The Canary Islands are always in season and the need for living space is on a continuous rise. If you have been thinking about selling your property, the following article might interest you.
The following summarized and simplified information does not claim to be complete or replace professional advice, but rather should serve as food for thought.
WHY WOULD I SELL MY PROPERTY?
a) You need money
b) You argue with administration, neighbors etc and don’t want to live there any longer
c) Current or future payments (e.g. reparations) are too expensive
d) You fear loss of value of your investment
e) You fear creditors
f) You don’t want to leave it to your heirs
g) You want to avoid the high Spanish inheritance tax
HOW MUCH MONEY TO EXPECT WHEN SELLING?
The price generally depends on the current market situation. After the high in 2007/2008 prices have plummeted. Therefore, today it is irrelevant how much you once paid or how precious your home is to you. Even pricey investments for luxurious updates or important renovations might not be taken into account when setting a price. It is best to collect information from seasoned real estate agents. Don’t go crazy with fantasy prices of homes for sale nearby. In the end the market will punish you when you cannot sell your property in a timely manner but have to keep on paying for running expenses, and all the while fearing prices might still drop.
HOW TO FIND A BUYER?
1. Very recommendable are established real estate agents, because they know the market, often have a customer base, make use of many advertising tools, possess sales talent, will competently answer all questions during the viewing, and do a lot more to ensure a smooth and fast business process. And, it’s for free if they do not find a buyer.
2. Both the Internet and the print media are a good way to offer your property. Especially on the Internet there are many sites dedicated exclusively to real estate.
3. Don’t forget about your social contacts like family, friends, coworkers, neighbors etc. Get your word out to them, the more the merrier. Maybe even mention that you are willing to show your gratitude after a successful deal.
SELLING TO FAMILY
To avoid high inheritance costs many consider selling their property to a member of their family. Since both parties have to pay different taxes and other costs it is advisable to make precise calculations beforehand.
The first steps have been taken, and there are already some interested buyers. Before you take pictures or make viewing appointments you must get the house shipshape. Cleaning, painting, small reparations, tidying up if you still live there or taking out everything that is not part of the deal are simple things that help with the selling process. Also, have the paperwork ready such as documents, contracts, receipts, invoices… Both your lawyer and your real estate agent will inform you in your personal case.
COSTS FOR THE SELLER
That the buyer has costs is clear. But also the seller must prepare for the following:
a) Property Tax (IBI)
b) Increment Value Tax (plusvalía)
c) Profit Tax
d) Fees for lawyer and real estate agent
Without having consulted with a lawyer that has checked and approved your contract DO NOT SIGN ANYTHING.
Private contracts are usually full of errors and can cause a lot of trouble. Often this doesn’t stem from fraudulent intend but mere ignorance. Therefore, hands off if you don’t know exactly what you are doing.
Concerning contracts with real estate agents, avoid exclusive contracts and long contract terms. It is best to have a lawyer draft the contract, or at least check it before signing.
In case you are not always available, a lawyer can in your name act, negotiate, close the deal, pay all taxes, and take care of all the necessary paperwork.
It is illegal to pay even a portion “under the counter”. The tax office will check whether the selling price is believable, and if they find it too low, in the best case they will claim the tax difference, in the worst case they can punish you with a hefty fine.