Gecko Towers
Over the last year I have provided an depth analysis, for those keen to buy a property in the Marbella region, in a nine chapter “guide” series – which is revisited here:
Buying a property in the Marbella region – V1 – Our Guide.
Buying a property in the Marbella region – V2 – Back to Basics
Buying a property in the Marbella region – V3 – Affordability.
Buying a property in the Marbella region – V4 – Due Diligence and Paperwork.
Buying a property in the Marbella region – V5 – Homework.
Buying a property in the Marbella region – V6 – The Costs of Buying.
Buying a property in the Marbella region – V7 – “Off Plan”- Don’t get ripped off!
Buying a property in the Marbella region. V8. Joining a Community of Owners
Buying a property in the Marbella region – V9 – Sweat Your Asset.
However, there may come a day when for one reason or another you decide that the time is right to sell your Marbella property. Whenever that may be, who will be Selling (Your) Marbella Sunset!
It may be “to downsize”, the experience of many, as the core family unit contracts. Or are you planning to move away from the Costa del Sol? We have occasionally talked about moving back to London where our three adult children are pursuing their passions but have always said we’d want to base here. Who knows, perhaps it really is best to say “Never Say Never”.
If you do decide that you’d like to sell, we’d like to offer you some guidance, through the various stages that need to be considered including before marketing your property for sale and at the completion of the sale.
Who should I appoint to market and sell my property?
There are hundreds of agents in the Marbella region who will be delighted to handle your sale but, as you needed to do when buying, be selective. Liking and trusting your sales agency and their key people is a vital element to establishing a rapport with your selling agent.
If needed, following a sensible discussion as to your plans and hoped for outcome, I’d be happy to help to steer your agency selection.
Price setting is key and there are several ways of scaling this. To some extent it will depend on your need to sell quickly. Alternatively, are you willing to take your time to allow as many viewings as are required and perhaps some small negotiation on price?
There are some agents with access to “asking price” and “sales prices achieved” data that will show the vagaries in the market over a number of years and can be very useful in setting a realistic asking price. Given the nature of Marbella’s property stock unless yours is in a defined urbanization of apartments or townhouses there are precious few comparable statistics, so often prices tend to be set, in part, based on previous asking prices, as opposed to prices actually achieved. This tends to embrace a willingness to negotiate a little on price.
Equally, and this has often been of interest to sellers who hail from the UK, the services of an independent valuer, often one regulated by the Chartered Institute of Surveyors, can be of great use to establish a viable price point for your property.
Don’t forget when selling, in addition to considering the reasonableness of your asking price, to include the costs you have been put to in making the purchase (including your buying costs) and in refurbishing the property. These should all be reflected in the sales price that you are seeking to obtain.
Will all marketing materials, that may include a video with drones, a 3D walk-through or a stand alone website be included in the sales commission quoted? Does the marketing agent have a ready access to purchasers looking for your kind of property at the price point you are anticipating?
Most estate agencies have access to one of the multi-listing services operating in the Marbella area. The usual model is that the first estate agency member that you sign up with adds your property onto the service and becomes the lead agency. This means that your property details are then shared with all other member agencies. The result of this is that if another member agency introduces a buyer, who proceeds to completion, then that member agency will usually share equally in the sales commission paid by you to the lead agent.
There is insufficient room here for a proper consideration of the notion of an exclusive agency retainer but careful thought should be given as to whether you are willing to grant, even for a limited period, the exclusive right to sell your property. Some agents insist that this is their core business model and I can see from the expenses incurred in various promotional and marketing activities that money is spent and as such they do need this form of backstop protection. It largely depends on the property being sold.
What’s it going to Cost to Sell my property?
There are a number of key issues that you should build into your expectations. It will come as no surprise that as the seller, you will usually responsible for paying your retained estate agency’s sales commission calculated by reference to the agreed sales price.
The rate charged by many reputable estate agents is 5% (plus IVA) of the achieved sales price but some charge 6%. You’ll need to identify what level of service you’ll receive for this, which, given recent property prices in this region, may well amount to quite a packet.
Your Mortgage Deed, that evidences the bank’s lending to you, needs to be cancelled by redemption (repayment) and the satisfaction of that debt needs to be recorded at the Land Registry. The precise sum payable to the bank lender will depend on the agreed terms of the lending which, in my case, vary if settled in the first five, ten or fifteen years. There may well be, particularly if you have a fixed interest rate mortgage, a redemption penalty of circa 1% calculated on the unsettled balance of your mortgage. It is important to cancel your Mortgage Deed at the Notary to ensure it’s recognized by the Land Registry, as cancelled. This will incur costs in the region of €1000 plus IVA.
Community Fees – Up to the point at which the property legally changes hands you, as the property’s owner, are responsible for these fees. Your Urbanisation/Community’s administrator will be asked by the buyer’s Abogado (usually co-ordinated by your Abogado) to provide a certificate confirming that your community fees account are paid up to the date of sale.
IBI (effectively Local Authority Rates) and utility bills that are paid by way of direct debit can be evidenced by a banking receipt. It is the custom that the seller is responsible for the full IBI for the year of their sale – which in our case is paid in July, so expect to have to cover this in full.
Municipal PlusValia – A tax usually payable (subject to agreement to the alternative) by the seller, and is based on a notional increase in value of the urban land occupied by your property during the years of your ownership. Your Abogado will be able to calculate this for you but it’s based on what is called the recorded “Catastral Value” of your property, multiplied by an accepted coefficient and the years of your ownership.
You will recall from my previous posts, that if you are Non-Resident there is an obligation on you to file income tax forms for what is regarded as “imputed income” which stems from you mere ownership of a property, whether or not you receive rental income. Many people inadvertently overlook this. On the sale of your property it will need to be shown that you have made such tax returns during your ownership. If not, a lump sum, representing at least five years of back returns, will be required.
Equally, as a Non-Resident there will need to be a sum equal to 3% of the declared sales price retained by the buyer (and best placed in an escrow account with your Abogado) to defray any claims for Capital Gains tax shown as due. As and when you have cleared all CGT liability the balance remaining out of the retained 3% may be claimed back by the seller.
Your Abogado will generally complete all of the calculations of the 3% retention and the CGT payable. These are usually deducted before you receive the sum you are anticipating.
In relation to CGT payment there are a couple of details that you’ll need to consider. CGT is the tax payable on your “profit” from the sale of your property – the declared sales price less agreed costs. Generally, it seems that what might be regarded as “maintenance” are not a deductible costs when calculating your due CGT. Replacing a kitchen or updating a bathroom are likewise not regarded as capital expenditure that “improves” the property. Converting a garage, subject to the correct planning permission, into living accommodation is more likely to be regarded as an “improvement” to the property and become a deductible cost. New walls affecting the distribution of the property may also be considered as to whether they constitute a deduction.
I am told that you may deduct your estate agency’s sales commissions, paid on sale, and your professional legal fees against your CGT liability.
If you have been a tax resident for three years or more then, I am told, you should be free of CGT so long as you use your proceeds of sale to buy another Spanish property within, I believe, two years of your sale. Further if you have been a tax resident for three years plus and you are over 65 years old when you sell, then I am told that you should be able to take your proceeds of sale without the necessity of reinvestment, free of any CGT liability. I understand that this means that your funds may be repatriated to your home country (for example) at your election and without penalty.
Additionally, your Abogado will usually collate the information and respond to the requests of your Buyer’s Abogado to ensure a smooth movement through to the Private Purchase Contract (PPC) stage. At this stage typically 10% of the purchase price is lodged with your Abogado towards the final signing at the Notary when the balance of sums are paid over and your property’s legal title will pass from you to your Buyer. Your Abogado will prepare all necessary sales documentation, agree it with the Buyer’s Abogado and liaise with the Notary as to each element of the transaction up to completion of the sale.
Your Abogado, for all his/her services in relation to your sale, will usually charge legal fees based on 1% (plus IVA) calculated by reference to your sales price as declared in your Escritura de Compraventa (Deeds of Purchase and Sale) the final paperwork signed at completion.
Should you be interested in discussing the process involved in buying a property in the Marbella region, we would be delighted to assist you. As and when you are ready to progress with your search please contact me to discuss your precise requirements.
We are not estate agents, but we know some hard-working and reputable ones, as needed.
We have a multi-disciplinary team of bi-lingual, highly experienced and wholly independent Abogados (Spanish Lawyers) and Asesores Fiscales (Tax Accountants) ready to help you.
Please note that our posts are for general interest. There is no substitute for proper advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law. Nothing contained in this article should be seen or taken as the writer or the publisher providing legal, tax or financial advice. All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
My details: Mark FR Wilkins, during usual business hours on +34 600 343 917 or e-mail me at mark@biznagapartners.com
You may also be interested to subscribe to my interactive FaceBook Group “Costa del Sol – The Best Place to Live in Europe” – please click this link – Costa del Sol – The Best Place To Live In Europe
© Mark FR Wilkins 2024. All rights reserved.