Selling your property in Ibiza

You want to sell your home in Ibiza, maybe to buy another one? We tell you how to proceed, and how to save taxes in the process.

First of all: Are you really sure you want to sell? Do not let some temporary grievances induce you to take a decision that you may regret in the future. Consider this question very thoroughly. Even write down on a piece of paper the pros and cons of the sale of your property.

Over the last years, the property prices in Ibiza have been rising considerably, due to many buyers, both Spanish and foreigners. Today sales are going more slowly, and you may have some difficulties in finding a buyer willing to pay the price you ask.

The sales channels

If you have decided to sell, you have different ways of selling. You can approach a sales agent and ask him to sell the property for you, you can try to advertise in local foreign language publications in Ibiza or you can advertise in the newspapers in your home country.

If you want to use a sales agent, in Ibiza or in your home country, make sure that you do not sign any sales exclusivity, or papers with reference to rules or regulations not explicitly mentioned in the agreement. Otherwise, you may be forced to pay commissions to the agent even if he does not sell, while you find the buyer yourself. Also, we warn against establishing what you accept to receive, permitting the agent to sell at a higher price, cashing the difference. Get the sales commission established from the start, and put it in writing.

If you advertise in a paper in Ibiza and you are not permanently living in your dwelling, you must arrange for someone you trust to have a set of keys, able to show the property to any interested client. Keen buyers may become disinterested if they have to wait for your next visit to Ibiza.

If you advertise in a paper in your home country, you must give brief information on the property and have some good photos to send to or show the interested buyer, together with a copy of your title deed and maybe even an evaluation of the value of the property. You should have investigated how you can travel with the interested buyer to visit the property, or how the buyer can get there alone, to be shown the property by someone with the key. Give the key to someone who can be trusted, and not to anyone you have not known for a long time.

Preparing the property

To be able to sell a property, it should be well maintained. If you have not been in the dwelling for a while, make sure it is cleaned and aired, all fittings function, the garden is tended to, the swimming pool cleaned, and that damaged curtains or furniture be repaired or changed. A small investment in preparing the property may make the difference both in the time needed for the sale as well as the price obtained.

Prepare the papers. You should have copies of your title deed (escritura) and a "nota simple" from the property register, ready to show to any interested buyers, so that they can see you are still the owner of the property and that there are no outstanding debts related to the property. That paper is a very good selling point.

In addition, you must have the latest receipts, for the local rates (Impuesto de Bienes Inmuebles), for electricity, water and fees to the Community of Owners.

If you are selling the property furnished, you must prepare a complete list of furniture and even photos of the most important pieces.

You may also decide to have an evaluation done on the property. That will give you a realistic idea on what price you can ask, and it will assist you in convincing a potential buyer. Such an evaluation can be done by specialised valuation firms, by a real estate agent, by a surveyor (aparejador) or architect. F.I.P.E. can assist you in finding such a surveyor.

Price and conditions

Before meeting the first buyer, you must have decided on price and conditions for the sale. We have mentioned the possibility of discussing with a local real estate agent to get an idea on the price you can expect, or by having an evaluation done. We recommend you establish two sums in your mind:

• the asking price that should give room for negotiations with the buyer, including eventual sales commissions, and
  

• the bottom price that is the net you will want to receive for the property, under which you are not willing to sell.
  

You may fix the price in any currency you prefer. Maybe the best alternative is to do it in the currency of the country where you will be depositing the money and eventually use it. There are no legal or other obligations forcing you to establish the sales price in any specific currency. If payments are made in another currency, they will have to be calculated at the rate of exchange on the day they are being made, so that you can be sure to get the agreed value.

As a foreigner you can sell your Spanish property in any country outside Ibiza, fix the sales price in a foreign currency and receive the money abroad. You can even make a title deed (escritura) to the buyer stating that you have been paid in foreign currency and abroad. Foreign currency or Euros can be mentioned in the title deed.

However, keep the following in mind:

If you use a Spanish general consul outside Ibiza as a notary, you must ensure the "primera copia" of the title deed is brought to the corresponding property register in Ibiza within 30 days. The consuls do not send the deeds to the property registers as a normal notary would. Some of the consuls refuse to make property escrituras, due to the obligations imposed by the new Notarial Rules.

Even if you make the sale and get the money abroad, your fiscal obligations to Ibiza in connection with the sale do not change.

We recommend that you sell cash, unless as a resident, you should want to spread the income from the sale over several years for fiscal reasons. Payment terms make the matter complicated. You should not give title to the property in the buyers name before having received the total sales price. It is not wise to give the buyer, or his representative, a key and right of use of the property before he has paid completely. If he moves in and stops paying, you have to take him to court to get him out. On the other hand, the buyer may not have the full amount available, needing to sell another property or get a loan from the bank. He will want some guarantee for the deposit paid in the meantime.

Always a deposit

On signing a private contract, you as the vendor, should insist on getting a non-returnable deposit of 5-10%, for taking the property off the market. This is normal. If the buyer is willing and able to pay a bigger amount when signing the contract, without this constituting the full price, the solution may be the following: The 5-10% non-returnable deposit is paid to you, while the rest of the money is paid into the clients account of a lawyer or a bank, with clear instructions that at the signing at the notary's office, when the rest of the total purchasing price and title deed is signed in the name of the buyer the money from the lawyer/bank account be paid to you.

According to the new Notarial Rules, the notary now has the obligation to check the registration of the property being sold, before the signing of the deed. Additionally, he must fax the new title deed immediately to the property register. This is good legislation, and vendor and buyer should make the notaries comply with their obligations.

To this Short Information we include a proposal for a private sales/purchasing contract, fair for both vendor and buyer. However, one contract form cannot cover all types of circumstances, so it is only a basis for you and must be adjusted to your particular situation.

Legal and fiscal obligations

The fiscal obligations for a foreigner selling his property in Ibiza are the following:

• make sure that the transfer taxes on the new title deed and the municipal Plus Valía tax is being paid.

• pay the local rates on the property up to the property transfer date.

• pay capital gains taxes on the sale. We have explained this in detail in our Short Information on Capital Gains Taxes (also available from F.I.P.E.). It is very important for any vendor to read this Short-Information carefully and make the appropriate calculations.

Your legal obligations is mainly to give a clean title to the new buyer and then to inform the town hall, the bank, the electricity company, water board and your fiscal representative in Ibiza that you no longer have any property. The new buyer should be advised to present himself instead.

Furthermore, you should be aware that Spanish law states that the real market value must be declared in any new escritura, and provides sanctions if they find a value has been declared at less than 80% of the real market value.

What is the market value? Not necessarily your sales price, since you can sell above or below the market value. The best way is to make an evaluation of the property value. If you then declare no more than 20% less of the value, you should be safe.

Change of residency

If you are a resident in Ibiza, and do not intend to buy another property here after you sell your present home, it may be advisable to give up your residency before selling the property. You can do this by taking your residence permit to a police station with a foreigners department, and get a receipt for having returned it. You are then a non-resident and can act as such. You may not be permitted to take up the residency again before 3 years have passed.

Before taking the decision to sell up and return to your home country, you should investigate the following points carefully:

• will you be covered by your national health services when going back?

• how and when will it be best for you to change to the tax system of your home country?

• how to invest the proceeds from the sale of the property in Ibiza, to get maximum benefits from your capital?

Do you need a lawyer to sell your property in Ibiza? If you have to keep all expenses as low as possible, you should be able to do a simple and straightforward sale on your own, but if you have a valualable property, a complicated situation or a difficult buyer, it is always better to have the assistance of a lawyer.

Find a good one in Ibiza speaking foreign languages, or a lawyer in your own country conversant with Spanish Law and property transactions, we can give further information.