Buying property in Spain does open quite a few opportunities for you. Whether you would like to rent out a house, move to the country, or obtain citizenship, you have a range of places in Spain to choose from. However, the purchasing process can seem intimidating and tiring, but don’t fret, that’s why we’re here.
In this article, you’ll discover how to buy a home in Spain as a foreigner step-by-step. You will see what you need to do both as a European citizen or non-European citizen, and as a Spanish resident or non-resident.
We’ll explain how to achieve a successful purchase, as well as tips that will lead to a smooth and safe experience. Are you ready?
The Spanish Property Market
The property market in Spain presents great opportunities for foreign investors, and for expats wishing to settle in the country with their families.
After the 2008 crisis that completely devastated the real estate sector in Spain, the overall market situation has improved since then.
Nevertheless, we are talking about a very special market. As the whole country in general, each region operates differently. Thus, it would be extremely useful to be aware of the nuances and differences that arise between regions.
If you want to buy an apartment, knowing where to find the greatest deals is crucial. For example, capital cities like Madrid or Barcelona are quite expensive.
In order to give you an overall idea, you can find in this article our predictions and characteristics for the Spanish property market during 2023.
Can foreigners buy a house in the Spanish territory?
Yes, any foreigner can purchase a house in Spain. The main thing you will need is a NIE number, which is the identification number given to foreigners in the country.
However, there are different types of NIEs, depending on your situation or where you’re from. In the next section, we’ll break down these distinctions.
Getting a NIE if you are an EU citizen
If you are an EU citizen, there are two types of NIEs:
- A temporary NIE number, for individuals who are only visiting Spain to realize the purchase, and do not plan to live in the country
- A resident NIE (a permanent one) for those who plan to reside in Spain
Getting a NIE if you are a non-EU citizen
On the other hand, if you are a non-EU citizen, you can apply for:
- A Resident NIE number if you are a Spanish resident, meaning you live in the country for more than 183 days per year
- A Non-resident NIE, if you are not living in Spain but would still like to buy a property
Can non-residents purchase property in Spain?
Yes, non-residents can purchase property in Spain. As previously mentioned, non-residents are still required to obtain an NIE to carry out the purchase, whether or not they are EU citizens.
The NIE must be requested at the General Immigration Office. You will need to submit a photocopy and original of the complete passport or identity document, as well as the economic, professional, or social causes that justify the request.
We also recommend opening a Spanish bank account, even if you are not going to reside in the country, as it will make it easier to show proof of economic means. Again, this is not a requirement, only a recommendation, but it will surely contribute to a smoother process.
Do you have any doubts so far? Ask anything to our lawyers here or keep reading for more information:
How to Buy a Property in Spain as an Expat
The process of purchasing a property in the Spanish territory can be divided into three different stages: (1) The Pre-Purchase, (2) The Purchase, and (3) the Post-Purchase.
Each stage has specific steps under them, which have been summarised in the following infographic. Of course, we will explain them more in detail later on in the article.
Now, how long does it take to buy a house in Spain? The search for a property can take from 3 months to a year, depending on your personal preferences and situation. If you would like some of our best tips on finding the best real estate deal, click here.
Once you’ve found your property, the purchasing processing usually takes another 2-3 months. However, this process can be extended if you decide to apply for a mortgage.
Our recommendation is simple: plan the entire process well in advance to avoid setbacks.
Let’s analyze the property purchasing process in a more detailed way.
The Pre-Purchase: Legal Procedures
In this section, a series of diligence prior to the signing of the binding contract between both parties is born: the so-called diligence of the property.
This consists of a review and verification of all the documentation of the property in the registry, as well as the validity of those papers.
Remember, at this point, you should already have your NIE number and the house you are willing to acquire.
We will first analyze the documents you’ll need here. Afterwards, we’ll explain, step by step, how you should manage this first part of the purchasing process.
The reservation contract is the process by which the buyer makes a deposit of 1-5% of the property price. This reservation makes the purchase agreement official, therefore the seller must remove all property listings and terminate all other offers.
This reservation contract is not mandatory and is usually made when there is an intermediary between the buyer and seller.
Deposit Contract or Contrato de Arras
The deposit contract offers a bit more security than the reservation contract but is not mandatory either. In this case, the buyer will have to make a downpayment of 10% of the total price.
Once paid, the seller is obliged to sell the property. If they do not sell it to you, they will have to give you back double the amount you paid (20% of the total price).
However, if you, as a buyer, do not complete the purchase, then you will lose that 10%.
Finding Financing and Preparing for the Notary
Once you have a copy of the notarial deed containing the property’s information (for example, who the property owner is), you can go to the register and request nota simple, a document which states that the property is free of debts and charges (such as mortgages).
After the deposit contract is made and paid, there is usually a 3-month period in which you can get financing from a bank, or just wait. Once that period is over, you will go to the notary to pay the remaining 90%.
The payment conditions will be defined in the deposit contract. In it, the purchase price will be established, the payment method defined (whether it will be fully paid in advance or it will be paid in installments), and the deposit amount stated (for practical purposes, a common down payment).
However, this document, unlike the public deed (as we will see right now), can not be used for registration to the property registry in Spain.
2. The Purchase: Public deed
Once you sit down with the notary, you will proceed to draw up and sign the sales contract.
Here, you will present due diligence of the property. The seller must provide several documents to verify that he or she is the real owner, that there is an actual agreement to sell, that there are no inheritance or tax problems with the property nor debt.
A full check regarding any legal issue that could affect the house or flat that is being sold will be done.
Important Advice: hire an architect and a lawyer
Our advice is to hire an architect to do an architectural report about the flat situation, in order to determine that the property is not damaged.
This part of the process is undoubtedly one of the most important, since a meticulous analysis of the contract will be needed, to ensure that neither party is harmed.
If you discover the property has problems with the city hall for town-planning reasons, after you have already purchased it, you will be faced many problems.
That’s why our specialized property lawyers in Spain will accompany you during the whole process of buying and/or selling the property. We’ll make sure that there is no clause that could lead to your detriment.
We’ve also developed a checklist that will guide you during the procedure. The checklist contains all the issues you should consider before buying a property, and you can access it here.
If everything is fine with the apartment and the agreement, you can go ahead and sign the contract, and make the complete payment.
3. The Post-Purchase: Property Registration
After making the purchase, there are 3 remaining steps that you must follow:
- First of all, you must register the property at the Property Registry, identifying yourself as the new owner
- Then, you must fill in the corresponding forms for the payment of: the property transfer tax or the value-added tax, and the stamp duty, to the Autonomous Community in which the property is registered. You have 30 days to pay
- Finally, you must transfer the ownership of public utilities; such as gas, water, and electricity
How long does it take to buy a house in Spain?
Having an idea of the entire process’s duration time is important in planning everything perfectly.
As we have seen, the process is made up of three phases: finding a property to purchasing, purchasing the property, then registering the property.
Finding the property for you usually lasts from about 3 months to up to a year, depending on your standards and how particular you are.
Remember to take into account several aspects, such as the city or town, the surroundings, and how close you will be to places such as public transport, shopping centers, hospitals, etc.
Once you have located your ideal home, the actual buying and selling process begins. This can last from 2 to 3 months until you finally receive the keys (see the previous section).
Keep in mind that this process will take longer if you decide to apply for a mortgage. This will add a few more weeks, since the bank requires time to verify and prepare the necessary management.
Taxes When Buying or Selling a Property as a Foreigner
Taxes will be present in any legal process. In that sense, not only will you pay taxes when buying a house, but also if you plan to sell it.
Knowing which are the specific taxes beforehand is crucial so you can plan accordingly.
Property Transfer Tax (ITP)
As we have mentioned before, you will need to pay the property transfer tax. This tax is applied to second-hand property, meaning the property has already been registered under someone else’s name. The exact amount would depend on the region, but it usually ranges from 6-10%.
Value-added Tax (IVA)
On the other hand, if we are talking about a new purchase, the value-added tax is 10%. Then you have an additional 1.5% that needs to be paid as a new land registration.
However, if you are under 32, and you declare that the house or flat you are buying will be the place you are going to live in, then that 10% turns into 5%.
Capital Gains Tax When Selling a House
If you are a tax resident selling the property, you will need to pay between 19-24% on capital gains tax depending on the case. That tax percentage will be applied to the benefit obtained from the property. This means, the difference between the selling price and the price you paid when acquiring the property.
And what happens if you rent out the property? As that will be considered a source of income, capital gains tax will be also applied, at the same tax rate.
Can you deduct any expenses? As a non-resident, you will only be allowed to deduct the expenses from the real estate agency, from the lawyer, and from the notary. Nothing else.
On the other hand, the list of things you can deduct is longer in the case of being a resident in Spain (more on how to determine if you are a resident or a non-resident in Spain in our tax post).
Buying a House in Spain with Cash
In the event that you consider paying for the property in cash, you should bear in mind that Law, 7/2012 of October 29 limits the amounts that can be paid in cash when making transactions in Spain.
For anyone who is not a tax resident, the amount is set at €15,000.
So you will have to pay for the house by making an international bank transfer if your money comes from abroad. Likewise, you should be aware that this type of transfer has a high cost due to the commissions set by the entity for the currency exchange.
Getting a Mortgage in Spain
Non-resident home 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 one.
This means that you only need to have a minimum of 20% of the available house price, in addition to approximately 15% extra on the cost of the house to pay taxes, lawyer, notary, property registration, etc.
Also, your debt cannot exceed 30-35% of your income.
You must also bear in mind that 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 said that each bank or entity 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.
Where to Buy Property in Spain
The average price of housing in Spain is about €1,886 per square meter.
Therefore, if you do not want to invest a lot of money and find really good deals, you will have to move away from the big cities (such as Madrid and Barcelona, some of the most touristy, populated and therefore expensive areas).
The cheapest cities in Spain to obtain a home are usually located in inland areas; although the metropolitan areas of the big capitals also offer good market conditions.
On the other hand, if you are looking to invest in homes to generate profits, the best cities in Spain are Madrid, Barcelona, Valencia, Malaga, and Bilbao.
All of them are large provincial capitals that, either because of the job or study offer, or because of their high tourist and leisure interest, concentrate the largest number of housing developments under construction, and because it is also where there is the greatest demand for housing and land available where to build.
Here you have the price per square meter for some Spanish regions:
Buying a House for Spanish Citizenship
As of 2013, the law to support entrepreneurs and their internalization came into force in Spain. This new Law allows foreign citizens who intend to invest (either in companies, talent or real estate) to obtain their visa in Spain in an easier, in a more agile, and faster way.
This visa, known as the golden visa or investor visa, brings the foreigner closer to Spanish nationality. That is because each year in Spain with that residency accounts for the total number of years required to obtain nationality (the general rule establishes that it is 10 years, but for Ibero-Americans the amount is reduced to 2).
This residence visa for those who buy a property is granted as long as they meet the following requirements:
- The acquisition of real estate in Spain is carried out with an investment of a value equal to or greater than € 500.00 for each applicant in a period not exceeding 50 days prior to the submission of the application.
- The visa must be requested in person or through a duly accredited representative.
- The request must be submitted a maximum of 90 days in advance of the planned date of travel.
- The residence permit allows you to reside and work throughout the national territory.
Thus, the validity period of the visa will be:
a) 365 days, if the purchase has already been formalized
b) 6 months if the purchase has not yet been formalized but there is a pre-contract with a guarantee of its fulfillment by means of a deposit or other means formalized in a public deed
Once the visa is obtained, the residency card must be requested. This is something that can be done from the moment the visa is obtained and up to 90 days after its expiration; and with that we can now legally reside in Spain.
Subsequently, in order to renew the residence authorization after 2 years in the country, the only requirement is to have traveled to Spain at least once in the period authorized to reside and maintain at least the investment that gave rise to the residence visa.
Accreditation of the sale
At the time of processing the golden visa, the authorities will require us to prove the sale of the property.
In this case there are two possibilities:
If the Purchase Has Been Formalized
You must provide:
- Certification with continuous information of domain and charges from the Property Registry that corresponds to the property or properties.
- If at the time of the visa application the acquisition of the real estate is in the process of registration in the Property Registry, the presentation of the aforementioned certification in which the entry for the presentation of the acquisition document is valid and will be sufficient, accompanied by supporting documentation of the payment of the corresponding taxes.
- The applicant must prove that they have an investment in real estate of 500,000 euros free of any charge
If the Purchase Has Not Yet Been Formalized
In this case, the pre-guarantee contract must be presented together with a certificate from a financial institution established in Spain in which it is verified that the applicant has an unavailable bank deposit with the amount necessary for the acquisition, complying with the committed contract, of the property or properties indicated therein, including charges and taxes.
What are the pitfalls of buying a house in Spain?
Generally, if you follow the steps and procedures we have explained in the article, and have the legal support and guidance that you might need, you’re purchase should be successful. However, one common pitfall of buying a house in Spain could be not planning out your timeline properly.
Spanish bureaucracy does not have the best reputation when it comes to efficiency and speed, so you need to consider that things might not be completed as quickly as you’d like.
Another common pitfall is not doing a thorough review of the property and the contract. This is why we have previously recommended that you hire an architect to check the place, and a lawyer to review the agreement. This will ensure your safety throughout the purchasing process, and even after.
Lastly, not having enough funds may also be a pitfall. This may be common sense, but make sure you have enough money to complete the purchase. Keep in mind that you will not only be paying for the property, but also additional taxes, legal fees, and more.
Rely on a Real Estate Lawyer for an Easy and Safe Process
So, we have just covered the 3 main legal steps in property buying in Spain as a foreigner. The purchasing process can be long and complex, mostly because there is an urgent need to take into account many aspects related to the operation (many times small nuances), especially if we do not want to be harmed.
If you still have doubts, we have gathered the 9 most frequently asked questions from our clients when trying to buy a new house in Spain. Would you like to go over them? You can have access to the real estate questions and answers here.
All the same, you may want to get the help of a specialized real estate lawyer. Getting the right legal advice as an expat is key. He will draft all the contracts and look after you during the whole transaction, making sure you are fully protected and you avoid losing money.
At our office, we have dealt with many foreigners who wanted to purchase a property. Now we want to help YOU out.