International Buyers Guide to Purchasing a House In Spain
Before you can buy any property, you'll need to know some things about the Spanish bureaucracy as a foreigner.
Knowing what to expect when buying property in Spain can help avoid any pitfalls of setting up your life abroad.
When purchasing property in Spain, the process is often not easily understood. In addition, it is necessary to know which taxes and expenses we will have to pay to acquire the property.
Note: The price of the property you see advertised does not include the taxes, in general we recommend you add 12% of the price of the property to your budget.
Tax And Budget Planning
The two existing taxes to purchase a property in Spain are:
1/ …VAT (IVA) which is payable for new build properties purchased from a developer (10% in the whole of Spain)
2/… ITP (Property Transfer Tax) which is payable for resale properties.
- 10% Valencian Community (Costa Blanca)
- 8% Region of Murcia (Costa Cálida)
Notary costs, title deed tax and land registration fee 1–2.5%;
Legal fees 1–2% (including VAT)
What Are The Requirements To Purchase A Property In Spain?
Obtain your Nie
The only thing you need when purchasing a property in Spain as a foreigner (in legal terms) is the NIE (Número de Identificación del extranjero). This number is unique to each individual,and is essential to carry out any transaction in Spain. Since it must appear on all documents that you sign or are issued in Spain, therefore you must have it before signing the deed. The NIE is not complicated to obtain, but it can take some time.
You can obtain it in Spain or in your home country at a Spanish Consulate. You will need to ask one for your spouse as well if you buy together
So it’s wise to apply for this as soon as you start looking for properties.
You can seek your own Legal Representative to obtain the NIE in order to speed up the process as much as possible or we have legal representatives that can help you.
Find a lawyer who speaks your language and Spanish
If you are going to buy a property and want to save yourself future problems, it is advisable to seek advice from a property lawyer in Spain. The savings far exceed the cost of legal fees.
Unless you speak fluent Spanish, you should find a lawyer speaking your mother tongue or we have legal representatives that can help you.
Prior to going into the acquisition of a property, essential undertakings of exploration and examination should be done.
The lawyer will check:
- The land registry, (Registro de la Propiedad)
- That appropriate planning permission has been obtained
- That there are No outstanding debts attached to the property
- The Community of owners documents’
- The property is as described and structurally sound
- The status of your mortgage or loan (if applicable)
Open a Spanish Bank Account
With your NIE and all your documents, it is easy to open a bank account in Spain!
You don’t need a bank account to buy a property, however having a bank account in Spain will make all the formalities easier, although it is not compulsory, it will make payments faster and will probably save you some commissions.
And take note that once you are the owner of a property in Spain, you must appoint a tax representative if you are not resident in Spain.
Do You Need a Mortgage?
If you need a mortgage now is the time to investigate. You can apply for a mortgage in your home country or here in Spain.
In general, non-resident buyers in Spain can enjoy the same mortgage conditions as Spaniards..
Up to 70% if you pay tax outside Spain
Up to 80% for Spanish taxpayers (70% on second homes)
This means that you must have a minimum of 20% or 30% of the price of the available property, plus approximately 12% extra on the cost of the property to pay taxes, lawyer’s fees, notary fees, etc.. In addition, your debt cannot exceed 30-35% of your income.
Other important information to bear in mind is that mortgages in Spain are normally taken out for a minimum of 5 years and a maximum of 30, with the maximum age of 75 years for completing the mortgage. It should also be noted that each institution has its own risk criteria, in which the country of residence can be included, and that properties abroad are not usually accepted as collateral, as it is difficult to reach them.
We have an excellent partnership with Habeno, a Fintech Mortgage Broker,helping International clients finance their property purchases in Spain.The Application is simple and can be found on our home page.
Searching For Properties In Spain
Estate agents can help you find a property to purchase in Spain. If you feel confident enough, you can also search for properties yourself, by making use for portals like Idealista.com, Thinkspain… etc. However be aware of scams, this is why using a Real Estate Agent is recommended -They will ask you questions regarding your specific requirements and do all the time consuming work for you and then send you properties to view. It is really important that you are honest with your feedback in order for them to get to know your requirements better. This also saves a lot of time wasting for everyone.
Viewing properties by video
Nowadays technology has given buyers the opportunity to view video tours of the property they are interested in without a physical visit to Spain, as a better perspective of a property can be gained by viewing a video than just pictures. Normally the prospective buyer views a video (when available) and then decides if they wish to view the property personally.
Although we do recommend a personal viewing sometimes this is just not possible for numerous reasons. In some cases after viewing a video tour the client may ask to reserve the property until their arrival.
Viewing properties in Person
When you have found a property that you wish to view you will have to contact the advertiser to arrange a viewing. As we know most foreigners do not reside in Spain, so this will have to be arranged with the knowledge that the property may be sold by the time the client arrives in Spain. This is why it is essential that you supply the Real Estate Agent with your requirements. That way they can search for other properties that fit your criteria so that you can view a good selection.
If you decide that you wish to purchase one of the properties you have seen, you will need to place a reservation, this reserves the right to acquire a property in Spain for a set length of time (the reservation term) This contract is very important, don’t sign without including provisions so you can exit the contract.
A reservation agreement is signed and the reservation fee is held by the appointed legal representative (lawyer)
During the reserve period, the builder or developer states in writing that the property will not be sold to another party.
NOTE: In the case of clients who have applied for their NIE. This should always be taken into consideration.
Signing The Private Purchase Contract
The private purchase contract is called the “Contrato de Compraventa”.
As soon as the necessary legal checks have taken place, you will be required to sign the private purchase contract which will state the full price of the property, address etc.
Generally signed within two weeks or a month following the down-payment, and usually entails a payment of 10% of the purchase price (Resale properties), and between 25% and 40% if the property is a new build or acquired off-plan.
Completion is certified by the office of the notary in Spain.
If one or all named owners cannot be present, they must make a power of attorney “poder” to allow another designated person, in general a lawyer, to sign on their behalf.
Normally on the day of the signing, the seller, you as the buyer and both your legal representatives are present.
The deed of purchase will be given to the buyer after the notary reads it and the parties present agree to the contents of the deed. The following must then be presented: proof of identity (or power of attorney) of both parties, the seller's title of property (a form that reports the investment to the Central Register), and the buyer's payment. The buyer and seller sign the contract; beneath their signature, the notary signs using his firma protocolizada and the deed is ready for taxes.
In the case of those who have applied for a mortgage, you will have to visit the notary prior to this
so that the notary can review the mortgage contract and obtain detailed information.
On the day of the signing, the seller, the representatives of the bank, you as the buyer and the borrower both and your legal representatives meet at the notary.
After The Closing
Once the closing is done, the follow-up work is to make sure the utilities are in order, taxes are paid and that your new ownership of the property has been registered.All this is of no extra cost as it was all accounted for in the 12% discussed previously. With a Spanish property in your name, you will need to file yearly income tax and property tax. Even if you have a valid will in your country of origin that includes your Spanish property, we also recommend having a Spanish will drawn up.
Keys to the property and latest receipts of paid utility bills and tax are then given to the new owner so that they can change the utilities into their name and you can begin your move
Enjoy Your New Home