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Important information

Buying a home in Spain as a foreigner involves procedures, taxes and costs worth knowing before you take the first step. This guide sets out the essentials. The figures are indicative, vary by autonomous community and by the circumstances of each purchase, and may have changed since this was written: before you decide, confirm them with a lawyer, a gestor or the relevant authority.

Buying a property: step by step

The process depends on whether you buy on the resale market or directly from a developer (new build). In both cases it is important to use professionals such as lawyers and estate agents, so that the transaction is carried out safely and in line with current legislation.

Resale property

  1. Choosing the property. Finding a suitable home, negotiating the price and agreeing the terms of the sale.
  2. NIE. Applying for your Foreigner Identification Number (NIE), which you need in order to buy.
  3. Bank account. Opening an account with a Spanish bank, needed to make payments and, later, to pay your bills.
  4. Reservation or preliminary contract (optional). A preliminary contract may be signed setting out the terms of the sale, usually with a deposit of around €3,000 to €6,000. It also sets the date of the deed, normally within one to two months, which is enough time to complete the formalities.
  5. Legal checks. A lawyer checks title to the property and confirms there are no charges or debts. Fees depend on the price of the property and typically start from around €1,600.
  6. Deed before a notary. Once the legal checks are clear, the deed of sale is signed and the balance of the price is paid into the agreed account. At that point you become the owner. Notary fees are roughly 0.20% to 0.50% of the property's value.
  7. Transfer tax (ITP). The buyer pays this tax, usually 10% of the value, although it varies by autonomous community.
  8. Registration. The property is registered in your name at the Land Registry.

New-build property

  1. Reservation. Choosing a property and reserving it with a usually small deposit.
  2. Reservation contract. Signing the document that sets out the terms of the reservation and the payment schedule; the deposit is typically between €3,000 and €6,000.
  3. Legal checks. Carried out before the purchase contract with the developer is signed.
  4. Contract with the developer. Once the conditions of the reservation have been met, the purchase contract is signed before a notary, and the next payment is made.
  5. Stage payments. Payments are normally made in stages as construction progresses.
  6. VAT. VAT is payable on newly built properties.
  7. Deed, handover and registration. When the building is finished, you take delivery from the developer and register the property in your name at the Land Registry.

Taxes and requirements for foreign buyers

Foreigners, whether resident or not, can buy property in Spain provided they meet certain legal requirements. Spain is a very attractive country for investing in rental property, and most foreign investment is concentrated in coastal areas, university towns and large cities. Popular destinations include the Valencian Community, the Canary Islands, the Balearic Islands, Andalusia, Catalonia and the Community of Madrid.

Buyers' profiles vary with their strategy: some buy to let long term, some as a holiday home or for their own enjoyment, and a smaller group want to live in Spain. If you are considering holiday, seasonal or long-term lets, take advice on your tax obligations first.

Costs of buying

On top of the price, set aside roughly 12% of the agreed purchase price to cover taxes and costs (notary, land registry, administrative agent and lawyer), or around 15% if you take out a mortgage with a Spanish bank.

What you need to buy

  • If you are tax resident in Spain: a resident NIE is enough (or a DNI/NIF if you are a Spanish national). If you need a mortgage, it helps to have an account with a Spanish bank.
  • If you are not tax resident in Spain: you need a non-resident NIE and, if you want a mortgage, you will have to apply to a Spanish bank on the terms it offers, which are always negotiable. Mortgages for non-residents tend to be less favourable: they may require a deposit of up to 30% and carry higher interest rates than standard ones.

Usual mortgage paperwork (non-residents)

  • Photocopy of your NIE, DNI or passport.
  • Certificate of non-residence.
  • Copy of your employment contract.
  • Copy of your latest payslip from your country of residence.
  • Bank statements for the past year from the account your salary is paid into.
  • Certificate of tax residence.
  • Your latest tax return.
  • Proof of the last three payments on any outstanding debts.
  • The purchase contract for the property (or the reservation contract if there is not yet a purchase contract).
  • Depending on the case and the language, the bank may also ask for translations of your documents.

Taxes when buying

The tax you pay depends on the autonomous community where the property is located, on whether it is new or resale, and on the owner's tax residence.

New homes (primary market)

  • VAT: 10% on newly built homes and 4% on officially protected housing. This includes garages and annexes of up to two spaces.
  • Stamp duty (AJD): between 0.5% and 1.5%, depending on the autonomous community. It is paid by the bank if there is a mortgage, or by the buyer if paying in cash.

Resale homes (secondary market)

  • Transfer tax (ITP): between 6% and 13%, depending on the autonomous community.
  • Stamp duty (AJD): between 0.5% and 1.5%, paid on the same basis as for new homes.

Taxes while you own the property

  • Non-resident income tax (IRNR): filed on Form 210. If you are resident in the EU, Norway or Iceland, you can deduct only the expenses that IRNR allows, and the rate is 19%. If you are resident anywhere else, no expenses can be deducted and the rate is 24%. Also check double taxation rules in your country of residence.
  • IBI: an annual tax paid by every property owner (home, garage or commercial unit). More on this below.
  • Wealth tax: this is uncommon and aimed at large fortunes; the rules exclude taxpayers whose assets are below €700,000.

Taxes can also vary depending on the type of rental you choose in order to make the property pay.

Where to start as a foreign buyer

The first two steps are: 1) get an NIE, and 2) work out the total budget you are going to invest. Then find a property that fits what you are looking for and begin the buying formalities, which are not always straightforward.

At Sun Team Property we take care of everything: we find your investment, help you arrange a mortgage with a Spanish bank, put you in touch with lawyers and notaries, and stay with you until you have the keys. If you want to buy in Spain without handling the paperwork yourself, get in touch or browse the properties for sale.

IBI: frequently asked questions

What is IBI?

The Impuesto sobre Bienes Inmuebles (IBI) is a compulsory annual municipal tax paid by property owners.

Who has to pay it?

The individual or company that owns the property on 1 January. In some cases also someone with a right to use a property they do not own, such as an heir who has the use of an inherited property.

If I buy or sell during the year, who pays?

In principle, whoever owned the property on 1 January of that year. The new owner pays from the following year. In practice, it is common to agree a proportional split in the sale contract.

If the previous owner did not pay IBI, can it affect me?

Yes, under certain conditions. The authorities will first try to recover the debt from the former owner and, failing that, may claim the unpaid amount from whoever now owns the property. You would owe only the outstanding tax, with no penalty. To avoid surprises, check the property's history before buying; at Sun Team Property we do this together with a lawyer.

Who pays IBI on a rented property?

Normally the landlord, unless the lease says otherwise. In long-term lets it can be agreed that the tenant bears part of the cost.

How do I receive the IBI bill?

By post, at an address in Spain. You can also set up a direct debit from your bank account, in which case it is collected automatically.

How is it calculated?

Mainly from two factors: the property's cadastral value (considerably lower than its market value) and the municipality's tax rate, which can range from 0.5% to 2%. The cadastral value depends on the age, condition and location of the building.

Where can I check my property's cadastral value?

On the Sede Electrónica del Catastro, the official website of the Spanish Cadastre.

When is it due?

The payment period is set by each town hall. According to the information we had, it is usually September, with a final deadline in early October. Confirm this with your town hall.

What happens if I pay late?

Late payment carries a surcharge of between 5% and 20% of the amount due.

Where can I pay?

Generally in three ways: in person at citizen service offices by appointment, by phone through the town hall, or through the town hall's online portal.