Buying Property in FuerteventuraThis guide is designed to be impartial and does not seek to promote or 'ramp-up' the property market in Fuerteventura. The advertisers on the right-hand side of this page do not deal with us directly and this affords us a certain amount of impartiality when speaking about property on the island.
First and foremost, you will need to use a Lawyer when purchasing a property in Fuerteventura. A Lawyer will check the property with the Land Registry and make sure that there are no charges against the property (In Spain, fines are often levied against a property rather than the owner and if these exist, the new owner would be liable) as well as check that all Taxes, Community Fees and utilities are up-to-date. The Lawyer will also make sure that the seller is in fact the owner of the property. These checks should be made before handing over any deposit.
Estate Agents in Fuerteventura often take up to 5% commission for selling an Apartment or Villa. For this reason, many people attempt to sell their property independently. However, there is added risk to the buyer when buying direct (especially when the buyer is from overseas and has little or no knowledge of either the legal system or language) and most of the horror stories are from people who did not use an Estate Agent. While using an Estate Agency is no guarantee, it does afford a degree of protection and certainly will make the whole process easier. It should also be remembered that where a potential purchaser makes an offer that is lower than the asking price, the Estate Agent and the Seller will often come to an arrangement where the Estate Agent will drop his commission in order for the seller to accept a lower price.
Unlike the UK or Ireland, Estate Agents do not normally operate on an exclusive basis and the same property will often be advertised by several Agents at the same time (sometimes at differing prices!). This can become even more complicated when the commissions are being split between several referring agents.
In Spain you literally cannot do anything without a NIF number (a number that identifies you for Tax purposes). Your Lawyer will help you obtain one.
The Private Contract
It is usual to sign a private contract and pay a deposit of about 10% once you have agreed to purchase the property. Note that this is non-refundable, if you pull out of the sale, you will lose your deposit. On the other hand, if the seller pulls out of the deal, he must pay back double the initial deposit.
While this law is often blatantly ignored (and many question the legality of the law itself within the EU), in order to rent to Tourists in the Canary Islands, the property must have a Tourist License. If the property does not have a Tourist License and the authorities find that you are (illegally) renting your property to Tourists, then a large fine is always possible. Double check this as Estate Agents can be economical with the truth!
Taxes and Costs
The various taxes and legal and administrative costs usually add up to around 10% of the sale price. These costs are paid by the buyer (on top of the sale price) and break down roughly as follows:
- 6.5% transmission Tax for a second -hand property or 5.75% (sales tax and stamp duty) for a new property.
- Notary Fees
- Land Registry Fees
- Plus-Valia Tax
- Translation Fees (obligatory for non-Spanish speakers)
- Mortgage opening commissions and fees (if applicable)
- Lawyers Fees
It is commonplace (although highly illegal) for the seller to ask for a percentage of the sale price to be paid undeclared and in cash. While the seller may try to convince you that you are saving money by doing this (the taxes being a percentage of the declared sale price), you should remember that this practice will more than likely disappear within the next few years and that when you go to sell your property, you will be liable for Capital Gains tax on the difference between the amount declared at the time of purchase and the sale price. This practise is disappearing fast, since the Spanish Authorities have introduced new legislation designed to place more responsibility on the Banks and Legal Professionals involved.
To finalise the purchase, the Escritura de Compra Venta (Deeds) are signed in front of a Public Notary. If the seller is not a Spanish Resident, then the buyer will withhold 3% of the purchase price, payable to the Spanish Tax Authorities within one month of the sale. This 3% is retained towards the Capital Gains Tax liability of the seller (If the seller's liability is more than this, then he will be liable for the difference, if it is less, then he can claim a refund). Capital Gains Tax now stands at 18% for both non-resident and resident sellers.
The property needs to be registered with the Land registry within 30 working days of the sale. The Deeds will then be available to the buyer within a few weeks.