Buying Process: Expenses And Taxes

Once you have found a property, you need to begin the buying process. Before buying your property, you should research the sale in depth and take professional advice during and after hand-over.

Regardless of the type of property that you want to buy, if you need to take out a mortgage, we recommend that the monthly mortgage payment does not exceed 35% of your family’s monthly income.

Here you have some tips to make sure you are confident through the process of buying your home.

. Existing properties:

* The Real-Estate Property Register

o It is important to check who the actual owner of the property is. The person entered in the Real-Estate Property Register is the only person who can sell the flat, provided that there are no restrictions to that person’s rights as owner.

o The Register will also tell you whether there are any pending financial encumbrances on the property, such as a mortgage or attachment order. This information can be found in the Real-Estate Property Register covering the town where the property is located.

* The city council

o You will need to check the planning status of the property to find out whether it is likely to be affected by any planning schemes. Ask the owner for the most recent property tax (IBI) bill to check that payments are up-to-date. If you are buying an existing property, the town hall can also tell you whether property tax (IBI) payments are up-to-date.

* Chair of the homeowners’ association, if there is one, or the property manager

o These people will be able to tell you whether contributions to the association are up-to-date, whether the owners have approved any major expenditure or works, and the total monthly expenses.

o It is also important to find out how old the building actually is and to check the shared services and the conditions of the electrical installations and other utilities.

* Finally, you will need to check that the property is actually vacant and that it is not subject to a rental contract or other type of occupation that may cause problems later on.

2. Properties under construction

* You should check that the administrative licenses for the properties under construction are valid. Check the technical design and make a note of the date of building completion and release.

* When you find out the dimensions of the property, note the useable internal surface area, which is the total size of the interior spaces that have a clearance of at least 2.5 metres, excluding terraces and any area occupied by vertical structural elements. If the property has more than one storey, the space taken up by the internal staircase is included in the useable surface area. Although people often talk about, built area or square meterage, you need to know the useable surface area.

* If the property is a new-build, you have the right to examine the plans and the building specifications.

* If the property is bought off-plan, you need to specify the materials and products to be used in the building as soon as possible, and insist that building specifications be drawn up, which can be used as a practical guide if the work is delayed or changes are made to the materials used.

* Bear in mind that all of the features advertised by the seller or the developer are binding and the buyer has the right to claim them. Advertising for real-estate products, and in particular advertising relating to the sale of homes, has to be accurate. As a result, any features mentioned may be claimed, even if they are not included in the contract of sale.

Prevent fraud by using properly regulated professionals who belong to the appropriate professional bodies. It is also advisable to use a professional who adheres to the Consumer Arbitration System, which allows disputes arising between companies and their customers to be resolved quickly and free-of-charge by means of a binding decision.

Option to buy

The option to buy is a right that gives you a certain amount of time to decide whether you want to buy a particular property if you not entirely sure, or in case you find another property that is in better condition or has better facilities.

But if you are sure, get in touch with the seller, which may be a private individual or a development company.

Pre-sale contract

Once the sale has been agreed, it is quite common to sign a private contract in which the buyer pays a part of the sale price as a deposit.

This contract must specify the conditions of the deal: the property being sold, price, payment terms and conditions if one of the parties decides to pull out

Deposit

Once you have decided on the property you want to buy, you can reserve it for a short time. A non-returnable deposit is normally paid as a guarantee to the seller that you are going to buy the property.

This amount will be discounted fr om the total price of the property once the paperwork has been formalised. Although it is a formality, the owner has to give you a signed document stating that this deposit has been paid.

The deposit may be up to 10% of the total price of the property. If you decide not to go ahead with the sale, you will lose this money. On the other hand, if the owner decides to sell the property to someone else, he will have to pay you back double the value of the deposit.

Signing the contract of sale and the public deed

The contract must include identification of the buyer and the seller, a description of the property being sold and its annexes (garage, storage rooms, etc.), useable surface area, shared areas and the by-laws of the homeowners’ association, if there is one.

It must also state the price and the payment terms, applicable taxes (VAT or ITP - property transfer tax), the conditions of sale and any penalties applicable to the parties in case of breach of contract.

It is advisable for both parties to agree to consumer arbitration, which is free-of-charge, as a way of resolving any disputes that may arise in the future.

The buyer has the right to choose the notary who will draw up the public deed of sale.

The contract between the two parties may be private or public. The contract is the document that will make you the legal owner of the property, setting out the rights and duties of the buyer and the seller.

Private contracts are not formalised before a notary and they consist of a document identifying the buyer and seller, the physical and legal status of the property, the payment method and details of the sale (conditions, exact price, handover date, etc.).

You are not the legal owner of the property until the public deed has been signed before a notary. The public deed will also include identification of the buyer and seller, the physical and legal status of the property, its value, the payment method and any tax obligations arising from it.

Property Register

The public deed is required to register the property in the Real-Estate Property Register covering the area wh ere the property is located.

In order to enter the property in the Register, you will need to provide proof of payment of the following items: property transfer tax (existing property) or VAT (new-build) and the related legal documents.

Although you do not have to enter the property in the Real-Estate Property Register, it is advisable to do so as it acts as a guarantee that you are now the legal owner of the property.