The only thing you need when buying a property in Spain as a foreigner (in legal terms) is the NIE (Numero de Identificacion del Extranjero).This number, which is unique to each individual, is essential to carry out any transaction in Spain. Since it must appear on all documents that you sign or are issued in Spain, you must have it before signing the deed
In addition, although it is not compulsory, having a bank account in Spain will make all the formalities easier, as it will make payments faster and will probably save you some commissions. Finally, remember that once you are the owner of a property in Spain, you must appoint a tax representative if you are not resident in Spain.
Although each buying process differs significantly, in general, the phases found in any real estate operation would consist of the following
Tax and Budget Planning buying a house in spain
The costs of acquiring a house are mainly paid by the buyer and vary from region to region. Taxes and other paid by the buyer include:
- Property transfer tax 6–10% (existing properties) / VAT (or IVA) at 10% (new properties).
- Notary costs, title deed tax and land registration fee 1–2.5%.
- Legal fees 1–2% (including VAT).
Get your NIE
Contact us to get your tax identification number. You don’t need a bank account to buy a house, but we advise you to get one before buying the house.
We can help finding properties in Spain. If you feel confident enough, you can also search for a property yourself, by making use for portals like Idealista.com, fotocasa… etc. When looking for properties, you might want to make sure that the ads that you see are not scams. This is what you should look for when searching for a home in Spain:
- The qualifications of the attorneys or real estate agents engaged
- There is adequate planning approval, according to the land registration (Registro de la Propriedad).
- There are no outstanding obligations on the property
- That the structure of the property is sound (either a surveyor or an architect can do this).
Reservation agreement and letter of Intent.
When a buyer pays a fee and reserves the right to acquire a property in Spain for a set length of time (the reservation term), it is known as a reservation agreement. During the reserve period, the builder or developer states that the property will not be sold to another party.
In addition, a letter of intent may be presented by one party to another party and subsequently negotiated before execution (or signature).
Payment of the Property Transfer Tax or VAT(as a Foreigner)
Once you’ve purchased a property in Spain, it’s essential to stay informed about your ongoing tax obligations as a foreign buyer. One of the most important taxes you’ll need to pay is the Non-Resident Income Tax (IRNR), which is applicable if you don’t live in Spain full-time. This tax is calculated annually based on the property’s cadastral value. Additionally, all property owners, including foreigners, are required to pay the Impuesto sobre Bienes Inmuebles (IBI), a local property tax levied by the municipality. The IBI is also determined by the cadastral value. Being aware of these tax responsibilities helps ensure that you remain compliant with Spanish laws and avoid any legal complications.
What are the taxes I need to pay when buying a house in spain?
All property owners in Spain are required to pay three different taxes each year. If you are a resident, you are subject to Income Tax (including Capital Gains Tax) and Real Estate Tax (IBI).
If you are a non-resident in Spain, you are subject to Income Tax (including Capital Gains Tax), Property Tax, plus an additional Non-resident Property Tax. Here you can find more info about property taxes.
Deposits and Mortgages
In general,non-resident buyers in Spain can enjoy the same mortgage conditions as Spaniards, i.e. up to 80% cover in the case of a first home, and between 60 and 70% in the case of a second home.
This means that you must have a minimum of 20% of the price of the available property, plus approximately 15% 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 five years and a maximum of thirty, 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.
