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Tenerife Property for sale can be found advertised by hundreds of Real Estate Agents on the island. You will find also that the same property can be found advertised by many different agents and often at different prices. This is because the selling process is different to the UK system. In Tenerife the property owner will place his or her property on the books of a number of agents and is not subject to a sole agency agreement as in the UK. The different agents may have different commission fees and basically they add their fees to the price the property owner wants unless the owner states a uniform final price is what he or she wants advertised.
Property prices can vary on the island greatly, its all about location, location, location. If you want to live on the coast you pay a premium and if you decide to live further inland you will find prices decrease dramatically. That’s not to say you have to live a long way inland as you can find prices just a short 20 minute car ride away from the main popular areas can reduce dramatically. When you do decide to buy a property in Tenerife you will have to decide whether it is for your use only or if you intend to rent the property to gain an income. If it is for your use only then it is you preferences and budget that decides the property. However if you intend to rent the property then you must take into account the location and facilities available. You must buy the property not for your preferences but your potential renter’s preferences such as location, how far to the beach, what shops and restaurants are close by and does the property have a pool. If you are buying a property for holiday lettings you must be aware that you are not allowed to just rent any property the complex that the property is on must have a touristic licence and not be classed as residential. You are allowed under Spanish law to let your property on any type of complex for any length of time to friends and family. On residential complexes you are allowed to rent your property to anyone for periods of 3 months and longer.
There are associated fees with buying and selling property in Tenerife and if you are buying a property you will need approximately a further amount of 10% of the property value for Taxes and fees. If you are selling your property you will find that most agents will charge you a 5% fee. In addition when you sell your property you could find that you are liable to Capital Gains Tax of 18% of the increase in value of the property. This particular tax has just undergone reform and has been reduced from 35% for non residents and increased from 15% for residents, this happened in January 2007. For a non resident they will have a retention of 3% withheld from the sales price to cover the tax bill, if you consider that you have not made a capital gain you have an opportunity to reclaim part or all of it after completion. Residents do not normally have to pay the tax retention but to be considered being a resident you must have been submitting tax returns each year and be in the tax system. Your accountant must also have the necessary tax paperwork for you to provide to the Notary to avoid the retention.
When you are a Tenerife property owner you will of course have running costs to pay such as community fees, water, telephone and electric. Other running costs are Basura (rubbish Collection) which is around 45 euros per six months and IBI which is an annual tax similar to council tax probably in the region of 150 euros for a one bedroom apartment. Telephones are around 20 euros per month line rental with free calls to any number in Spain and an additional 30 euros or so for adsl internet access. Your utility bills are normally paid every two months by direct debit from your Spanish bank account. Your agent will assist you in opening an account and setting up your payment arrangements.
Property Prices
Property in Tenerife has probably fallen by around 35% in 2009 but now seems to have stabilised. Even though Sterling has fallen has fallen dramatically against the euro now is a very good time to buy and sell. Prices will never be this good again for purchasers and represent an excellent long term investment For those sellers who bought their property at higher exchange rates now is a good time to sell and transfer the money back to Sterling. You can afford to reduce the price of the property because you are making money on the exchange rate.
Procedures of buying Tenerife Property
First of all USE A LAWYER, would you buy a house in the UK without a Lawyer. I have come across a number of people who have not used a lawyer and had problems after completion. Your lawyer is covered by insurance so if anything goes wrong YOU are covered. Debts in Spain are assigned to the property, if the current owner hasn’t paid his bills and they are not paid before completion they become YOUR bills.
Normally you would find a property with an Estate Agent and put in an offer to buy the property. You would then be expected to pay a deposit immediately you offer is accepted so you need funds available. This deposit is normally 10% of the purchase price and is not normally refunded. You would at the same time sign a contract for the purchase which sets out what you are buying and when completion is and of course the price. It will also state the vendors and purchasers details, whether the sale is subject to a mortgage and that the property will be free of debts and taxes. Get your lawyer to check it before you sign it. Once you have paid the deposit and signed the contract your Lawyer will then investigate the property and ensure that all bills are up to date and paid and that the mortgage has been or will be cleared at Notary. He will liaise with the Estate Agent and yourself and all parties will have a Notary appointment. This is where the vendors, the purchasers and the legal representatives all meet in front of the Notary. If a mortgage is being arranged or paid off then there could also be a representative from the Bank present also Money will change hands in the form of Bank Drafts and sometimes cash which is called “Black Money”, everyone will sign paperwork and the property will become yours. Sometimes “Black Money” is used to reduce the official purchase price in the Escatura to reduce tax, however the tax authorities are now cracking down on it and I would not recommend this route as the fines can be large.
For further information on buying property in Tenerife visit Tenerife Property Agents
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