All you need to know about buying a property in Spain
Spain remains at the top of the list of best destinations to purchase a home by expatriates. Climate, geographical location and infrastructures are just some of the reasons why Spain is the perfect destination for a second residence.
What paperwork do you need to purchase a property in Spain?
The only requirement to buy a house in Spain is to request a NIE (Foreigners Identity Number), which serves to identify you when making the purchase-sale contract and to pay the corresponding taxes.
The NIE can be requested in Spain at the General Directorate of Police or, in the event that you are not physically in Spain at the time of the request, at the Embassy or Honorary Consulates of your residing country or through a power of attorney that can be granted in order to request the NIE on your behalf.
Do you need a bank account in order to purchase a property in Spain?
It is not mandatory to open a bank account in Spain but it will facilitate the payment of taxes and expenses.
Registration before a public notary
The purchase of the property is made before a Public Notary and is registered in the Property Registry which is a public registry.
One must also take into account that before making the purchase before a Public Notary, it is very common to make a "deposit contract" which is a private contract and proves your commitment. In this case, part of the price is already paid, which is then deducted from the final price of the property.
When buying a property in Spain, you will have to pay up to 12% of its value for administrative costs for the purchase. If the transaction is carried out through a real estate agency, the fees are paid by the buyer.
What are the basic steps to buying a home in Spain?
Negotiate the price with the seller
Check that the property belongs to the seller and that it is free of administrative charges or mortgages. You can do this by requesting a report at the Property Registry called “Nota Simple”
In some cases, you can sign a deposit contract and pay a percentage of the final price as a down payment. This document is an agreement by which both parties agree to finalize the sale in the near future. The usual price of this agreement or deposit is usually 10% of the house.
Sign the purchase-sale contract before a Public Notary and pay the remain balance of the property
Register the property in your name before the Mercantile Registry and pay the corresponding administrative expenses.
Housing finance
Another aspect to take into account when buying a home is the possibility of financing it.
In general, non-resident buyers in Spain can enjoy the same mortgage conditions as Spaniards, that is, up to 80% coverage 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 house in funds.
It is also important to take into account that typically, in Spain, mortgages are contracted for a minimum of five years and a maximum of thirty, with 75 years as the maximum age to finalize the mortgage.
It should also be noted that each Bank has its own risk criteria, in which the country of residence can be included, and that properties abroad are not usually accepted as collateral, since it is difficult to reach them.
What taxes and expenses must be paid when buying a house in Spain?
Buying a property is subject to various taxes, which on average raises the price of the house substantially.
Among them are:
The Value Added Tax (VAT), in the case of new homes or first transfer which is a tax rate of 10%.
The Property Transfer Tax (ITP), in the case of second-hand residences or second transmission. The tax rate is between 6 and 10% depending on the Autonomous Community where the property is located and must be paid if VAT is not applied on the transmission.
Tax on Documented Legal Acts (AJD). It must be paid if the house is bought and VAT applied and if it is bought by mortgage at a rate of between 0.5 and 1.5%.
What other expenses should be taken into account when buying a property in Spain?
Public deed at the notary's office
Registration of the deed in the Property Registry
In case it is necessary to request a mortgage, it is necessary to include the appraisal and the notary, the mortgage taxes and the registration of the deed to the Property Registry
During the year you will also have to face other taxes, such Real Estate Tax (IBI), Wealth Tax -if applicable, Personal Income Tax (IRPF) or, if you do not live permanently on Spanish territory, the Non-Resident Income Tax will have to be paid.
Some tips for buying a house in Spain
Where possible, we recommend that you:
Visit the house personally before paying, that means, check first-hand the state of the house, the surroundings, the transport routes that connect with the area, etc.
Find out who owns the house by requesting the “Nota Simple” document at the Property Registry and check its legal and urban situation to ensure that you don’t any problems or scams later on
Upon acquisition, register the home at the Property Registry to demonstrate that you have the absolute rights of the house that has been bought in Spain
If a deposit contract is made prior to the Notary, go to an expert to verify the content of the contract and its effects
In order to avoid any uncertainties and in particular any errors, we highly recommend delegating all legal tasks to a qualified expert.
How can Encantada help?
Encantada is here to help you find your dream property here in Valencia, we can also assist if you are looking to buy property in the Costa Blanca.
Based on your tastes and criteria, we will make selections and organize viewings on your behalf.
If you are buying your property remotely and can’t be here in person, we will work closely with you, take the viewings for you and send detailed feedback and videos so that you can feel confident in buying your new Spanish home even if you can’t be present.
Our network of architects, builders and interior designers are also at your disposal and we can also recommend the right banks for your mortgage.
Contact Us
If you are looking purchase a property, we’d be delighted to assist.
You can contact us directly by filling out the form below.
