After carefully researching the region of Murcia, choosing the right location and type of property, and viewing different property for sale in Murcia, after the ideal home has been found, the next step is to actually purchase it.
Whilst not an exhaustive or step by step guide to purchasing property in Murcia, this guide provides an overview of the buying process. Whether buying a Costa Calida property by the beach, or a new golf development inland, the process is the same.
Finding a good property agent with plenty of experience is essential, and the importance of an agent with local knowledge, and contacts cannot be overestimated. An English-speaking Spanish lawyer should also be employed. Together the agent and the lawyer should be able to provide the necessary advice and assistance, and help avoid common mistakes and problems. It is also worth consulting a financial or tax advisor, especially if the property is to be a permanent residence.
The estate agent can help with finding a mortgage, although they may favour a particular mortgage provider. Spanish mortgage interest rates are lower than the rest of Europe, making buying Murcia property even more appealing. A mortgage offered by a developer is often well worth considering, as there are substantial tax savings to be made. The developer is likely to have a mortgage on the property to fund the development. This mortgage can then be transferred (subrogated) to a new buyer. The new buyer in effect "takes over" the mortgage from the developer, rather than taking out a new mortgage. Savings of several thousand euros in tax and administration fees can usually be saved this way. Subrogation may not be the best way to finance your Murcia property, but it should certainly be investigated. It is important to secure a mortgage so that the properties being considered are within budget. Before getting too carried away, be aware that a deposit of at least 40% of the purchase price plus taxes and fees is usually required. A lot of the process for purchasing property in Murcia will involve appearing in person. If this is not possible, a trusted "power of attorney", such as the Spanish lawyer, can appear instead.
The property buyer needs to apply for their NIE (Numero del Indentificacion de Extranjero) or ID number at a police station. This can be done at any time, and once issued, means that a power of attorney is not required. This number is used to track a person's financial and commercial activities in Spain. The NIE is used for many things, such as for employment, buying a vehicle and insurance, as well as for applying for a mortgage or other type of loan, and buying or selling a property.
Once in possession of the NIE, the next step is to open a Spanish bank account, so that payments can be made. Official documentation such as a passport will be required. There are different accounts available for residents and non residents. Applying for a non residential account requires a Certificao de no Resdiencia) to prove residential status. This can be obtained on application from a police station.
The lawyer will help get the necessary background checks done on the property. Purchasing off plan will require all licenses and certificates to be issued, and that the property is debt free and bank guarantees are in place to protect the deposit in case the development is not completed. Purchasing an existing property requires background and history checks into the ownership and debt status. The Lawyer will help to set up an escrow account so that the deposit is protected. It is important to consider making a will; under Spanish law, without a will, the property may not be inherited as expected.
Once the ideal property has been found, and the legal and official processes are underway, the next step is to reserve the property. Each developer will have their own procedures, and there may be some room for negotiation. Purchasing an off plan property requires the reservation contract to be signed, and the payment of a small deposit. This will reserve the property for a month to enable the rest of the deposit to be paid. When the deposit has been paid, the purchase contract can be signed. While the paperwork will be in Spanish, translations will be available.
Once the property is ready to be handed over, the purchase can be completed. The balance of the purchase price and taxes is paid, and the Escrita Publica de Compraventa (Public Deed of Sale) is signed. This document must be authorised by a Spanish Notary and signed by both the Buyer and Seller. At this point, the buyer becomes the owner. There are additional documents that the seller is required to provide, which can vary. Expect to see title deeds, proof of payment of the most recent IBI (Impuesto sobre Bienes Inmuebles) property tax, proof of recent utilities and other documents. Again, legal advice will be useful.
When the sale is completed, the next step is to register with the Land Registry, and the Catastro. The Land Registry is concerned with the ownership and title deeds of a property, whilst the Catastro deals with the exact location, description and boundaries of the property. This then ensures that all property tax correspondence is sent to the new owner.
As part of the purchase process, various taxes will need to be paid, and a rough guide is to budget for an additional 10% over the purchase price. The taxes paid buy the buyer will be negotiated by the chosen lawyer. For off plan properties, the IVA (Impuesto sobre el Valor Anadido) the equivalent of VAT, of 7%, IAJD (Impuesto Sobre Actos Juridicios Documentados), Tax on Documented Legal Transactions, and the Plus Valia, the capital gains tax on the increase in value of the land. Legal and Notary fees usually amount to approximately â‚?2000.
Owning a property in Murcia is no different to owning anywhere else when it comes to ongoing costs. When budgeting, be sure to allow for community fees, such as for the upkeep of the pool and gardens if applicable. Utility bills are similar to UK costs; however there may be a connection cost in the beginning.
Various taxes will need to be paid, and the tax situation depends on residential status. The IBI (Impuesto Sobre Bienes Inmeubles) or community charge and the Impuesto Sobre La Renta (Letting Value Tax), the amount of which varies on residential status are paid on the property. The Impuestos Sobre la Renta de las Personas Fisicas or Income Tax is payable on all income for permanent residents and only for income earned in Spain for non residents. The Impuesto Sobre el Patrimonio or Wealth Tax is calculated on the value of assets including property and bank balance. As tax is a complicated matter at the best of times, professional advice on tax matters is highly recommended.
Despite it looking a complicated procedure, and lots to remember, buying a property in Murcia is highly recommended, and there are many experts who can help along the way.
