Glossary of Terms associated with buying Tenerife Real Estate
Spanish Property Terms
A
Abogado - Spanish Lawyer / Solicitor
Adosado - Semi-detached or town house
Amortizacion - Redemption, Repayment
Repayment of the initial mortgage amount by means of a scheme of installments, including a repayment of capital borrowed and an amount for the interest charged. According to the type of mortgage, these installments can be fixed for the whole life of the mortgage or vary with interest rate fluctuation.
Architecto - Architect
Arras Contract
Clauses inserted into a Sales contract to allow either party (buyer or seller) to break the contract prior to completion provided that certain penalties are paid.
Aval Bancario
A guarantee covering any money placed as a deposit or as stage payments against an unbuilt or unfinished property.
Assesoria Economica - Spanish Accountant
B
Banco / cuenta de / tarjeta de - Bank / bank account / bank card
Basura - Rubbish bins and rubbish taxes
Boletin de instalaciones electricas
The certificate from the electrician once the property is complete.
C
Caja de Ahorros - Savings bank
Cancelacion anticipada - Early Repayment or Early Redemption of Spanish mortgage
Repayment of the total amount or partial repayment of the borrowed amount before maturity. In partial repayments, you can choose to reduce the monthly payment and keep the agreed final maturity date, or keep the same amount of installment but reduce the term.
Cancelacion Registral - Registry Discharge
Once the Spanish mortgage has been repaid, the encumbrance has to be released from the Land Registry. This Involves costs of Notary, Registry and Lawyer.
Capital Gains Tax
A capital gain tax is a tax paid on the profit made from a property transaction, residents and non residents alike pay 18%. Profit is determined by subtracting the property purchase value from the sale value.
Carga - Registered Charge
Legal charges regarding a determined property entered in the Land Registry, i.e. a mortgage
Before signing the purchase contract, ensure that there is no charge related to that property in the Land Registry.
Cedula de Habitalidad - Occupancy / Habitation Certificate
Cedula de Habitalidad certifies that the property meets the minimum occupancy conditions. Certificate of habitation issued when a new build property is complete. Required before a property can be switched from the builders supply connecting for utilities, such as electricity & water.
Certificado de Registro -Certificate of registration
This document replaces the old style Residencia.
Everyone who is an EU citizen and has stayed or intends to stay in Tenerife for a period of longer than 3 months is obliged to get themselves entered on to the foreigners' register. If you already have a Residencia you need not apply for the new Certificado de Registro until your Residencia has expired.
Certificado de fin de obra - Formal Completion of Works on a New Property
Certificate from the architect when work on the property is finished.
Comisión de apertura - Mortgage Opening Fee or Mortgage Arrangement Fee
This is a percentage of the mortgage discounted from the total amount when it is paid into your account, for services rendered in granting and processing the mortgage. Usually approx 1%
Comisión de cancelacion anticipada - Early Mortgage Repayment Fee
This early mortgage repayment fee, indicated in the mortgage contract as a percentage of the repaid amount, compensates the lender for the loss of interest payments expected for the period between the early redemption and the agreed maturity. Usually approx 1%
Comunidad de propietarios - Committee of property owners
Properties on some complexes will have an annual community charge to cover costs of general maintenance, pool care, gardens, reception etc. Depending on the size of the development and the services offered, this can vary between approx. £800 and £1200 per annum. Other complexes will not share services and there will be a minimal fee to cover street lighting etc.
Contrato de Compra Venta - Private Purchase Contract
A private document signed between the buyer and seller. It must reflect true ownership, legal definition of the property, the exact dates of payment, currency of the transaction (euros, pounds, dollars etc) completion dates and penalty clauses. It is usual that the vendor commits to paying double the amount of the deposit paid should he withdraw from the contract. There would also be a penalty paid by the purchaser in the amount of the deposit held should he withdraw from the agreement.
D
Diferencial - Margin
The set value throughout the term of the mortgage which is usually expressed in percentages and which is added to the reference rate to calculate the interest rate for each revision for variable rate capital repayment mortgages.
Documento Privado - Private document
Documento Publico - Public document
E
Embargo - Embargo on a property for unpaid debts such as a mortgage or property taxes.
Escritura publica de compraventa - Deed of Sale
The sales transfer document and title deeds to the property that states the purchase price the property was bought for. This document legalises the purchase and shall be signed by both contracting parties and by the notary. The purchaser obtains a first copy of the deed once all taxes have been paid and the corresponding inscription in the Property Registry has been done.
Euribor - Variable mortgage interest rate set by European banks
An index based on the interest rate for deposits in Euros at 12 months that is published by the European Central Bank and commonly used as reference rate for variable rate mortgages.
F
Fin de Obra - Formal Completion of Works on a new property
Fiscal Representative
Someone you appoint to keep your tax affairs in order.
G
Gestoria
Specialists used to obtain official authorisations, permits and licences
H
Hacienda - The Spanish tax office.
Hipoteca - Mortgage
A legal charge entered in the Property Registry when a property is assigned to be collateral for a mortgage.
I
Impuesto sobre Bienes Inmuebles - IBI - Property tax levied yearly.
The equivalent of rates.
Impuesto actos Juridicos documentados - AJD - Stamp Duty / Transfer Tax
Legal documentation tax approx 1% of the property purchase price
Impuesto sobre el Incremento del Valor de los Terrenos - Plus Valia - Tax on the increase of land value
A tax on the increase in land value, levied when a property is sold.
This is a local Spanish tax which is charged on the capital gains on the sale of property or land.
Under Spanish law it is the seller who must pay this tax (except in circumstances where an agreement has been made to the contrary, something which must be recorded in the private sales contract as well as the title deeds). In Tenerife, it is usual for the buyer to pay the Plus Valia.
The amount calculated for this tax depends on the location within the municipality, the number of years since the property or land was purchased and the rise in value since then.
The scale used by the town hall to calculate this tax is based on certain parameters fixed by law.
Impuesto sobre el valor anadido -IVA - Value Added Tax VAT
Only charged on new build properties, land and commercial real estate.
Sales made directly by a developer (newly built homes) are subject to VAT. The current standard rate is approx 7% on the sales value in case of private use and approx 16% in case of commercial use. In some autonomous regions like in the case of the Canary Islands the rate might vary.
Impuesto sobre transmisiones patrimoniales - ITP - Property Transfer Tax
This tax is payable instead of the VAT when the property is a resale and not newly built. In this case, the standard rate of approx 7% is independent of the assigned use of the property, but there are regional differences.
Indice de referencia - Reference Rate
This base rate is, on variable rate mortgages, used to calculate the new interest rate when it is reset.
Pay attention to the fact that the reference rate, together with the margin, determines the amount of future payments.
Interes ordinario - Ordinary Interest
Normal mortgage interest rate. It has to be specified in the contract whether the interest rate is fixed or variable throughout all or part of the mortgage.
IRPH - Indice de Referencia de Prestamos Hipotecarios
Similar to the Euribor, this rate is used as a reference for variable rate mortgages and published by the Banco de Espana. It represents an average rate for mortgages offered by all Spanish financial entities.
Impuesto extraordinario sobre el patrimonio ISP - Wealth Tax
Capital Gains Tax based on the value of all assets in Spain.
Impuesto Sobre La Renta ISR
Income tax on all second home owners in Spain and non residents for the notional letting value of the property. If the property is not let, it is calculated on the notional rental value of the property.
J
K
L
Libre de cargas - Debt free
Libro del edificio - Documents from the developer when a new building is finished
Licencia de prima ocupacion -Licence to occupy a completed property
Licencia de obra - Building permission
M
N
N.I.E. - Numero de Identificacion de Entranjero
Spanish Tax number for residents and non-residents.
Fiscal or tax identification number required by all foreign property owners in Spain.
N.I.F. - Numero de Identificacion Fiscal
The fiscal number which all Spaniards have (the same number as their identity card and passport numbers).
Notario -Notary Public
An official witness of documents like purchase contracts and mortgage deeds.
The Notary acts as the public official when signing the public deeds, such as property sales or the mortgage agreement. He is obliged to ensure that current legislation is fulfilled and to defend the interest of the parties, particular the borrower's interests.
Notarised
The act of officially sealing or approving an official document in front of a public notary.
Nota Simple
Extract of the property register showing a property's details (such as the owner) and whether any charges / debts are registered against it. Also a copy of property deeds.
O
Obra nueva - Document certifying a new building
Oferta vinculante - Bank document specifying mortgage conditions
Offplan Property
New Development Property that is sold from plans and is in the process of being constructed.
P
Plazo de amortizacion - Mortgage Term or Repayment Period
The period of time during which the mortgage capital and the corresponding interest have to be repaid.
Prestamo hipotecario -Mortgage Loan
Usually known simply as Hipoteca (Mortgage), this is a loan granted by a lender and backed by property.
Poder - Power of Attorney
A third party given official authority to sign documents on your behalf.
Q
R
Registro de la propiedad - Land Registry
Register of Property Ownership. The Land Registry contains all acts, contracts or legal charges referring to a property, such as ownership or charges. Registro de la propiedad is also the local department responsible for maintaining the Land Registry.
Representante fiscal - Foreigner's official tax representative
Resale Property - A second hand property, already registered at the property register in Tenerife.
Residencia - Residency permit
Residente - Resident of Tenerife
S
Se vende or en venta - For sale
Se alquila - For Rent
Seguro de amortizacion de prestamos - Mortgage repayment insurance
Seguro Multirriesgo Hogar - House insurance
T
Tasa anual equivalente -TAE - Annual Percentage Rate APR
This represents the cost of a mortgage calculated as if it were paid as one single repayment each year. It has to be indicated on any mortgage offer to make it easy to compare different mortgage offers with different characteristics (interest rate, commissions ,reference rates margins etc.).
Tasacion Valuation - Independent valuation of property
An independent surveyor company carries out the valuation of the property in order to determine the current value of the home within the property market and to specify the maximum amount that can be financed. The valuation is valid for six months after the date of issue. Usually costs approx 250€
Tasa de cambio - Exchange rate
Tasadores - Official Bank Valuers
Titulo de propiedad - Deeds stating the ownership of property, date of sale etc.
Trastero - Storeroom
Tecnik - Town Hall architect
U
V
Valor Catastral - Assessed value of property for tax purposes
Verificacion registral - Land Registry Check
That is the examination of the Land Registry records of a property, verifying the legal owner and the existence of charges, such as mortgages, embargoes, etc. The document where all this is reflected and that must be presented to the bank and Notary is the Nota simple de cargas.
Vivienda de Proteccion Oficial - VPO - Tenerife Subsidised housing.
Withholding tax -If you are a non resident 3% of the selling price of your property will be retained by the Tax Office while the vendor's Capital Gains Tax is being assessed.
For further advice and guidance on the obligatory Legal Fees and Taxes when purchasing Tenerife Property please visit
Whilst we endeavour to ensure that the information on buying and selling Tenerife is correct at the time of publishing this information is intended for guidance only
