The tax liability is for the owner so the tax receipt will be issued in the landlord’s name.

The payment of tax is to be made by filing the forms 211 and 212 as follows:

1. The purchaser who is acquiring the real estate to the vendor, regardless the purchaser is a tax resident or non-resident, is obliged to withhold and deposit in one month to be counted from the date of the signature of the notarised sale deed, at the Tax office, the amount of 3% on the sale price, by filing the form 211. For the vendor this withholding acts as a payment on account of capital gains tax arising from the capital gain (current rate 19%). Should the amount withheld be higher than the tax liability, the vendor will be entitled to a refund of the balance.

2. The vendor in four months to be counted from the date of signature of notarised sale deed will either pay the outstanding amount in addition to the 3% (if the tax liability is superior to 3% on sale price) OR will apply for the refund of any balance as mentioned above (if the tax liability is less than 3% or there is a capital loss in such case will apply for the refund of the full 3%). The Tax office should instruct the refund within the following six months and if it takes longer the applicable interests will apply.

The bank can initiate a legal proceeding in Spain by taking legal action if the mortgage monthly charges are not paid. Each bank has its own criteria but usually if there are three consecutive outstanding bills the bank will initiate the proceeding which could lead to the property embargo. However the bank can offer alternative solutions to avoid the proceeding by renegotiating the mortgage loan terms.

Having initiated the legal proceeding in Spain, it will be the Courts decision to instruct a restriction on the Spanish property and sale in a public auction if the customer does not pay the debt.

Since the Spanish property guarantees the loan payments, the claim will be against it. But if the sale of the property does not cover the outstanding mortgage loan, the bank can then claim against other assets owned by the debtor either in Spain or abroad. Therefore the delivery of Spanish property keys to the bank is not accepted as a solution to satisfy the outstanding debt. The debtor’s liability affects any assets worldwide. So if there is a property in the UK in your name it would be possible that the Spanish bank will claim against it.

If the IBI receipt is not paid there will be a surcharge and under certain circumstances the local authorities can initiate legal proceedings to enforce payment which could even lead to embargo procedures.

If there are outstanding bills for IBI and the property is sold, IBI debt will be passed on to the new owner who will assume the debt.

IBA is a local tax known as IBI which stands for “Impuesto sobre Bienes Inmuebles” charges the right of ownership/usufruct/surface/administrative concession on urban or rustic real estate, being calculated and collected anually by the local authority in charge of the municipality where the property is located.

The calculation is made on the basis of the “Cadastral Value” as per the Cadastral Registry records, which includes the value attributable to the land and the value attributable to the building if any.

When fixing cadastral value several criteria (urban planning circumstances of the land, market value, building circumstances, etc) are taken into account. The cadastral value can be updated by applying certain indexes which may vary in each specific case. It is possible to challenge cadastral values in accordance to applicable Law.

By applying the rate on the cadastral value the payable tax will be obtained. There are maximum and minimum rates which can be increased by each Town Hall under certain requirements. There are certain benefits which may reduce the payable tax if legal requirements are met in certain cases (i.e. official protection property)

During judicial proceedings in these circumstances, there are three options open to the judge:

1. Public auction of the property ("Subasta")

2.  Private agreement between parties ("Convenio Privado de Realización")

3. Enforcement by specialised agent or company ("Realizacion por persona o entidad especializada").
 

A. The registration of a sale / purchase contract is not compulsory; however, this can protect owners against third parties who may claim other non-registered rights against the property.

The Land Registry’s regulations require that sale / purchase contracts must be notarised before they can be registered. Notarising the document however, is not proof of its validity; therefore, the contract should also be checked to ensure it complies with the law.

1. Building License (“Licencia de Obra”) is the license granted by the authorities to allow the building activity to go ahead on the basis of the technical project produced by an architect/expert technician initially presented to the authorities. It verifies that the building activity proposed is in accordance with URBAN PLANNING SCHEME (PGOU) provisions and minimum requirements (such as “urban” qualified land, building limits, height restrictions etc). This license should be obtained before starting building work.

2. Final Building Certificate ("Certificado Final de Obra")
This is issued by an architect or other expert who can verify that the building activity has been completed in accordance with the initial Building License.

3. First Occupation License ("Licencia de Primera Ocupación"). This confirms that the housing is ready to be occupied and electricity/water supplies can be connected.