds are signed by both the buyer and the seller before the Notary.

The Notary (Notaria)

This is a solicitor appointed by the Spanish government to witness the signing of all legal public documents. In this case the title deeds (escritura) of the property.

He represents both the buyer and the seller.

The Notary fees are set by law on a set scale depending on the purchase price of the property and must be paid at the time of the signing of the deeds.

The Original signed document is retained by the Notary who will apply for a formal change in the Tenerife land registry.

The purchaser will receive an initial legal copy of the title deed which is signed and stamped by the Notary.

The official title deed can take a while to be processed and until then this is your official proof of ownership and must be kept in a secure location.

Legal Costs and Taxes of buying a property in Tenerife

These are in addition to the sales price of the property and range between 8-10% of the sale price.

They are as follows

Transfer Tax

This is paid by the property purchaser and is a standard 6.5% (on a Tenerife resale property) tax applied to the declared value of the property. This tax must be paid within 30 days of signing the title deed. Property Transfer tax is calculated on the increase in the value of the land from when it was last sold. The calculation is based on the ratable value of the property and is a one off payment.

Impuesto sobre Transmisiones Patrimoniales y Actos Juridicos Documentados Mod 600 of the new declared value on the deeds (equivalent of VAT) when buying a resale Tenerife property

5% if new and Stamp Duty 0.5% of Mod 600

Tenerife Notary fees Fixed scale of charges based on the price of the property purchased

Tenerife Property Registration Office

Plus Valia (added value, land capital gains tax). This is a tax levied by the Town Hall and is based on the surface area of the land, against the annual increase of the property since the previous sale, on the cadastral value and on the date of the previous escritura.

FREQUENTLY ASKED QUESTIONS

What is a sales agreement?

A private document signed between the buyer and seller. It must reflect ownership of the property, legal definition of the property, the exact dates of deposits and completion, currency of the transaction (euros, pounds etc) and penalty clauses.

What happens if there is a mortgage on the property I want to buy in Tenerife?

If there is a mortgage on a property; before the signing date at the Notary, your agent or lawyer will have to inform the holding bank to prepare cancellation costs, amount and interest due from the seller. On the day of the signing we will be asked to prepare a bankers draft for the amount due, to cover the mortgage etc, for the seller. Please note that once the bank has collected the last payment, you should make sure that the cancellation deed is duly registered in the Land Registry.

When we sell a property in Tenerife do we have to pay tax?

The selling costs associated when selling a property are a 3% retention of the total purchase price imposed by the Public Treasurer Ministry of Economy if you are a non resident of Tenerife to arrange for your capital gains tax to be settled.

This procedure is carried out in order to ensure that no public or private debts are pending within the Spanish territory.

Once the Spanish tax authorities have been paid, the balance of the monies paid less your tax bill will be returned to you.

Your personal fiscal representative will be able to tell you exactly what your personal current tax situation is.

Capital Gains

Other costs involved in owning a property in Tenerife

LOCAL RATES

Local rates are payable annually, and are calculated from the ratable value of the land assigned by the local Tax Office.

RUBBISH COLLECTION

The rubbish collection rate is applied by the Town Hall according to the property and payable every 6 months.

WATER RATES

Water consumption is calculated by the water meter and is payable every 3 months. Payment can be made directly at the Town Hall or by bank with direct debit instructions

COMMUNITY FEES

Properties on some complexes will have an annual community charge to cover costs of general maintenance, pool care, gardens, reception etc. Depending on the size of the development and the services offered, this can vary between 800 and 1200 per annum. Other complexes will not share services and there will be a minimal fee to cover street lighting etc.

ELECTRICITY

Charged monthly with minimum rates applicable (whether you are in residence or not). Don't forget you use a lot less electricity in Tenerife as no heating is required.

TELEPHONE

Charged monthly. Standard rates vary according to equipment installed. Broadband internet connections are available in Tenerife.

Our agency also prides itself on our after sales service, we offer a professional, friendly and honest service from your initial enquiry to after sales care second to none.

We offer ALL our real estate clients an Impartial, TRANSPARENT, Confidential and Professional Tenerife Property Service whether Buying or Selling Tenerife property.

To read more about us please visit About TeneRealty

These guidelines are meant for guidance only and describe a straightforward purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.