Quote:
Originally Posted by Expat Ben
Hi again.
I understand that in Spain if you purchase a NEW property then you must pay IVA (VAT); but does the buyer need to pay IVA on a property that is second hand ?
I've seen property prices drop significantly in parts of the Costa del Sol, but the bank will only offer mortgages up to a maximum of 80% of the value of the property; either the valuation of the owner or the bank; whichever is lower.
So if a property has reduced in price by say 25% in the last 2 years, would the bank still only loan a maximum of 80% of the value as I've also come across properties being advertised as having 100% finance available ?
Is it also true that land is cheaper to buy in the South of Spain and that the prices of the properties are being fixed by the banks not the owners ?
Ben
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Hi Ben,
The Impuesto de Transferencia is not VAT, but I believe it's 7% in any case, just like the VAT in a new property (and 8% from next June I believe)
You can reckon on 10%-11% of purchase price for the taxes, notario and the like.
The Tax is worked out by Hacienda on the value it is Escriturado for. Hardly ever the same as the Market value. As a guide, I would say that a 380K or so house would be Escriturada for about 250K or so. This will be similar to the valor catastral and on which rates and the like are based. Usually, if Hacienda's tables don't agree with what it's registered for, they send on a little present after the initial payment of the Tax - a top up to meet their table of values for that property in that area.... at which point you pay the diff between that already paid and what they say you should have paid.
As for the banks setting prices - well, twas ever thus in any country. If you need a mortgage, then their valuation (about 350€ or more) will dictate what they'll loan. This is nothing to do with what the property is on the market for as the vendor will decide what they will and what they won't let it go for. The fact that the bank will only loan 80% (70% for non residents was the guideline from Banco de Espana when I last looked for someone) is an additional headache as once again, this takes you even further from what the seller is willing to accept.
I remember this when the guy buying my house in the UK in 1992, argued that the bank had valued it at 20% below what I was asking. I told him that I was not willing to argue the bank's market risk assesment process with him and that the estate agents valuation stood. He ended up paying what I was asking (very close in fact) as I don't think he understod that Bank valuations in the negative credit housing market we were in had nothing to do with market value as at that precise moment. Obviously I was lucky he could go ahead with a less % mortgage than he was obviously hoping for.
All of the property valuations, as in any market, have a finite time value and what the market's done in the last two years is of little interest to the bank who will want to value now for a now mortgage (though as stated, their valuation will reflect current market trends V. the risk they are willing to take.... and of 80% MAX. mind you, you could find that if your finances are good and demonstrable, they will be happy to give you a 20% of the value personal loan - at a much higher percentage of course.
Xose