Definition:
The rent with option to buy contract implies:
– On the one hand a normal letting contract.
– And on the other, the possibility (unilateral faculty of the tenant) to buy a property. According to the conditions that should have been agreed.
Legal regulation of the Rent with option to buy
As for the letting or rental contract, it is generally governed by the Urban Letting Law.
In relation to the purchase option, it will be governed mainly by the Spanish Civil Code.
In general, each rent with option to buy is different, and it depends on what the parties have agreed to.
Exercise of the purchase option.
It is the tenant who can decide to buy or not, it is who has that option.
It is important to clearly state the conditions for exercising this purchase option right:
– Term for execute the right.
– Purchase conditions. In case of exercising the right to buy, it should be stated the basic elements of the sale. Such as: object, that is, the property to buy. Price. Conditions of the purchase, etc.
Registration of the purchase option contract
In addition, these types of contracts are inscribable in the property registry.
Therefore, if the parties agree to it, and the legal requirements are met, they can be registered. This will give security to the tenant that the property will not be sold to third parties, etc.
Taxation of the rent with option to buy
In the event that the owner and lessor is a natural person (not a company), two main taxes will be generated:
1. Regarding the income (monthly rents) received from the rental contract. The corresponding income tax will be paid. Like any rental.
2. And in case of exercising the purchase option. If the monthly rents are deducted from the price. These will be considered as a lower transmission value. And in this sense, they will reduce the capital gain.
Advantages of the rent with option to buy
This type of contract can have advantages and be suitable on many occasions.
For example, it allows a buyer to somehow finance the purchase by making monthly payments, which are discounted from the price. Also know the property, and how it would be living in it, before deciding to buy it, etc.
On the other hand, it can also be advantageous for the owner and landlord. Well, it allows to rent the property and being for sale. Normally it allows the landlord to ask for a higher rent, etc.
Conclusion
This contract can be a very advantageous alternative on some occasions. First, it is necessary to know its taxation and how it works to avoid problems. Secondly, it is essential that the main aspects for the protection of the interests of the parties are agreed upon. Finally, as there are many different options, it is advisable to seek the advice of an expert lawyer.
If you want information about rent with option to buy, a purchase contract or a rental contract in Spain, contact us.
The information provided in this article is not intended to be legal advice, it merely conveys information related to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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