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Immigration Lawyers & Legal Experts
Immigration Lawyers & Legal Experts
It is no wonder why Spain is known internationally as a prime choice for expats looking for a new country to live in and to also invest in. With over 6 million immigrants, Spain’s colorful culture, amazing lifestyle, and unbeatable weather make it an easy choice for many people looking for a new life in Europe. There are also many different towns if you are looking to join a large expat community!
Benefits of living in Spain include a high quality of life with a low cost of living — great health care and educational facilities, and plenty of tourism options. Spain also has a hot property market with some of the most exclusive properties in all of Europe.
One of the amazing features of Spain is that there is a wide spectrum of property prices, so there is a new house for every type of real estate buyer.
This comprehensive guide will provide you with key information on how to buy a house in Spain and all the information to consider! Laws, taxes, purchase process, and most importantly a team who is able to help you throughout it (lawyers, real estate agents, and architects).
In order to ensure a smooth process of buying property in Spain as a foreigner, it would be a good idea to ensure that you have all the correct documents beforehand.
The first step will be to get your Spanish NIE number. The NIE number is your Foreigner Identification Number in Spain. The NIE as a foreigner allows you to conduct business, economic, professional activities, and most importantly to buy a Spanish property.
Obtaining the NIE is a fairly easy process, however it can take time. So for this reason it would be wise to apply for it well ahead of time.
You can also employ the help of one of our lawyers to guide you through this process. They can apply for a NIE on your behalf which can expedite the process of buying property in Spain.
Once you have your NIE, it will serve you in opening a bank account in Spain, registering utilities for your new home in Spain, and performing other activities.
Yes, any foreigner can buy property in Spain. Spain has a hot property market with a variety of property prices.
There are currently over 680,000 residents in Spain as a foreigner. Foreign buyers own about 36% of all the properties in the Costa del Sol region.
Finding and buying a house in Spain can be straightforward with the right support and advice from lawyers, real estate agents, and architects (technical surveyors). Our office of lawyers and real estate agents have all the expertise on hand to help you with legal, financial and mortgage advice during the purchase.
It would be advisable from the beginning to determine your budget, taking into consideration the cost of property acquisition, along with all the other costs and taxes associated with buying a property in Spain.
The first thing you should do is to apply for your NIE number. You can read more about NIEs on our NIE page.
Once a property has been decided through the help of a real estate agent, it is a good idea and highly advisable to hire a lawyer to conduct all the necessary checks and due diligence.
Buying property in Spain is a little different than how the process of buying goes in other countries — for this reason, lawyers are a vital part of any real estate property purchase.
Also the buyer of a real estate purchase never pays the real estate agent fees. So do not be afraid to employ the help of a real estate agent to help you with the search and buying a property in Spain. The Real Estate agent fees are paid by the seller of the property.
The following are some of the many items that you will need to inquire about as a buyer of real estate property in Spain. Your lawyer will ideally handle all these checks during the due diligence.
Our legal team and real estate team work hand in hand to walk you through this process. Contact us today for a free consultation in regards to your property search and home buying process in Spain.
The IBI is an annual tax levied by the local Town Hall on property ownership. The fee is based on a percentage of the “valor cadastral” or cadastral value — and can vary depending on the municipality the property belongs to.
As a reference, the tax scale is 0.3–1.3% of the registered cadastral value. There is also a charge to property owners for garbage collection — payable at the local Town Hall.
Also take into account that in a property development with communal facilities, gardens, pools, gyms, security, concierge, you will pay monthly community fees — which are set by the community of owners.
This is an annual tax that has to be filed and paid dating from the year after the property is purchased.
The Spanish tax agency assumes that all non-resident property owners derive financial benefit from their property and therefore assign an income of 1.1% (if the value has been revised in the past 10 years) or 2% of the cadastral value attached to the property if the figure was revised more than 10 years ago.
For property owners resident in the EU, the taxable rate is 19%. Outside the EU, the taxable rate is 24%.
In order to rent out a property in Spain for short-term touristic rent, a special licence is required from the Spanish authorities. If you intend to rent out the property with a long-term contract then you will not need this licence.
Rental income is subject to tax at 24% for non-EU residents, and 19% for EU residents (including Spanish residents).
The wealth tax rate in Andalucía was reduced in January 2022, and the rate is on a sliding scale of 0.2%–2.5% depending on your worldwide assets. The top rate is applicable to those with 11 million euro or more in taxable assets, and the net value is reduced if you have a mortgage to repay.
There is a tax-free allowance of up to €700,000 for Spanish residents and non-residents alike.
Our legal team can help you through your tax responsibilities in Spain.
The interest rate to get a mortgage and borrowing funds to purchase a home is currently very low in Spain and mortgages can be arranged at a fixed or variable rate.
Spanish residents can borrow up to 80% of the purchase price of a property from a Spanish bank or mortgage provider, while non-residents can borrow up to 60–70% of the property price — subject to approval by the lender.
You can apply for and get a mortgage from the age of 18 upwards to approximately 65 — as the term of repayment must be complete before you reach 75–80.
An individual can apply for a loan from a Spanish bank. In Spain, a foreign person, including a non-resident, can get a mortgage for up to 70% of the purchase price of a home. The property you buy in Spain will serve as collateral for the loan.
To apply for a mortgage in Spain, you must have a stable source of income and be able to prove the regularity of your income. Loan repayments must not exceed 30 to 35% of your net income. Most banks ask for tax returns for the last two years, payslips for the last three months, and bank statements to prove income.
You must have at least 30% of the purchase price for the deposit, plus money to cover other expenses. For these other costs, you should allow around 10 to 14% on top of the purchase price. Costs include the property transfer tax, notary and registration fees, bank account fees and legal fees.
The opening fee for a mortgage is usually 1%, and the interest rate is linked to the 12-month Euribor rate. Margins range from 0.9% to 2%. It is also possible to obtain a fixed-rate loan from Spanish banks for the entire duration of the loan.
When you take out a mortgage from a bank, you will also need to take out home insurance and sometimes life insurance. Insurance is usually taken out with the same bank as the mortgage.
Once a mortgage approval is received, the bank requires that Spanish property be appraised by an official appraiser approved by the bank. This registered appraiser makes a price estimate (tasación). The cost of the estimate depends on the size of the property (€300 to €2,000).
The Costa del Sol consists of many different towns with a variety of characteristics that you can choose from — such as Marbella, Estepona, Mijas, Fuengirola, Benalmádena, Torremolinos, Málaga, Nerja, Benahavís, Casares, San Pedro de Alcántara, Manilva, Las Lagunas, Calahonda, Sotogrande and more.
The homebuyer can have the property inspected by an official evaluation company. This will give you a reliable picture of the condition of the home, the level of construction, and potentially give you some leverage when negotiating a price.
For the inspection, a fee will be charged according to the value of the apartment. The evaluation company will compile the information about the home in a special book, which will be kept by the homebuyer.
The bank will carry out an appraisal if you apply for a loan. The bank’s appraisal is carried out by an independent firm. Costs are paid by the buyer. The cost of this bank-approved valuation is between €300 and €2,000, depending on the size of the property.
The appraisal takes into account the condition of the property, the surface area, the neighbourhood, and the price. The loan from the bank will be proportional to the valuation of the home. Often, the price estimate is slightly lower than the market price.
The real estate agent must explain to the client the searches and diligences on the property. If you want, you can also use a lawyer to help you.
It is important to check whether the property is mortgaged or has any outstanding bills, such as council tax or condominium charges.
If such encumbrances are found, they must be clarified before the transaction is concluded. The seller must clearly show that all invoices have been paid. Another option is to deduct the amount of the invoices from the purchase price, leaving the buyer to make the payments. Even if the property is mortgaged, it is not a problem as long as you know this well in advance.
(Contrato Privado de Compraventa)
Once the seller and the buyer have agreed on the price and the terms of the sale, it is time for the private purchase contract (preliminary contract). In common Spanish practice, a private purchase contract (contrato privado de compraventa) is concluded before the final public deed of sale (escritura de compraventa). This contract sets out all the terms and conditions of the sale.
The private purchase contract (preliminary contract) is legally binding and usually involves a deposit of a percentage of the purchase price. The deposit is usually between 1% and 10%, depending on the value of the property and the terms of the offer.
Once the deposit has been paid into the account of the real estate agency or the law firm’s client funds account and the payment can be verified, the property sale listing is removed from the market and the property is reserved for the buyer.
After the private purchase contract has been signed, the buyer and seller sign the Escritura, a public deed of sale, at a notary’s office. Both the buyer and the seller must be present in person or represented by a notarised power of attorney for signing the contract.
Receipts for the previous year’s IBI property tax on the property and proof of the fees paid must also be brought along.
The public deed of sale is checked by a notary and all the terms of the sale are recorded in it. The notary’s duties include certifying the formal authenticity of the deeds and acting as a witness when the deed is signed.
The notary must also ensure that the parties to the sale understand the content of the document. In Spain, deeds are written on paper, and each page of the deed must be signed on both sides by the buyer, the seller, and the notary.
The notary keeps the original document and gives copies of the deed to both the seller and the buyer. The notary confirms the legality of the sale by signing the contract.
You should ask for a copy of the new Escritura as soon as you have signed it. The documents are then submitted to the real estate register for title registration, which usually takes time. A recorded and stamped copy of the original deed from the real estate register can normally be obtained within a few months.
If the buyer is not a resident, they must be able to prove to the notary where the funds needed to buy the home were obtained. If the money has been transferred from abroad to Spain, they must have a certificate from the bank stating that the money was transferred from abroad specifically for the purpose of buying a property.
A reservation fee of €6,000–€10,000 is paid either into the developer’s account of the real estate agency or the law firm’s client funds account. Depending on the contract, the reservation fee can be refundable or non-refundable if you cancel the reservation.
At the time of signing the purchase agreement for a new property, 20 to 50% of the purchase price is paid. As the construction progresses, the next instalment is paid. The final conclusion of the sale takes place at a notary’s office when the construction is completed and the keys are handed over.
We recommend that the buyer negotiates the contract in such a way that a deposit of €5,000 to €30,000 is left in the client funds account in case there are still some minor or major unfinished works on the property.
This is normally 1% of the purchase price of the property. This reservation contract ensures the house is taken off the market and goes towards the overall purchase price.
Once the seller accepts the reservation, you will need to sign the pre-sales agreement along with a deposit of 10% of the purchase price. This pre-contract between buyer and seller formalizes the transaction between both parties. If the seller decides to back out, they must return your deposit and double it. However, if you as the buyer decide to back out, you lose the deposit.
This is the final payment of the remaining amount to finalize the deal and complete the property purchase.
It is crucial that as the buyer, you have a lawyer and architect on your side to review the deal when buying a property in Spain.
This step will help you avoid huge problems. The architect will perform an inspection and create a report to review potential damages and red flags when buying a property.
You also want to make sure that you are not buying a property in Spain that actually has problems with the town hall. Many properties and homes in Spain have been built illegally. So they have limited rights and problems with the town hall. That’s why a lawyer and architect can help protect your large purchase and investment.
Our legal team is specialized in the house buying process in Spain, and we work with architects who will have your best interest in mind when performing technical reports reviewing the property’s status.
As the seller of a property, you will be responsible for paying capital gains tax. This tax can be between 19–24%, depending on your tax status in Spain.
This tax will be applied to the benefit received from selling a property. So for example, if you bought a property for €300,000 and sold it for €400,000, then the capital gains tax will be applied to the difference of €100,000.
As you can see, buying property in Spain can include many different conditions that you must take into account. Jointly with our law office and real estate agency, we provide our clients the whole package deal. From helping our clients through the search process, to the due diligence, securing financing or mortgage, and also the residency application — we’re able to serve our clients their dream of buying property in Spain and living their new Spanish life!
