Ownership in Spanish: Legal Keys to Understand Ownership in Spain

Ownership in Spanish

When purchasing real estate in Spain, ownership structure is a crucial factor to keep in mind. Particularly if you intend to form a corporation to purchase the property, you should carefully consider who will appear as the owner(s) on the title deeds and make all necessary preparations well in advance.

This page discusses the many ownership options available to you, along with their advantages and disadvantages.

What does owning real estate entail?

The legal right to use, possess, and transfer an item is known as ownership. Ownership can be of two types: immaterial (like intellectual property rights) or tangible (like land and personal property).

Ownership in Spanish: Prior Considerations

Tax-related issues:

You should consult a tax expert regarding the ramifications of your ownership option, both in Spain and in your place of residence. There are numerous double-taxation agreements between Spain and other nations, but they don’t always lessen your financial risk.

Speak with a financial expert in Spain as well as in your home country before choosing the ownership arrangement for your property. When making a purchase, during ownership (as certain nations tax assets you own overseas), and after you sell, find out the tax implications of each option. Inquiring about inheritance tax is also worthwhile.

Purchase contract:

Selecting the ownership structure is equally important to decide before signing the acquisition agreement. This ought to contain the names of the purchasers (or the business). Ask your lawyer to add a provision allowing you to include additional buyers in the title deeds if you’re unsure or haven’t made up your mind. This procedure guarantees that the seller is fully informed. It is not uncommon for vendors to object to signing title deeds if they find out that the buyer they are selling to isn’t listed on the purchase contract.

Sole Ownership

It is your choice to name the property under the sole name of one owner. With sole ownership, you have complete power over the property and don’t have to consult anybody else when making decisions, such as how to sell it. Tax-related issues are also rather simple. However, the heirs’ inheritance tax obligations will increase.

Dual ownership

Most foreign Spanish real estate buyers opt for this option, with the couple’s names typically appearing on the title deeds. The fact that the assets are divided and that only half of the property is included in the estate that will be inherited reduces inheritance tax payments. However, co-ownership might create issues in the event of a divorce, for instance, because any decision about the property’s sale or transfer requires consent from both parties.

Multiple ownership

Title deeds can have as many owners as desired under Spanish law. A suitable choice if you’re buying as a family or in groups (like many siblings) is joint or multi-ownership. Spreading the inheritance tax liability among multiple owners is another benefit. However, each person on the title deed has less authority over the property the more people there are, so reaching an agreement on anything like whether to sell the land could be challenging.

Company ownership

Purchasing a Spanish home through a business was common in the 2000s, particularly for buyers who spent more than €500,000. International laws against money laundering and the exchange of fiscal data have, nevertheless, lessened this tendency. Spanish tax authorities and a small number of Spanish legal and fiscal consultants have examined the three options: Spanish-registered firms, those registered in your native country, and offshore companies.

Ownership in Spanish: Law on property rights in Spain

Spanish law recognizes the following property rights:

Total and exclusive use and disposal of a property is known as absolute freehold (propiedad en pleno dominio).
Propiedad en pro diviso, or co-ownership, refers to the entitlement to a portion of a property’s ownership.
The right to utilize a designated and furnished property for a set amount of time each year (not less than a week) for a term ranging from one to fifty years is known as time-sharing (derecho de aprovechamiento por turns).

The right to erect and maintain a building on (or beneath) another person’s property for a predetermined amount of time is known as the “derecho de superficie.”
The term “bare ownership,” or “nuda propiedad,” refers to a person’s exclusive ownership rights over a real estate asset, subject to the restriction that the third party who disposes of the beneficial interest (derecho de usufructo) will have the right of possession and enjoyment.
The right to use someone else’s land for a certain amount of time in the same manner as an owner, including the ability to collect interest and award leaseholds, is known as a beneficial interest (derecho de usufructo), so long as the original use is preserved.
The right of use refers to the right to use real estate for personal and family support.
Servidumbres or easements are rights of way, water easements, and other advantages established in connection with another owner’s real estate.
Leasehold refers to the right to use and enjoy real estate for a specific period at a specific price.

Owning real estate in Spain via a corporation has the following advantages:

Anonymity of ownership:

A corporation structure enables you to remain the property’s non-disclosed owner for any number of reasons.
But keep in mind that this anonymity is limited to the land registry; if the Spanish tax office or judicial system demands it, ownership must be revealed.

Tax reduction:

The fact that buying through an organization lowers your tax liability is one of the main benefits. When the stockholders are non-residents of Spain, this is particularly relevant for inheritance reasons.
However, choosing the corporation option for ownership has disadvantages as well, such as the possibility of becoming a “hidden” owner and tax savings.

Insignificant tax mitigation:

The UK and Spain have implemented fiscal information sharing, leading to an increase in tax bills.

Set-up costs:

These can be substantial. A limited company in Spain, Sociedad Limitada, S.L., requires a minimum capital expenditure of €3,000, including notary and business register expenses.

Operating costs:

These might range from a few hundred euros to thousands of euros annually, depending on the business and its assets.
Using a business to purchase real estate in Spain requires expert legal and financial assistance due to extensive tax implications. Always get professional advice beforehand.

FAQs for Ownership in Spanish:

How can I give someone else ownership of my house in Spain?

In Spain, a notary completes the ownership transfer in the same manner as the initial purchase. To sign on behalf of all parties, we prepare a power of attorney.

What is the Spanish meaning of fractional ownership?

Fractional ownership is the practice of sharing the expenses of a large asset, such as a private jet or piece of real estate, with others while keeping some ownership and use rights.

In Spain, what happens to jointly owned property upon death?

Ownership does not immediately pass to the surviving joint owner(s) upon the death of the first joint owner. Not without first going through a notary-led probate process and, if there is any property involved, going via the land registration and tax office. A probate document is also required for assets such as vehicles, bank accounts, and other possessions.

Also, Read:

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *

5 × 2 =