This page is sponsored by;

Buying a property – how does it work?

Ok, so you've made the decision and found the perfect home in the sun. Now what? How do you go from being just a sightseer to a Tenerife property owner? Obviously some money has to exchange hands before the previous occupier is going to let you start bringing in your collection of Burt Bacharach LP’s and making yourself feel at home.

How much deposit needs to be put down to secure the purchase depends on the type of property you’re looking to own. If it’s a resale then generally 10% is requested up front, increasing to up to 25% if you’re buying a new property direct from the builder. Contracts then need to be drawn up clarifying the who, what, when and how’s of the agreement between both parties, such as the completion date and method of payment.

Before the deeds can be handed over however, all the receipts and necessary paperwork have to be checked to see that there are no debts outstanding on the property. This will include;

• Obtaining a Nota Simple (clearing data from the registration office.)
• Checking that all I.B.I (local council rates) have been fully paid up to date.
• Collecting the most recent electricity & water receipts signed and approved by the • President of the community where you’re buying.
• Obtaining a copy of the deeds (Escritura).

You'll need all the originals of these documents on the day of completion at the Notary's office. The notary will refuse to sign the deeds unless it has been clearly stated that you were already aware that some receipts were missing.

Taxes & Other Costs

In addition to the sales price, bear in mind that you, the purchaser, will also have to pay approximately 10% of the new declared value for a resale property, or approximately 6% if buying a new property. This is made up of the following taxes and fees;

6% ITP tax (Impuesto sobre Transmisiones Patrimoniales) when buying resale property, or 5% ITP plus 0.5% stamp duty if purchasing new property
Notary fees
Property registration fee
Plus valia (capital gains tax)
If you buy in the name of a company you are also liable to pay IVA (VAT) or IGIC, the Canarian equivalent.

Mortgages

You'll be pleased to hear it's fairly straightforward to apply for and obtain a mortgage and non-residents can get up to 60% of the valuation price. There are costs involved however:

• Approximately 240 Euros for a property valuation.
• 1% mortgage opening commission.
• Insurance, varying from 120 – 240 Euros per year.
• A fee for the Notary & Registration of the mortgage.

Provided you submit the requested financial information, which is very straightforward, the mortgage can be effective within 10 to 15 working days. The advantages of securing a local mortgage include extremely low interest rates (4% variable, 5% fixed); it doesn't reflect your country of origin; it’s tax deductible; and should you rent the property, the same account can be used as a debit credit account.

The only downside is that local banks, whether they have major international associations or not, will only finance you a percentage of the valuation price, not of the actual purchase price. Therefore, depending on the evaluation, it’s sometimes worthwhile taking the time to compare what different banks will offer.

Frequently asked questions

What is a sales agreement?
A private document signed between the buyer and seller. It must state the following points;

• Details of the buyer and seller.
• A legal description of the property
• The purchase price
• The form of payment and currency to be used in the transaction (banker’s draft,   cash, etc.)
• The completion dates and penalty clauses if these dates are not met (usually, if the   buyer withdraws after signing the contract he is liable to pay double the amount of the deposit).

What if there's still a mortgage on the property?
If there is a mortgage on the property it can be cancelled on the same day that you sign at the Notary. Before the signing date at the notary, we will inform the holding bank to prepare the cancellation costs, and the amount that the seller still owes.

On the day of the signing a banker's draft will be made out for this outstanding figure including the costs and paid to the bank. This figure will then be deducted from the purchase price when paying the seller. The bank will then register the cancellation of the mortgage.

Is it easy for a foreigner to obtain a mortgage?
Yes. So long as you can submit basic financial information getting a mortgage in Tenerife is much easier than in most other European countries. Often builders will offer you a mortgage if you purchase a new property. But don’t worry, we at Horizon will handle the whole process for you.

What does a foreigner need in order to buy property in Tenerife?
The first thing is to apply for an N.I.E. (Number of Identification for Foreigners), which is basically an ID card anybody with a financial interest in Spain or the Canary Islands is required to have. You'll also need to set up a non-resident bank account, which is a simple process, but again, we will handle all these administrative procedures for you.

Will we have to pay tax when selling a property?
Yes, as a non-resident you'll have to pay 5% of the new declared value as a retention to the Spanish Tax Office, but provided your accounts are in order you should get most of this back within five or six months.
You will also have to pay 35% of the capital gains as Income Tax, i.e. 35% of the difference between the price you paid for the property and the price you’re selling it for.

Special incentives for companies investing in the Canaries

As more and more people each year are discovering the appeal of the Canary Islands, the tourism economy is shooting up at an unprecedented rate – great news for the financial stability of the region, and good news for the visitor as more money is consequently put back into improving the region's infrastructure and facilities.

However, as if the prospect of a booming population wasn't enough enticement to encourage new business to the archipelago, the Special Canary Islands Zone (ZEC) was established in the year 2000 to promote even further development by offering unique tax advantages to new companies establishing themselves within this zone.

There are certain criteria to be met before registering for ZEC status (ask us for more details) but ZEC companies will enjoy the following tax advantages:

• Rather than the 30 to 35 percent corporation tax levied on companies in Spain, those sheltered under the ZEC regime will only be charged between one and five percent on profits derived from ZEC activities.
• Exemption from IGIC on delivery of goods and provision of service from one ZEC company to another, and also on the importation of goods.
• Exemption from Capital Transfer Tax and Stamp Duty in business activities and company operations within the geographical area of the ZEC.

As ZEC businesses are considered Spanish resident companies, EU tax treaties are fully applicable to avoid double taxation.

E & OE.

10 GOOD REASONS TO MAKE THAT MOVE - NOW !

If you are thinking about moving to Tenerife, but havn't quite convinced yourself and/or your spouse and family that it is a good idea, then heres some great points and reasons to help persuade and convince them to go ahead and make the move now !!.......don't leave it to long, or you know you will regret it !!!!.....................................................

1) COST OF LIVING !

As a holiday maker you may have noticed that eating out, drinking, cigarettes and petrol are much cheaper here than in the UK. For the British who live here and use the hypermarkets and local restaurants the difference is even more profound but there are other great advantages you may have also over looked, like no big heating bills, rates that average around 10% of the UK's rates due a year and not forgetting the one-climate wardrobe......go on !

2) HOME FROM HOME !

With a British population of around 30,000 residents todate, out of a total island population of 600,000 and growing every year, you have easy access to British foods, newspapers, television, books, however with the large Canarian population you don’t have to go far to enjoy the local culture and cuisine.

3) WAY OF LIFE !

Ask anyone who lives in Tenerife if they have any regrets and the usual reply is that they wish they had made the move along time earlier in life. The way of life in the Canaries is more relaxed and laid back, no rushing around chasing there tales, with a great knock on effect being people have more time for other people – they smile more, feel healthier, are more active and generally get more out of life, generally helping to live longer and enjoy your life to the full, not just exisiting and working all day everyday just to pay the bills like in the UK.

4) CLIMATE !

As the weather in Tenerife is hard to beat. Just off the African coast, on the same latitude as Florida, Tenerife enjoys year round sunshine, which means you can be on the beach sunbathing in January, golfing in February, windsurfing in March and never have to think of heavier clothing than maybe a light cardigan for the late night barbeques in December................go on, what your still thinking about it !

5) PEACE OF MIND !

As part of the European Community, your investment in Tenerife is protected by European laws and building regulations. (In other words you are afforded the same protection here as you would receive in the UK !) Excellent medical facilities and schools, both English and Spanish are available at reasonable and good value for money. British pensioners have access to reciprocal medical treatment.

6) PROXIMITY !

One issue that often gives prospective expats second thoughts is the prospect of leaving friends and family behind. Considering that Tenerife is a short four hour flight from Britain, with more than 200 flights per week all year round from 30 different airports in the UK, which is increasing by the year, you never need to feel home sick or lonely for your family. You may even see more of them here than you did back home as your parents, children or siblings discover what a great place Tenerife is to spend their holidays.

7) TENERIFE ISLAND !

From Mount Teide at 12,000 feet with its dramatic volcanic landscapes to sandy beaches and lush tropical forests in the north, Tenerife is a collection of micro-climates and it is hard to imagine more variety on any other island of a similar size.

8) CANARIAN CULTURE !

Every town and village in Tenerife has its own fiesta where giant paellas are cooked, lively Canarian music is played, local handicrafts are demonstrated and sold and the people turn out in their best clothes to promenade and enjoy the spectacle with their family and friends. Second only to Rio De Janeiro, the Santa Cruz Carnival is a world class event lasting for three weeks every February/March. Visitors and performers arrive from all over the world to participate and enjoy the entertaining, spectacular and culinary extravaganza

9) CUISINE !

It is true that the great British breakfast, beloved by holidaymakers in the resorts of Las Americas, is alive and well on the island, however for the more adventurous there are a number of first class restaurants in the countryside specializing in Canarian and Spanish food. On the coast in any of the fishing villages in the South there is a mouthwatering variety of the freshest seafood available at incredible prices. On the international side in the South we have Thai, Indian, Belgian, French, Moroccan, Lebanese, Chinese, Swiss, German, Italian, Vietnamese, Mexican, Japanese …

10) ACTIVITIES !

Every type of water sport is catered for from big game fishing, excellent windsurfing and diving to sailing and angling. On land there are six golf courses in the South, many tennis and bowling facilities, stables for horse riding, aquaparks, zoos, natureparks, and there are wonderful walks and trails for all levels of hikers.

Well after all that, if you arn't convinced, maybe come for a holiday - you are guaranteed to change your mind, not after the holiday or by the end of the holiday - but probably in the first 48 hours !

BACK TO TENERIFE MAIN PAGE