Starting the process of buying and selling a property or land in Ibiza is an important and exciting investment for the buyer, due to the aforementioned attractiveness of this dream island. However, both the buyer and the seller need to be fully informed and equipped with the correct knowledge of the phases and the taxes and costs involved in the buying and selling process for each party involved. And all this is possible through a previous legal advice or previous phase of the buying and selling process itself.
From Manzanares Lawyers, we work in the so-called Pre-Due Diligence of the property and in the Fiscal Report, in this initial phase of the buying and selling process. This is an essential preliminary analysis: both of the legal and urbanistic situation of the property, as well as the economic situation of the buyer, in order to analyze which vehicle is best suited to their financial situation (analyzing the corresponding tax implications that each of the options entails).
A brief introduction to these reports can be found below:
TAX REPORT:
This report is aimed at the buyer, so that he can decide which structure best suits his financial and tax situation before making the investment.
However, on the other hand, we also consider that it is important to provide tax advice to the seller, since it offers a detailed summary of the expenses and taxes attached to the sale, which will provide a better idea of the net profit that could be obtained with the operation.
Once the necessary economic information has been received from the buyer, a team specialized in Tax Law prepares a report with the purpose of providing information about the different ways of approaching a real estate purchase operation in the Balearic Islands. The main objective of this document is to analyze the different options available to the investor and, in the same way, to determine which is the most efficient, from a tax point of view. Thus, the different options should be analyzed according to the tax liabilities, so that the investor client can choose the one that best suits his personal circumstances.
This report should be structured in different sections, depending on the economic situation of the buyer and the specific operation he/she wants to carry out. Such sections could be: The analysis of the starting situation – fiscal information of the buyer and of the real estate operation. The acquisition of a property in Spain. Differences between operations subject to VAT or ITP. The natural person. The businessman or professional. Limited companies. The incorporation of companies in Spain, and it will end with an analysis of the particular situation of the investor client.
In this way, the buyer receives a previous scenario from which he can decide how to make the investment, which, if not provided or not in a complete way, could result in a less beneficial tax implication for him, or even detrimental. Translated with www.DeepL.com/Translator (free version)
PRE-DUE DILIGENCE OF THE PROPERTY
The urbanistic situation of the island of Ibiza is peculiar and this has given rise to the existence of buildings with some singularity, which makes a previous urbanistic and legal study by the Lawyer essential.
Unlike the Due Diligence itself, which we will explain in more detail in future articles, this prior urbanistic report is carried out before the signing of the reservation contract or earnest money contract. Specifically, in Manzanares Lawyers we start working on it either when the property has been put on sale (it can be requested by the seller or Estela Exclusive Homes, or during the negotiation phase of the conditions between buyer and seller.
This Pre-Due Diligence contains an analysis, especially and although it depends on each property, about the registry, cadastral and urbanistic situation. In this way, the buyer obtains a preliminary report that provides a complete outline of the property he wishes to acquire, including a study on the adaptation of the construction to the current urban planning regulations. After this detailed legal and town planning analysis, it is important to draw a conclusion as to whether the property complies with all or part of the regulations and whether it is possible or necessary, depending on the case, to carry out any adaptation or modification of the existing construction.
All this will depend as we said at the beginning, on the property in question object of analysis and also on the intentions or desires of the future buyer.
It is important to emphasize that this report must be carried out by a team of Lawyers and Technicians specialized in town planning law. And, from another point of view, it is also important that the seller-owner and the Real Estate Agency have access to this type of previous report, which provides them with an excellent letter of introduction to the property in question.
As we have seen and explained in the explanation of both reports, the Pre-Due Diligence of the property and the Fiscal Report, are part of the previous phase or prelude to the sale and purchase process and are essential for both parties, buyer and seller. This is the beginning of the negotiations in a transparent, documented way and with an urban and fiscal advice that will give peace of mind in any real estate transaction to the parties involved.
