The English are the largest buyers of Spanish Real Estate, followed by French, German, Russian and Italian, without forgetting the increase of Chinese citizens who come to our country. Whether you are looking for a property in the coast areas or want to enjoy the diversity of the large cities (Barcelona, Madrid, Valencia, etc.), the steps to follow are not always intuitive. In addition it is also necessary to know what taxes and expenses have to be faced when acquiring a property. We explain all this and much more to you hereunder.
Requirements to buy a property in Spain being a foreigner
The only indispensable requirement to buy a property in Spain is to get a NIE (a Tax Identification Number for foreigners). It is a personal and unique number, essential to carry out any transaction in Spain, from opening a business to buying a property.
In this article we explain how and where to apply for the NIE, whether you are in Spain or if you are in a foreign country. When the non-resident has the NIE, he can initiate the procedures for the purchase of the house.
It is not mandatory to open a bank account in Spain but it makes straightforward and straightaway the payment of taxes and expenses.
The purchase of the property is done before a Notary through a public deed of stransfer and it is registered in a public register (“Registro de la Propiedad”).
It is necessary to take into account that before making the purchase before a notary public is very frequent to realize a private contract of commitment of sale called “Contrato de arras” where a part of the price is paid on account of the final price that is paid when the transsfer of the property is carried out before a Notary.
What taxes and expenses do you have to pay when acquiring a property in Spain?
To purchase the property you have to pay several taxes, which increase the acquisition cost substantially. These include:
- The Value Added Tax (VAT), in case of new real estate or first transmission. The tax rate is 10%.
- The Property Transfer Tax in the case of second hand residences or second and subsequent transmissions. The tax rate is between 6% and 10% depending on the Autonomous Community where the property is located.
- Tax on Document Legal Acts. Just in case that VAT is applied, and if the property is purchased through a mortgage.
In addition, there are other expenses that must be taken into account:
- Public deeds in the notary’s office.
- Registration of the deed in the Property Registration Office (“Registro de la Propiedad”).
- In case of a mortgage, taxation, the notary and Register fees and taxes for the mortgage have to be included.
- Other taxes during the year such as the Property Tax (Impuesto sobre Bienes Inmuebles, IBI), Wealth Tax (if applicable), Personal Income Tax (IRPF) or, if you do not live in Spain permanently, you will have to pay the Personal Income Tax for Non Residents.
Tips for buying a property in Spain
As far as possible, we recommend you:
- Visiting the property personally before paying, what is to say, check by your own the state of the house, the surroundings, the transport routes that connect with the area, etc.
- Knowing who owns the house. You should go to the Property Registration Office and check the legal and urban situation of the property.
- Once acquired, registering the property in the Property Registration Office in order to demonstrate that you have the absolute rights on it.
- If a contract of commitment (Contrato de Arras) is made before the before notary signature, go to an expert who verifies the content of the agreement and its effects.
To avoid uncertainties, mistakes and queues we recommend entrusting all these tasks to an expert on that subject as GM Tax.
