IMPORTANT INFORMATION

– What taxes do foreigners pay when buying property in Spain?

Buying a house as a foreigner or non-resident expatriate is possible in Spain as long as a number of legal requirements are met. In fact, Spain is one of the most profitable countries to invest in rental housing, which undoubtedly attracts investors residing in all countries of the world.

– Tax:

Tax is an important factor when buying a house in Spain. You will need to calculate around 12% (or around 15% if you have a Spanish mortgage) on the agreed purchase price to cover the costs of the notary, the property registry and lawyer’s fees.

Clients considering summer, winter or long-term rentals are advised to consult their tax obligations with a legal representative. According to INE 2021, the majority of foreign investment is located in coastal cities, university towns or in the centres of large Spanish cities such as Barcelona or Madrid. The preferred destinations for foreigners to buy property in Spain are the Valencian Community, the Canary Islands and the Balearic Islands, as well as Andalusia, Catalonia and the Community of Madrid. These choices are not too different from Masteos’ survey of the best neighbourhoods in which to invest in flats in 2023, coincidence?

The profile of the foreign or expatriate buyer varies considerably depending on the buying strategy: some buy a house as a long-term rental investment, others as a holiday rental (e.g. family holidays or for their own pleasure) , although there is also a more residual part that buys with the intention of living and residing in Spain.

– However, what requirements do foreigners who do not live here have to meet in order to buy property in Spain?
– What taxes do non-residents have to pay?
– What are the first steps to investIf you are a non-resident foreigner and want to buy a property in Spain, read on, as this article will interest you!

– What does a foreigner need to buy a house in Spain?

* Buying as a tax resident in Spain.

If you are a resident of Spain, all you need is a resident NIE or NIF (if you have Spanish nationality). To apply for a mortgage, it is best to have an account with a Spanish bank so that you can enjoy the benefits of ordinary loans. If you are a Spanish resident, we recommend you find out more about the taxes you have to pay when buying a house.

* Buying as a non-tax resident in Spain.

Non-tax residents in Spain have a different process for buying a property in Spain and paying taxes. A foreign resident will need to apply for a NIE, either a temporary NIE for non-EU residents or a non-resident NIE for non-EU residents. Also, when applying for a mortgage, you will need to do so with a Spanish bank on the terms they offer you (remember, these are always negotiable).
Usually, mortgages for ‘non-residents or foreigners’ are less favourable, requiring up to 30% asset contribution and with higher interest rates than ordinary ones.

* Documentation to be provided

In terms of documentation, a non-tax resident in Spain must present the following to the bank in order to apply for a loan:

– Photocopy of NIE, DNI or passport
– A certificate stating that you are a non-resident
– A copy of your employment contract
– A copy of your most recent payroll from your country of residence
– Bank statement from the most recent year of the account to which the payroll is credited
– Certificate of tax residence
– Tax return
– Last three bills to pay off outstanding debts
– Contract for the purchase of the house (or deposit agreement if you do not already have a purchase and sale agreement)
– They may also ask us to translate the documentation (depending on the subject and the language)

* What taxes does a foreigner pay when buying a house?

When paying taxes, there are several important factors to consider:

The amount of taxation will depend on the Autonomous Community in which the property is purchased,
It will also vary depending on the condition of the property,
And depending on the tax residence of the owner.

Taxes when buying and selling a house

Taxes for new homes/primary market

‍ VAT*.
10% on new construction dwellings
4% on housing covered by official protection
*VAT includes garages and extensions accommodating up to two spaces

Taxes Documented Acts (AJD)
Varies in each Autonomous Community from 0.5 to 1.5% of sales
This is a tax that is paid by the bank if applying for a mortgage or by the buyer if paying it in cash.

Taxes on second-hand houses/secondary market

‍ Transmission tax (ITP)
Between 6 and 13% of sales depending on each Autonomous Community

Taxes Documented Acts (AJD)
Varies in each Autonomous Community from 0.5 to 1.5% of sales
This is a tax that is paid by the bank if applying for a mortgage or by the buyer if paying it in cash.

Property taxes

Income taxes

If you are resident in the EU, Norway and Iceland
-Deduction only for IRNR deductible expenses, which must be filed on Form 210
-19% tax rate

If you are resident outside the EU, Norway or Iceland (i.e. any other country)
– You cannot deduct any expenses and must submit form 210
-24% tax rate
-Check double taxation in your country of residence
‍
Property taxes (IBI)

IBI is the tax that every investor must pay for owning a property in Spain (house, garage or premises). It is paid annually to the city council and is calculated based on the cadastral value of the house.
(Read more in a separate article)

Property taxes

This is actually a rare tax, mainly intended for large fortunes, as the law states that taxpayers who declare less than €700,000 are excluded from this payment.

It is important to know that taxes can vary depending on the type of rental agreement you choose to make renting a house profitable.

Where do I start when buying a property as a foreigner in Spain?

The basic points if you want to buy a property in Spain as a non-resident foreigner are:
1). get a NIE and
2). Calculate the total budget you need to invest.

Then you need to find a property that suits your needs and budget and, once found, start the bureaucratic procedures involved in buying and selling.

These processes are not always straightforward, which is why, I recommend that you contact me, a person who specialises in the purchase of property in Spain by foreigners and takes care of everything: I look for your investment, help you apply for a mortgage with a Spanish bank, we contact lawyers and notaries and accompany you through the whole process until you have the keys to your property. In short, Son Team Property is the solution to buying property in Spain for non-resident foreigners who do not want to do it themselves.

And you, are you still in doubt about what taxes you will have to pay in Spain if you buy a property as a foreigner?