The following is a general guide to selling property in Spain. It is not intended to deal with all the legal and financial aspects that arise, or to replace professional advice, but highlights the main points you will encounter in a property sale.

Sale Price
The first step is to decide on the sale price of your property and in which currency you intend to sell. Decide what fixtures and fittings are to be included in the sale and what is available for purchase separately – this will avoid potential disputes later. You can search for similar properties in your area; surf the internet or seek informal valuations from local sales agents but, in this case, do not assume the highest valuation is the right one.

Marketing
This is a matter of personal choice but can include marketing the property (1) by handling this personally through advertising and/or the internet (2) advertising through one of the internet-based sales companies or (3) instructing a sales agent.

When instructing a sales agent ensure you fully understand the terms and conditions that will apply to your transaction, especially the sales commission, This is all the more important where you give the sale agent a sole agency agreement, If in doubt consult your lawyer before committing yourself. It is prudent to instruct your lawyer at this stage of the transaction as he can undertake preliminary checks on the title, planning and/or building control, liaise with your bank (if you have a mortgage), the Community of Owners and collate the up-to-date receipts for IBI, water and electricity.

Offer Stage
Once an acceptable offer has been made, it is recommended you do not commit yourself by placing anything in writing or taking a deposit. Let your lawyer handle the preliminaries with you sale agent (if any).

It is also advisable to avoid "cash buyers" ready to offer you a quick deal. There are strict anti-money laundering regulations in force within the EU and the last thing you need is to become involved in a money-laundering operation. There are legitimate cash buyers and your lawyer will be able to protect your interests and undertake due diligence enquiries as required by the regulations.

Sale Contract
It is not uncommon for a seller to be told the involvement of a lawyer is unnecessary. Considering this will be one of the largest personal financial transactions you undertake, you have to decide who is best equipped to protect your interest and, more importantly, your money.

Once you have found a buyer, and assuming you are not proceeding directly to signing the Escritura before the Spanish Notary, your lawyer will prepare the contract. This will contain all the details of the sale to include the agreed sale price; the deposit; payment of the balance of the monies, the completion date, such fixtures and fittings that are included and any other terms and conditions that have been agreed.

The deposit should preferably be no less than 10% of the agreed sale price. This will give the buyer an incentive to complete as his deposit will be forfeited if he defaults and will leave you with a fair sum to compensate for a lost sale.

Always ensure the full deposit is paid to your lawyer because, if for any reason you cannot complete the sale, you will be responsible for returning the deposit to the buyer.

When the deposit has been paid by the buyer and both parties have signed the contract there is then a binding agreement to sell and to buy.

Completion
Once the contract has been signed and the date set for completion, an appointment will be arranged by the buyer with the Spanish Notary of his choice.

It is essential you attend completion to sign the Escritura before the Spanish Notary but, if this is not convenient or too expensive, you can grant your lawyer a Power of Attorney to complete the sale on your behalf. However, do not leave this until the last minute as your lawyer needs time to complete the various formalities.

In advance of the meeting with the Notary, the lawyers will have presented to his office the information and documents required for preparation of the Escritura. The law requires the Notary to undertake numerous checks and to be satisfied the sale price agrees with the price to be declared in the Escritura. If the Notary suspects an under-declaration he will not complete the transaction and the matter will be reported to the proper authorities.

Before completion, the financial figures need to be agreed with the buyer and apportionments made for sums you have paid in advance e.g. Community of Owners fees, IBI and basura.

Once the Notary has undertaken his checks and is satisfied with the transaction, the Escritura is signed and the balance of the purchase monies paid. If you are non-resident in Spain the buyer is obliged to deduct a sum equal to 3% of the declared price which he pays to the Spanish Tax Office. This is a payment on account of any potential capital gains tax liability you may have in Spain (see Taxes below).

Costs and Expenses
If you retain a sales agent, commission will be payable to him on completion of the sale. This could range between 5%-7% of the sale price but in view of the current marketplace, you are free to negotiate.

Where there is a mortgage on the property, there may be a charge by the bank for early repayment in addition to their charges for dealing with cancellation of the mortgage.

Depending on the sale price of the property, expect legal fees to range between .5% - 1% of the sale price plus VAT. At Cornish & Co., in advance of any instructions to act, we will provide you with a written fees quote to enable you to budget for the sale.

Taxes
The following taxes may arise on the sale of your property:-

Plusvalia

This tax is paid by the seller to the Local Town Hall and is a form of capital gains tax that is based on the notional increase in the value of the land (but not the buildings) since it was purchased. Usually the tax is not substantial but where the land has been owned for many years it is advisable to ask your lawyer to check the amount that will be due.

Capital Gains Tax

If you are non-resident in Spain, capital gains tax will be payable on the profit you make from the sale of the property. As mentioned above, the buyer is obliged to deduct 3% of the declared value and pay this to the Spanish Tax Office which is treated as a payment on account of any capital gains tax liability you may have in Spain.

For 2009 the current rate of capital gains tax is 18% which is calculated after deducting the purchase price (plus allowable expenses) from the sale price. In Spain, mortgages are not treated as allowable expenses or deductions. Special rules apply for those properties purchased before 31st December, 1986.and for those who bought between 1st January, 1987 and 31st December, 1996 there are also partial exemptions available.

If you are resident in Spain, the gain can be rolled-over into the purchase of another residence and for those aged 65 years and over they are exempt from capital gains tax. However, for non-residents these concessions do not apply.

If the capital gains tax payable by a non-resident is greater than the 3% deducted by the buyer, as the seller, strictly you are responsible for payment of the balance. However, many non-resident sellers do not bother with paying the balance. For those sellers tax resident in another EU country, be aware you are not immune from recovery. The EU tax authorities co-operate with each other to recover tax debts due from those resident in other EU member states.

Should the gain be less than the 3% deduction, as the seller, you can apply for reimbursement. The application needs to be submitted within 3 months of the sale date and for an application to be successful you need to be up-to-date with the filing of your tax returns in Spain.

Finally, remember that if you are non-resident in Spain your resident tax laws may require you to report the sale to your local Tax Office.

Transfer of Funds
With a few exceptions on transfers to some "fiscal paradises", you are free to transfer the sale proceeds outside of Spain without restriction.

If you are converting the sale proceeds into another currency, compare the exchange rates and charges quoted by your bank to one or more of the principal foreign exchange dealers.