How to buy a property in Spain as a foreigner?
Looking to buy a property in Spain? Here you will find all the major steps required to purchase a property in Spain.
Doing market research
Depending on the purchase motive one will have to look into different aspects when researching for the ideal property. This can result difficult as you may not know the reputation behind each neighbourhood or because you do not have the basic tools and understanding used to analyse Spanish real estate.
Properplan is the Swiss knife of real estate. This service helps you find, analyse and organise the purchase of a property. In Properplan you and your dedicated personal agent will determine your property goals in order to plan a route towards purchasing your dream home. You will have access to a real estate portal where you will find the most exclusive properties in the market. If you find a property that is not in our portal we will also analyse it for you and recommend you the best plan of action in order to move forward.
Buying a property in Spain does come with many different costs, it is very important to account for these costs before purchasing the property. A good rule of thumb is to always add an extra 10% of the value of the property in acquisition costs.
With that said, below you will find the different list of taxes and costs related to purchasing a property:
Obtaining a NIE
Technically, any person from any country in the world is allowed to buy a property in Spain. However, in order to do this they need to have a foreigner Identification Number (NIE by the spanish acronym). This number is granted by the Spanish government and can be obtained either in person, through a representative in Spain, or through the Spanish embassies and consulates in the applicant’s country. Nonetheless, to buy a property in Spain you need to apply for a NIE, regardless if you are planning to settle in Spain or not.
Paying Taxes
It does not matter if you are a Spanish resident or foreign non-resident, everyone has to pay taxes when buying a property in Spain. These taxes might differ depending on the type of property.
The main taxes are:
- IVA (VAT): for newly constructed buildings
- ITP: for second-hand properties
- Appraisal costs: specially if a mortgage is required
- Public deeds: this cost will depend on the complexity of the purchase.
As a rule of thumb these combined costs normally account for an additional 10% of the value of the purchase price.
You can find more information about the costs and taxes of buying a property in Spain here.
Opening a Spanish bank account
It is not mandatory, but very recommended, that you open a Spanish bank account before buying the property. There are a number of reasons such as:
- Proof of funds: Transferring the necessary amount to a Spanish account will make it much easier to show Spanish authorities that you have the necessary funds for the purchase.
- Taxes: Using a Spanish bank account to pay taxes will become a much simpler procedure.
- Mortgage: Owning a Spanish bank account will allow you to access a higher number of lenders, since not all work with foreign accounts.
Other costs and bills: Utility bills, insurance costs and other operating costs are much easier to pay through a domestic bank account.
Putting an offer on the property
Once an offer is accepted the usual next step is to formalise the offer. This is done by signing a private purchase contract agreement (Contrato de Arras).
This contract guarantees that you will purchase the property for the established amount at an established date in the future. Furthermore, the buyer, as a sign of commitment, will normally deposit 10% of the purchase price to the seller.
However, if at any point one of the parties pulls out of the deal, they will be penalised and will be obliged to pay the other person a fee equal to the amount deposited. For example, in the case that the seller decides to not sell the property, they will have to return to the buyer the deposit and an extra fee equal to that deposit.
This period between the purchase agreement and the actual sale is when all of the due diligence is done.
Due diligence
This step is normally carried by the solicitor, they are in charge to gather all the information about the property, such as: who are the owners; what areas of the building are registered towards the property; any outstanding debts linked to the property; any outstanding community charges that should be paid by the buyer.
If you are not sure about a property and would like to access some of this information yourself before putting an offer down, you can access the simple note document (Nota Simple). This document gives you all the information about who are the registered owners of the property as well as the outstanding debts the property might have (e.g. a mortgage).
During the due diligence period the solicitor will be drawing up the purchase contracts and making sure that the seller is paying up all debts and delayed payments that are entitled to them.
Closing the purchase
Finally the big day has arrived and you, the seller and the solicitors of both parties will meet to sign the property sale contract.
Once this is done, the solicitor should register the sale in the land registry so that the state is aware of the change of ownership. This is not a compulsory step, but it is highly recommended to do as this ensures that you become the sole owner of the property. Failing to do this could result in
All these steps can result very time consuming and confusing. At Properplan we will help you complete the purchase of a property from the first stage of finding the perfect house until the final closing day where the property has been registered.
If you are interested in buying a property in Spain you can contact us here and schedule a free buying consultation with one of our agents.
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