The Ultimate Guide to
Real Estate in Spain
It it 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 ever 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).
The Basics of Buying Property in Spain
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Make sure you have a NIE number
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Inquire about real estate loan options
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Contact our real estate agents department to show you available properties
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Reservation of the Spanish property
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Private Contract of Sale
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Complete the transaction
NIE Number
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.
An Intro into Buying a Property in Spain as a Foreigner.
Can a Foreigner Buy a House in Spain?
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.
Legal Checklist
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.
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consult property registry (registro de la propiedad) to ensure there are no debts/mortgages
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land registry, proving ownership and exact details of the property
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check title deed about ownership and property details
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planning charges, check that there are no outstanding fees
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in the case of purchasing land you will need to check the possibility of obtaining a building permit
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licence of first occupation (LPO licencia de la primera ocupación) checking to see if it is registered with the local town hall
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energy performance certificate
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IBI payments, the annual property taxes that you will need to pay to the local council
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check the community of owner statutes and bylaws, if you are buying a property to later rent, you will need to check to see if this is permissible
Taxes and Fees for a Property Purchase in Spain
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the biggest expense will be the conveyance tax, or property transfer tax on resale (second hand) properties. The current rate is 7% property transfer tax of the purchase price of the property
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if you are buying a new home from the builder you will need to pay a 10% IVA (VAT - Value Added Tax)
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lawyer fees are 1% + IVA of the property purchase price
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mortgage fees, which also include the costs of the official valuation of the property, can be between 300-3000€
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notary fees, which is for officially signing over the property can be between 0.1-0.5%
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title deed tax
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land registration fee, to register the property (registro catastral)
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bank account expenses and currency exchange
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another tax on new build homes is 1.2% (impuesto sobre acto juridicos)
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if you are buying an empty piece of land the tax (IVA/VAT) can be 21%
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.
Annual Property Taxes
IBI - Impuesto sobre bienes inmuebles - Real Estate Tax
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.
Non-Resident Property Income Tax
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%.
Rental Income
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).
Wealth Tax
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-resident alike.
Our legal team can help you through your tax responsibilities in Spain.
Can a Foreigner Buy a House or Property in Spain?
You do not have to be a resident in Spain to buy a property, unless you are planning to live in Spain for more than 6 months and 1 day.
If so, you will need to apply for a fiscal residence in Spain.
Non-European Union citizens wishing to reside permanently in Spain must obtain a residence visa from the Spanish Consulate in their home country. With this visa, they can apply for a residence permit.
Golden Visa
One of the many popular combinations that foreign buyers perform is obtaining a new home in Spain, and their Spanish residency at the same time.
The Golden Visa was introduced in Spain in 2013 - it is a residency permit for 5 years offered to people who are willing to invest at least 500,000€ in a property in spain. If the property price is more than 500,000€, you will be able to get a mortgage to finance the remaining amount if you need to.
Along with this purchase, the buyer and their family (legal dependents) will be able to also gain residency in Spain.
Non-Lucrative Visa
Another residency option is through the non-lucrative visa, also known as the non-profit visa, if you do not plan on spending over 500,000€ on a property purchase.
With this residency you will gain a Spanish residence permit, however with a catch - you must live/stay in Spain for more than 6 months and 1 day (183 days).
Mortgages 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.
The documents required to apply for a loan includes:
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a copy of your passport
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NIE (identification number)
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latest tax returns
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3 pay slips
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assets
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other incomes
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bank statements from the last 6 months
Our legal team has helped hundreds of clients through the house purchasing process.
Contact us for a free consultation.
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. This is a viable option if, for example, the buyer has savings equivalent to the deposit but not enough collateral for a loan in their home country.
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. Some banks also ask for a credit registry certificate to check your credit history.
You must have at least 30% of the purchase price for the deposit, plus money to cover other expenses.
For these other costs, it would be a good idea that 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 for yourself. 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 (tasacion). The cost of the estimate depends on the size of the property (€300 to €2,000).
The appraiser will carry out the appraisal and produce a written report with pictures. The loan is always granted at the lower end of the estimate. The mortgage is signed by a notary in connection with the sale of the property. The mortgage is recorded as an encumbrance in the real estate register and is entered in the Nota Simple, the register extract.
We are based in Marbella, in the Costa del Sol of Spain.
10 good reasons why the Costa del Sol is one of the best places to buy in Spain!
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The Costa del Sol has its own microclimate, providing over 300 days of sunshine every year
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You can lead a healthy lifestyle with the variety of options
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The Costa del Sol is always improving and upgrading to attract foreign investors
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International flights options from the Malaga airport
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A very diverse lifestyle and culture - the highest number of English speakers in Spain live here! There is a large expat community that lives along the coast.
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The Spanish property market in the Costa del Sol is always in high demand from foreign buyers. Some of the most expensive and exclusive properties in all of Europe can be found here, with buyers paying top dollar (or in this case euro) per square meter
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The Costa del Sol has become a hub for digital nomads, combining business and pleasure
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There is an excellent demand for rental properties, which creates great investment opportunities. The Costa del Sol is recognized as a tourist/remote working destination.
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The 5th highest number of annual sales of Real Estate in Spain was on the Costa del Sol
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Spanish property market values and property prices are always steadily increasing year after year
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, Benalmadena, Torremolinos, Malaga, Nerja, Benahavis, Casares, San Pedro de Alcantara, Manilva, Las Lagunas, Calahonda, Sotogrande and more.
Inspection and Appraisal of the Property
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.
Determination of Encumbrances
The real estate agent must explain to the client the searches and diligencies 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.
Private Purchase Contract
(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). In many other countries, this corresponds to a preliminary contract for a real estate sale. 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.
Public Deed of Sale
(Escritura de Compraventa)
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. You can usually get it while you’re waiting. 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 of the date of signature of the Escritura.
The notary’s fee is calculated as a percentage of the purchase price and is generally paid by the buyer. The same applies to other transfer costs, which are described below.
If there is already a loan on the property you are buying and you want to redeem it or transfer it under your own name, this will only be done by a notary at the time of concluding the sale.
Representatives of the banks will also be present, with whom a solution must have been negotiated in advance. If there will be a mortgage on the property, it will be attached to the Escritura de Compraventa with its conditions.
You should also read the terms of the mortgage at the notary’s office and check that, for example, the interest rate and payment schedules are as agreed.
You should take time to read the Escritura de Compraventa and, if possible, ask to read the text in advance of the signing.
The buyer must pay the title registration fees within 30 days of the contract of sale.
The buyer is also responsible for paying the withheld tax and providing the seller with a receipt.
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.
For the total amount of the property in euros, any advance payment receipts, bank transfer certificates or a bank cheque made payable to the seller must be presented to the notary, proving that the purchase price has been paid by the time of the signing.
Homeowners should bear in mind that, as elsewhere, there are some regular costs associated with owning a property in Spain. Real estate owned by non-residents and so-called second homes are taxed differently from an owner-occupied residential property, such as capital gains tax.
Example of a Pre-Owned Property Sale in Spain
A pre-owned property in Spain with a purchase price of €500,000
Purchase price = €500,000
Property transfer tax 7% = €35,000
Legal fees 1% (+VAT 21%) = €6,051
Notary and registration fees 0.5% = €2,500
Total €543,551 (other costs €43,551)
Example of a New Construction Sale in Spain
A new construction property in Spain with a purchase price of €500,000
Purchase price = €500,000
Tax 10% = €50,000
Legal fees 1% (+VAT 21%) = €6,051
Notary and registration fees 0.5% = €2,500
Stamp duty 1.2% = €6,000
Total €564,551 (other costs €64,551)
A reservation fee of 6,000€ - 10,000€ is paid either into the developers 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.
Our legal team will ensure the terms of the contracts are in your best interest.
At the time of signing the purchase agreement for a new property, 20 to 50% of the purchase price is paid. The reservation fee already paid will be deducted from this amount.
As the construction progresses, the next instalment is paid, e.g. 20%. The final conclusion of the sale will take place at a notary’s office when the construction is completed and the keys are handed over to the new owner. The final purchase price is then paid, which is usually the remaining 50% of the total purchase price.
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 the formal deed of sale in case there are still some minor or major unfinished works on the property. These are to be carefully recorded and documented.
When all the remaining finishing touches have been completed, the amount is released from the client funds account and paid directly to the developer. This will give the finishing touches a nice speed boost without compromising on quality.
How long does it take to buy a property in Spain?
This process can vary widely, depending on how prepared your legal documents are and if you will be buying property in spain with a mortgage or a cash offer; but in some cases it can be done as soon as a week or two. It all depends on your situation and on the contingencies of the offer.
The 3 Essential Steps in Buying Property in Spain.
Once you have acquired your NIE number, you will go through a series of signing 3 documents that are a part of larger steps in the process of buying property in spain.
One of the documents is the reservation contract. 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 this, you will need to sign the next document which is the pre-sales agreement. Along with this document you will need to pay your deposit of 10% of the purchase price.
This pre-sales agreement is also known as the contrato de arras.
This pre-contract between buyer and seller has the purpose of formalizing the transaction between both parties: the buyer shows his clear intention to acquire the property, and the seller her intention to sell.
If for whatever reason, the seller decides to backout of this deal, then they must return your deposit and double it.
For example, if you pay 10,000€ during this agreement, and the seller decides not to sell anymore, then you can receive back 20,000€.
However, if you as the buyer decide to back out of the deal then you obviously lose the deposit that you have paid.
Then finally is the deposit contract. This is the final payment of the remaining amount to finalize the deal.
The Importance of Hiring an Architect and Lawyer When Buying Property in Spain
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 inspect 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 in your property in Spain.
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.
Taxes When Selling a Property in Spain as a Foreigner
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€.
Our Team...
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!
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