Just take a moment to read this CHECKLIST FOR NEW HOME-OWNERS IN SPAIN. Buying a house in Spain is different than in other countries and in my work at a law firm in Andalusia I often notice that buyers don´t always process all information and tips they receive. Make sure that you won’t have any surprises and take action to arrange the basics for your new Spanish house and potential residency well.
Make sure that your house insurance is active (also if you have bought an apartment that is part of a Community of Owners). Because of the legal situation of rural houses in the countryside of Andalusia, a good insurance policy is extra important here.
Is your house safe? Of course you definitely don´t want burglars or occupants in your house. Occupants in Spain even have a legal right to stay in your holiday home if you don´t report them within 24 to 48 hours. In that case it can take a long time to get them out through a court order and you even need to pay for their water and electricity. So take action and think about:
- renewing your locks for special security locks or even a security door
- installing bars at windows that don´t have security glass or change the windows (even better for the environment
- an alarm system
- installing detection lamps at your entrance with a sensor
- lamps inside with (variable) time schedule for when you´re not here.
As always in life, it´s better to be safe than sorry.
Renting out to tourists? RTA rental license
Would you like to rent out your house to tourists (short-term rental for less than 2 months)? In Andalusia / Costa del Sol you then need to apply for the RTA rental license of the Junta de Andalucia.
Final balance meeting with lawyer or bank
- the original Purchase Deeds stamped by the Land Registry
- your new Nota Simple of the Land Registry and Cadastre inscription
- all bills and proof of tax payments
- a copy of the electricity and water contract (if not supplied through the town hall)
- bank transfer if there´s money left from the estimated third-party costs
Costs that you can deduct from the Capital Gain Tax when selling again
Save up all your bills of the purchase and for reforms together with the bank transfers, because these purchase costs in many cases are deductible from the Capital Gain Tax if you sell again in the future. If you want to deduct bills they need to have VAT, your NIE and a reference to your house (Cadastral and/or Registry reference number). Also you need to keep proof of bank payments or checks. Payments done in cash are not excepted by the Spanish tax office to deduct costs on the Capital Gain Tax.
Have you bought with a Spanish mortgage? Then ask your bank for your final balance meeting.
Spanish will (testament) & Registro de Pareja de Hecho
According to your personal situation and wishes you can sign a Spanish will for your assets in Spain (or in the whole world). This is essential for new homeowners that wish to become resident in Spain and don´t have last will in their home country yet. This last will is signed at the notary (this can´t be done through Power of Attorney) and registered in Madrid at the Registro de Ultimos Volutantes. Here the authorities keep track of where the last Spanish will was signed.
Registro de Pareja de Hecho
If you are a non-married couple and leave your properties to your partners, we advise you to inscribe in the Registro de Pareja de Hecho to avoid high inheritance tax for the heir. If you still have assets in your home country, you might consider marriage, because this is valid in both countries.
If you become an official resident in Spain, we advise you to inscribe at your local Town Hall through the document that is called Empadronamiento. Although the town benefits from every inscription and wants to stimulate homeowners to apply for the Empadronamiento, this isn´t always good for you if you want to avoid problems. In certain cases, the tax office might want you to pay your IRPF income tax over the previous years for fiscal residents in Spain and can try to have you pay a fine.
You can apply for your official residency at the Police station. The rules for this change all the time and are different for EU and non-EU members, like the Brits. Non-EU members need to have private healthcare insurance in Spain. Remember; Spanish residency and fiscal residency are two different things.
Fiscal residency in Spain: IRPF income tax
You only become a fiscal resident once you have declared your IRPF income tax in Spain (this can have fiscal advantages if you sell in the future). There are people with low income or pension that according to the rules don´t have to declare at all. So, neither in Spain nor their home country.
However, if you sell in the future again you can have a benefit being a fiscal resident in Spain. If you are 65+ and sell your first residency home, then you don´t need to pay Capital Gain Tax over your profit. Also, if any fiscal resident seller buys another first residency home within 2 years, you can get a (proportional) exemption from the Capital Gain Tax.
IRNR income tax declaration for non-residents
If you´re a non-fiscal resident in Spain and don´t rent out your property, you need to pay once a year IRNR income tax over the cadastral value of your house. On the other hand, if you do rent out, you need to do the IRNR tax declaration every quarter. Official bills with VAT are proportionally deductible.
Do you have any smart additions for this for your this CHECKLIST FOR NEW HOME-OWNERS IN SPAIN? Please just let me know through an email message.