PURCHASING A PROPERTY - PART 2
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Before we carry on from the last edition's article, I would just
mention that 1 am currently checking details with regard to taxes on
property purchase/sales, so will deal with this in my next article. I
think you will agree, however, that what we cover this week is quite
enough in one sitting!
THE ESCRITURA
Once you have signed the escritura for your new property, the notary
holds what may be regarded as the true original at the notary office
(as is the case with all deeds signed in his/her presence). However, a
further 'original' is. forwarded to the Registro (Registry Office) for
registration and stamping, which takes about four months. Whilst the
stamped escritura is an important document, and should be kept in a
safe place once received, it is not as vital to produce as UK title
deeds, as each subsequent purchaser receives a new escritura on buying
a property. If the premises are purchased with a mortgage, the bank
issuing the mortgage will hold the stamped and registered escritura.
You should receive a Copia Simple (simple copy as the name suggests) at
the time of signing the escritura which is for you to keep. It is not
actually necessary to produce the registered escritura when you sell
the property, but you must provide a copia simple for the searches to
be carried out by the prospective purchaser or their agent.


FEES
The notary fees and property registry fees for a conveyance transaction
are set on a scale fixed by the government and usually amount to
approximately 1% of the declared value as shown in the escritura. The
notary should be paid the day of signing the escritura, and the
registry fee on collection of the registered document. Copies of these
bills should be kept safely as they may be able to be offset from taxes
at a later date should you become resident or subsequently sell the
property.
In order to change the details of ownership for the property, various
forms must be completed, signed and administered at the relevant
electric, telephone, water and gas companies. Copies of your NIE or
residencia, and the Copia Simple Escritura must also be produced in the
case of water and gas changes. It is strongly advisable to set up
direct debits for the utilities if you are not living in the property
all year round, and these can be administered with the relevant
companies and your bank at the same time as the name change details are
lodged. I recommend that you ask the bank for a list of your direct
debits, and keep an eye on your monthly bank statements to check the
relevant payments have gone out of your account.  Mistakes can and do
occur and in the case of water electric and telephone services,
non-payment of a bill could result in you supply being cut off. If this
is the case, you will be charged a reconnection fee and it may take up
to 48 hours to reconnect the service. With regard to the telephone line,
Telefonica will suspend the service for up to three months (during
which time you can receive but not make calls) and then disconnect the
line altogether and allocate the telephone number elsewhere. So a quick
check of what is happening on you account is definitely worth while!


THE TOWN HALL AND SUMA
It is also important to provide your local Ayuntamiento (Town Hall)
with your details and the NIE/Residencia and Copia Simple copy
documents, in order that municipal taxes can be administered. For most
regions in the Alicante area (except Javea, which sends everything from
the Town Hall direct) these documents are also handed to an
intermediary body called SUMA who are responsible for administering
these municipal taxes.  Every region is subject to an annual rubbish
removal tax (Basura or Exaciones Municipales and an annual Rates tax
(IBI, or Impuestos Bienes Inmuebles). The invoices are prepared at the
beginning of each year, but are payable during the spring and autumn
respectively.  SUMA advise well in advance the dates on which payments
can be made (usually spanning about six weeks), and in this column I
will try and advise as this payment periods arise. If payment is not
received during the voluntary payment period a 20% fine is levied on
the original tax amount, and in respect of some charges, penalty
charges can continue to be incurred. Do bear in mind that SUMA do not
change the ownership details if the property has changed hands
subsequent to their invoices being prepared, and the tax is still your
responsibility even if the bill is in the old owner's name. It is
therefore a good idea to check your tax liabilities at the relevant
SUMA office, or appoint an administrator to do this on your behalf - as
many exasperated property owners will testify, tax bills are often
never received or details updated despite years of ownership by the
same person. Again, the ideal solution is to set up direct debits to
pay these taxes. Many owners are already using this method of payment,
and SUMA are planning to implement direct debits in all cases wherever
possible. However, we shall continue to check on behalf of every one of
our clients that an invoice has been presented to their bank, so really
the point I am making here is - never assume!


WEALTH TAX
The other tax liability you will encounter, if you are a non-resident,
is the Patrimonio (Wealth) and Renta (Own Use Income Tax) taxes. These
are payable together once a year in arrears, and relate to your
ownership of a property or properties when you do not hold-a current
Residencia card. The tax is calculated on 0.2% of the declared value
for Patrimonio, plus an amount of 1.1% x 25% on the rateable value fox
Renta. Some owners do not bother to pay this tax, but it is strongly
recommended you do so as the Hacienda (Tax Office) is planning to
tighten up their checking procedures in this regard. In addition, these
taxes are nothing to do with renting your property: if this is the case,
you are supposed to declare an additional 25% of your gross rental
income. Many people feel the Government shoot themselves in the foot
with this, because the amount is so high that very few owners ever
declare any rental income at all. However, the Tax Office are currently
also looking at this area of tax reclamation so the situation could
well change in the future. If you- own one property,you may administer
your own Patrimonio and Renta payments (if you feel up to it!). In this
case, a 214 tax form should be completed and handed to Denia with thee
relevant amount prior to December 31. If you own two or more properties,
however, you are obliged to hire a fiscal adviser to administer the
payments on your behalf. If you have applied for and received a
Residencia card, you are classified as a resident of Spain, and any
property purchases/sales should be declared in the following year's
Income Tax Declaration. Depending on certain factors, such as how long
you have owned the property and whether the profit was re-invested, you
may have to pay an additional tax amount - I shall cover this area in
more detail in my next article, which will cover the conveyancing tax
obligations for both sellers and purchasers, residents and
non-residents. As you can see, this whole issue is quite complicated,
and one area where I really would recommend you seek the assistance of
a professional adviser, at least for the first year you own the
premises and in any event if you do not live in the property all year
round.