How to buy property in spain

Buying a Spanish Property – How long does it take to complete?

One of the first things my clients want to know when they’re buying a property in Spain is how long it will take before they become owners. There are no law regulating the time between signing a private contract and completing at the notary’s office. It all depends on how complex the purchase is.

The private contract – signed by both parties and including a deposit paid by the buyer – always states a time limit for completion. This date is agreed on by both parties and based on the type of purchase and the buyer’s and seller’s preferences.

In general, timescales are as follows:

3 to 4 weeks: for straightforward purchases, i.e. properties with no debts, all paperwork in order and financing already in place.

4 to 8 weeks: for slightly more complex purchases where, for example, an architect’s certificate is required or the buyer needs to obtain a mortgage. Spanish properties purchased from banks tend to fall into this category too.

Over 8 weeks: for those purchases where there are problems or time-consuming bureaucratic processes – for example, the property isn’t properly registered or the property forms part of inheritance or divorce proceedings.

In my experience, completion typically takes place between 4 to 6 weeks after the private contract is signed, but the buyer and seller can of course agree longer timelines if necessary.

If you’re thinking of buying a property in Spain, contact us to find out how Andalusian Lawyers can help you. And download our free guide to Buying Spanish Property.

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.

How to buy property in spain

If you own property in Spain it makes sense for you to have a Spanish will. Having a Spanish will in place will greatly ease the administration of your estate upon your death, a job that the beneficiaries, perhaps your loved ones, will have to deal with. By making a Spanish will in relation to your Spanish assets, as opposed to any English or other will governing the succession of everything that you own, you will remove any cross-border uncertainty and unnecessary delays.

2) Don’t forget your IBI

IBI is a local charge in Spain that is similar to council tax in the UK. The letters I.B.I. stand for Impuesto sobre Bienes Inmuebles, literally an immovable property tax, or real estate tax. Whereas the tax is payable by the person who owns the property on 1st January each year, the invoice is usually issued during June, July or August.

If you do not make payment of your IBI then the town hall may charge penalties and register a charge against your property in respect of the debt you owe. Set up a direct debit from your Spanish bank account in order to avoid missing payments.

3) Community fees

If you own a property in Spain that is part of a development, for example, an apartment, then you will be obliged to pay community fees, which are service charges by another name. Community fees are paid by all property owners within the development towards the maintenance of the communal areas such as swimming pools and gardens.

Communities with a large number of debtors or late payers have the right to increase the community fees for the members who do pay regularly. You should ensure that your adviser considers the minutes of the most recent annual general meeting of the community in order to get a clear picture of the community’s finances, as well as a good idea of any other issues that are affecting the development.

Download our free guide to buying a property in Spain below

If you do not pay your community fees it is possible that the community could take legal action to recover the debt, which could result in a charge being registered against your Spanish property. On a day-to-day level, you may be refused access to communal facilities. As with other regular payments, set up a direct debit to avoid falling behind.

4) Don’t ignore non-resident’s income tax

As the owner of a property in Spain, but a non-resident of Spain, you will be liable to pay non-resident’s income tax. If you let the property on a holiday let basis, then you will be required to submit quarterly returns declaring the income received and the expenses you have incurred in each quarter. You can expect to pay a quarterly tax on the chargeable amount, which will be the net income earned during each quarter. If you let your property on a long term basis, so for a year or more for example, then tax on the net income will be payable annually, not quarterly.

If you do not let your property at all, or if you do not let it during one or more quarters, you will need to submit an annual return and pay an annual tax that is calculated on the basis of the rateable value of the property. That tax payable will usually be relatively low, usually based on a chargeable amount equalling 1.1 percent of the “valor catastral” (similar to a rateable value).

Whether or not you let your property, tax is payable on the chargeable amount at the rate of 19% for that resident in the EU and at 24% for all others.

5) Beware of rental rules

If you intend to let your property in Spain on the open market, as well as the tax implications, you need to be aware of the local rules. The rules on holiday lets vary in Spain, depending upon the location of the property. In certain regions, you will be required to obtain a licence to be able to let your property legally. In other areas, you will be required to comply with certain administrative rules. In any event, the consequences for non-compliance with the rules could be a hefty fine, so the key if you intend to let your property will be to make sure that you are aware of the rules before you purchase it.

Technically, investing in Spain does not give you citizenship right away, you have to sacrifice around 10 years to get your hands on your new citizenship.

What is Spanish Golden Visa?

Spain Golden Visa is neither a visa nor a citizenship program. The program offers residency permits to those that invest in Spain . It is not designed as a program for outsiders to get citizenship . Basically put, the foreign investors already interested in buying property in a different country than theirs can get a real estate in Spain and expect to get some benefits in return. Perhaps the most important benefit of this program is the allowance of a residence permit to the investor and his/her immediate family. One should invest in Spain with a minimum amount of 500.000 Euros to apply to the Golden Visa though, so it is natural to expect some returns on your investment other than its economic benefits.

From Investor to Permanent Resident

Permanent residency can be identified as the next best thing to having actual citizenship from a country. One does not necessarily identify as a citizen of that country yet, but technically they do live as a citizen of the country in most regards. This status can be achieved via a Spanish Golden Visa program if the investor sticks around his/her investment for five years. You need to live at least 6 months every year in Spain for those five years to be eligible for this upgrade. This means that your investment in Spain is now well on its way to get citizenship for you too.

From Permanent Resident to Spanish Citizen

People that chose to invest in Spain using a Golden Visa scheme can, if they prefer to, apply for Spanish citizenship after 10 years of the initialization of their investment. At this point as long as you can prove that you were a citizen of the country for 10 years you will be reviewed for citizenship and a new passport. Moreover, ever since you had your permanent residency, and especially when you get your citizenship, the investor can actually dispose of their initial Golden Visa investment in Spain to perhaps look for new opportunities elsewhere.

Technically, investing in Spain does not give you citizenship right away, you have to sacrifice around 10 years to get your hands on your new citizenship.

What is Spanish Golden Visa?

Spain Golden Visa is neither a visa nor a citizenship program. The program offers residency permits to those that invest in Spain . It is not designed as a program for outsiders to get citizenship . Basically put, the foreign investors already interested in buying property in a different country than theirs can get a real estate in Spain and expect to get some benefits in return. Perhaps the most important benefit of this program is the allowance of a residence permit to the investor and his/her immediate family. One should invest in Spain with a minimum amount of 500.000 Euros to apply to the Golden Visa though, so it is natural to expect some returns on your investment other than its economic benefits.

From Investor to Permanent Resident

Permanent residency can be identified as the next best thing to having actual citizenship from a country. One does not necessarily identify as a citizen of that country yet, but technically they do live as a citizen of the country in most regards. This status can be achieved via a Spanish Golden Visa program if the investor sticks around his/her investment for five years. You need to live at least 6 months every year in Spain for those five years to be eligible for this upgrade. This means that your investment in Spain is now well on its way to get citizenship for you too.

From Permanent Resident to Spanish Citizen

People that chose to invest in Spain using a Golden Visa scheme can, if they prefer to, apply for Spanish citizenship after 10 years of the initialization of their investment. At this point as long as you can prove that you were a citizen of the country for 10 years you will be reviewed for citizenship and a new passport. Moreover, ever since you had your permanent residency, and especially when you get your citizenship, the investor can actually dispose of their initial Golden Visa investment in Spain to perhaps look for new opportunities elsewhere.

How to buy property in spain

Making an offer on property in Spain can be an exciting yet daunting experience. There is a fine line between securing your ideal property at the best price and losing it forever.

The decision to invest a large amount of money is no easy task. And when you make that investment abroad, you move further out of your comfort zone. Finding many variables and unknowns that will affect your final decision. It is advisable to do independent research, take your time, be cautious and, essentially, do not be pushed into purchasing what an agent wants you to buy.

This may sound like a harsh warning but we are speaking from first-hand experience.

In our article 7 Tips for Negotiating the best price when buying property in Spain we talked about:

  1. Do your market research
  2. Understand “Why” the property is for sale
  3. Play it cool … but not cold!
  4. Present yourself as a strong and attractive purchaser
  5. Use a Currency Transfer Company to have your funds in place
  6. Your starting offer price is the key to a successful negotiation process
  7. Ask the question “Is the price negotiable?”

If you haven’t already read this article (CLICK HERE) have a read and then come back to me here.

How to buy property in spain

Points 2 and 6 mentioned above are essential for knowing how low you can go when making an offer on property in Spain. As we mentioned, you are rarely ever able to go lower than your starting offer price and, if the answer to the question “Why” is one of the situations we are about to discuss, you may well feel a tingle of excitement.

So, let us begin…

If you are making an offer on property in Spain and the reason for the sale is one of the following, and you have followed our 7 Tips for Negotiating the best price when buying property in Spain, you will be in a strong position to secure a property at a “very interesting” price.

The four “Why” reasons for sale we are talking about are:

  • Death
  • Divorce
  • Sickness
  • Grandchildren

Let us explain …

When the reason for sale is “Death”.

Without wanting to sound morbid nor feel you are benefiting from somebody else’s misfortune, a death in the family can result in an urgency to sell a property in Spain. As we discussed in point 4 of the previous article, “presenting yourself as a strong and attractive purchaser” in this situation will give you an advantage and open the door for a lower offer being placed on the table, thanks to your ability for a swift transaction and early completion of sale.

Remember, no matter how urgent the sale appears, this is no time to cut back on legalities or checks that your independent lawyer needs to carry out. Once you have secured the property, lodged the 10%, take all the time you need for your lawyer to do his job.

When the reason for sale is “Divorce”.

This can be a tricky situation at times. It is purely subject to the desires of each estranged partner. It is not uncommon for one party to want an urgent sale at whatever price yet the other party is hanging on for the best price. The insider knowledge of a reputable agent is key to a successful negotiation process.

When the reason for sale is “Sickness”.

Similar to a death situation, sickness in the family requires a sympathetic yet pragmatic approach. Some vendors may make you feel like you are taking advantage of their situation when offering below the asking price and be reluctant to sell to you. Insulting a vendor by making an unacceptably low offer, particularly when they are in a sensitive situation, is an easy way to lose the property of your dreams. As your property finder, we are able to build a relationship with both the real estate agent and vendor and aid you with the negotiations in this kind of situation. Having a third person, your property finder, assist in this situation can help separate decisions made by your head or your heart.

When the reason for sale is “Grandchildren”.

We are all at different stages in our lives and our situations and goals are continually changing. The arrival of grandchildren often results in couples, who have often lived in Spain for many years, experiencing a burning desire to return to their home country to be a bigger part of their grandchildren’s lives. Time becomes of the essence and an urgent sale is required.

As in the “death” situation, “presenting yourself as a strong and attractive purchaser” in this situation will give you an advantage and open the door for a lower offer being placed on the table, thanks to your ability for a swift transaction and early completion of sale.

The Next Step .

Get in touch via the enquiry form below. You can see what each package includes on our Property Finder Malaga page. Or just tick ‘I am uncertain’ below and we’ll arrange a Skype consultation to talk through the options.

How to buy property in spain

If you are thinking of securing your own slice of paradise in Spain, you’re not alone. Post-Brexit and COVID-19 have many people thinking more about lifestyle, and the desire to live somewhere with more space, both indoor and outside, should another pandemic occur in their lifetime. Europe is the obvious choice too, as it’s just a quick plane trip to get back home if required.

Did you know Spain is home to 360,000 British? For ex-pats, it’s hard to give up their new lifestyle, and for those wishing to leave the UK for a more affordable lifestyle and better weather, Spain is an attractive option for relocation.

In this article, we look at why Spain is still top of mind when it comes to a long term move and will likely include purchasing a home in of the best places to buy property in Spain.

Let’s start with what’s changed since Brexit and the pandemic.

Post-Brexit & COVID-19

We do live in a different time now since Brexit and COVID-19. However, there really is nothing to be gained from pining for Spain as it was pre-COVID. Focus on what you can do if you want to buy a property and move there.

Less Freedom

Start with understanding the rules that apply to you. If you’re in the EU, the rules are the same as before the pandemic. If you’re British, you’ve no longer got the same freedom as pre-Brexit. You can stay for 90 days within a 180 day period without a permit. To stay longer, you need residency status, which is income tested.

The good news is buying a property in Spain is the same process; however, your residency status is now that of a non-EU resident.

Minimum Income Requirement

Pre-Brexit UK residents had the freedom of travel in Spain. Post-Brexit, to live in Spain permanently, you need to apply for residency status.

You will be income tested insofar as you will need to prove you have a regular income of £2000 or more a month. How you earn that income is up to you. It could be dividends, wages, or interest from investments, and so forth.

You may be self-employed or have the flexibility of remote working where you are an employee, but you can reside anywhere in the world as your work is done online. If you are moving to Spain with your family, you will need to prove you have an extra £500 per person per month.

While sustaining the minimum income may seem daunting, it’s really a safeguard for you. A notable change is ex-pat retirees living in Spanish. As a pensioner, pre-Brexit living in Spain was doable – however, it’s not so attractive now with many ex-pats in this demographic moving back to the UK.

Why? The UK pension is just £778.25 a month which is far short of the new minimum income requirement to stay in Spain as a resident.

Trading Places and Faces

However, while older folk are electing to return home to live out the rest of their lives, Spain and its property is attracting high interest from younger Europeans and non-Europeans.

Property prices are a lot lower than UK homes, and the cost of living is also less. Getting onto the property ladder doesn’t have to be achieved by owning a home in the country you’re located in. 🙂

Property investors are keen to secure buy-to-lets as they’re still an attractive investment as long term rentals or short term lets via accommodation portals, e.g.Airbnb.

Beware, British residents buying rental property in Spain will pay more rental income tax. Pre-Brexit, the tax rate was 19%, now it’s 24%. However, the sales price is lower, and Spain is an attractive holiday destination.

Summing Up

Look for the right signals to get into the Spanish property market. Since Brexit and the pandemic for ex-pats, it’s been a state of ‘trading places’.

Older folk departing and younger generations arriving to start their new journey where the property is more affordable, the weather is better and if there is another return to lockdown, where else would you rather be than in sunny Spain?

On your very own tropical island – maybe that’s your next goal.

Your finances are the key consideration in most of the big decisions you will make in your life, and this is no different when choosing to move to Spain. It’s so important to make sure you are aware of everything you need to think about in advance. Here’s what keep in mind when financing your property.

From the actual cost of your property, to the ongoing maintenance of it, to the planning of your taxes and pensions, there is so much you need to think about when it comes to your finances and a move to Spain – and a number of different financial pitfalls you need to avoid.

Spain Property Guide can guide you through these considerations from the moment you decide you want to move to Spain, and put you in touch with the right people to deal with the tax issues that can arise. We can also help with your currency exchange to and from Spain.

“If I can pass on one piece of advice, it is to make sure you think very carefully about your finances when you are moving to Spain – right at the beginning. You need to consider what cost you can afford, of course, but you also need to think about the additional costs, taxes and fees that will arise before you finish the purchase. You need to think about your residency status, where you will be paying taxes, and, of course, your pension and how to transfer it over to you in Spain. It sounds like a lot – and it is! – and that’s why I would always recommend speaking to a professional financial advisor to help you tick all the boxes correctly.”