Buying real estate in Spain as a foreigner?

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Buying property in Spain as a foreigner: a full guide

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buying property foreigner Spain

Everything you need to know is included in our Spain Property Pack

Spain is an attractive destination for foreign investors looking to buy real estate. From its stunning landscapes to its vibrant culture and welcoming locals, it's no surprise why so many people choose to invest in Spanish property.

However, buying property in a foreign country can be complicated, especially with all the laws and regulations that come with it.

Don't worry! This guide is here to make it easy for foreign buyers to understand how the property market works in Spain. We'll cover everything you need to know in a straightforward and simple manner.

Also, for a more in-depth analysis, you can check our property pack for Spain.

Can you purchase and own a property in Spain as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in Spain for US citizens.

Foreigners can indeed buy real estate in Spain, and the process is quite straightforward, but there are some important aspects to consider.

Firstly, foreigners, regardless of their nationality, are allowed to buy property in Spain. This includes both EU and non-EU citizens.

There's no legal distinction in property ownership rights between a foreigner and a Spanish citizen, meaning as a foreigner, you can own land, apartments, houses, and commercial properties just like a local would.

However, there are certain nuances depending on your country of origin. For EU citizens, buying property in Spain is relatively uncomplicated. If you're from outside the EU, it's still possible to buy property, but you might face additional administrative steps.

For example, non-EU buyers often need to obtain a Foreigner Identification Number (NIE), which is essential for any financial transaction in Spain, including property purchase.

Residency in Spain is not a requirement for buying property. You can buy a property as a non-resident, which makes Spain an attractive destination for investors or those seeking a holiday home.

In terms of visas and permits, there's no specific visa required just to buy property. However, if you're planning to stay in Spain longer term, you'll need to consider the appropriate visa.

Notably, Spain offers a "Golden Visa" program, which is a residency visa granted to non-EU citizens who make a significant investment in Spain, such as purchasing real estate worth at least €500,000. This visa can eventually lead to permanent residency and citizenship.

There's no minimum investment requirement for property purchase in general, except in the context of the Golden Visa program. You can buy property at any price point that suits your budget.

It's also important to be aware of the additional costs involved in buying property in Spain, which include taxes, notary fees, and legal fees. These can add a significant amount to the purchase price.

Can you become a resident in Spain by purchasing and owning a property?

There is indeed a way to become a resident in Spain through property investment, commonly known as the "Golden Visa" program.

This program is designed to attract non-EU investors by offering them residency in return for a significant investment in Spanish real estate.

The minimal investment required to qualify for the Golden Visa in Spain is €500,000. This means you need to purchase real estate worth at least half a million euros. It's important to note that this investment must be free of any liens or encumbrances.

So, if you're buying a property worth €600,000 but it has a mortgage of €200,000, it won't qualify, as the net investment is only €400,000.

The process of obtaining residency through this scheme typically involves several key steps. After making the qualifying investment, you need to apply for the Golden Visa.

This application will require proof of the investment, such as property deeds, as well as other documentation like a valid passport, a clean criminal record, and proof of health insurance in Spain.

Once granted, the Golden Visa offers you and your immediate family members – such as a spouse and dependent children – residency in Spain. Initially, this residency is temporary, usually granted for two years.

However, it can be renewed as long as you maintain the investment. After five years of continuous residency, you can apply for long-term residency, and after ten years, you may be eligible to apply for Spanish citizenship.

It's important to remember that to transition to permanent residency and ultimately citizenship, there are additional requirements, including proving your continuous stay in Spain and demonstrating integration into Spanish society, like language proficiency.

The Golden Visa scheme has been quite popular. Since its inception in 2013, thousands of investors have taken advantage of this program. It's particularly attractive because it doesn't require you to live in Spain to renew the visa, unlike other residency programs.

This flexibility makes it an excellent option for those who want to maintain residency in Spain without committing to living there full-time.

Thinking of buying real estate in Spain?

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Market data

You can find fresh and updated data in our pack of documents related to the real estate market in Spain.

If we look at the the GDP per capita indicator, it seems that Spanish people have become -1.1%poorer throughout the past 5 years.

As people's wealth decreases, they are less likely to consider real estate as an investment, which can drive prices down in the future.

If we check the data displayed on Numbeo, we see that residential real estate in Spain offer gross rental yields between 3.4% and 6.1%.

These values for rental yields can be considered as "moderate", which means they fall within a reasonable range and are neither exceptionally high nor exceptionally low.

To know more, you can also read our dedicated article: is it a good time to buy a property in Spain?

The life as an expat

Living as an expat in Spain can be an exciting and rewarding experience. The country is full of vibrant culture, beautiful landscapes, and delicious cuisine. Expats will find that the Spanish people are friendly and welcoming, and there are plenty of activities to take part in. Most expats in Spain live in cities, where there is a lot of opportunity for employment, education, and entertainment. The climate in Spain is generally warm and sunny, with temperatures ranging from the mid-teens in the winter to the low-thirties in the summer.

The cost of living is generally lower than in other European countries, making it a great option for those looking for a more affordable lifestyle. Expats will find that there are plenty of options when it comes to housing, transportation, and entertainment. There are also a variety of activities to take part in, from sightseeing to nightlife.

Expats in Spain can enjoy a wide variety of cultural experiences, from flamenco dancing to bullfighting. There are also many festivals and events throughout the year, celebrating everything from music and literature to food and wine. Spain is also home to some of the world's most famous buildings and monuments, such as the Alhambra in Granada and the Sagrada Familia in Barcelona.

Overall, living as an expat in Spain can be a wonderful and rewarding experience. With its vibrant culture, delicious cuisine, and warm climate, it is a great place to live, work, and explore.

What are the best places to buy real estate in Spain?

This table summarizes some of the best places to buy a property in Spain.

City / Region Population Average Price per sqm (EUR) Strengths
Madrid ≈ 3.3 million 3,000 - 8,000 National capital, cultural attractions, economic opportunities
Barcelona ≈ 1.6 million 4,000 - 10,000 Metropolitan city, vibrant arts scene, Mediterranean lifestyle
Valencia ≈ 800,000 2,000 - 5,000 Coastal city, historic architecture, paella, fiestas
Seville ≈ 690,000 2,000 - 4,500 Andalusian charm, flamenco, Moorish architecture
Málaga ≈ 570,000 2,000 - 4,500 Costa del Sol, beaches, Picasso Museum, vibrant nightlife
Palma de Mallorca ≈ 500,000 3,000 - 6,000 Balearic Island, beaches, Mediterranean climate
Granada ≈ 230,000 1,500 - 3,500 Alhambra, Sierra Nevada, tapas culture

Do you need a lawyer when buying a property in Spain?

When you purchase a property in Spain, a local lawyer can play a crucial role in guiding you through the legal aspects and ensuring a smooth process.

One important document they can assist with is the Escritura de Compraventa, which is the official deed of sale between the buyer and seller, signed before a notary public.

The Spanish lawyer can also help you obtain the Número de Identificación de Extranjero (NIE), which is a tax identification number required for non-residents who wish to buy property in Spain.

Additionally, they can assist with the verification of property titles and registrations, ensuring that there are no legal encumbrances or disputes affecting the property.

They will ensure that all necessary taxes, such as the Impuesto sobre Transmisiones Patrimoniales (ITP) (Property Transfer Tax), are paid correctly and advise you on other fees and costs associated with the purchase.

What are the risks when buying a property in Spain?

We've got an article dedicated to the risks associated with purchasing property in Spain.

1. Urban Planning Regulations

Spain has specific urban planning regulations that vary across different regions and municipalities. You have to understand the zoning restrictions, building codes, and development plans that apply to the property you intend to buy. Ensure compliance with these regulations to avoid legal issues or limitations on future property use.

2. Property Ownership Structures

Spain has various property ownership structures, such as community properties (comunidad de propietarios) and shared facilities. Familiarize yourself with the rights, responsibilities, and potential costs associated with these ownership structures. Understand the community rules, including shared expenses and decision-making processes, which can impact your property ownership experience.

3. Coastal Property Restrictions

If you're considering purchasing a coastal property in Spain, be aware of specific regulations and restrictions. Coastal areas may have conservation or environmental protection laws that limit construction or renovation activities. Research the applicable regulations, permits, and potential limitations before investing in a coastal property.

4. Tourist Rental Regulations

Spain has regulations governing tourist rentals, including platforms like Airbnb. Different regions have their own rules, which may require specific permits, registrations, or compliance with certain criteria. Understand the local regulations regarding short-term rentals to ensure legal compliance and avoid potential penalties or restrictions.

5. Spanish Tax System

Understand the Spanish tax system and its implications for property ownership. This includes property transfer taxes, annual property taxes (Impuesto sobre Bienes Inmuebles), capital gains taxes, and potential taxes on rental income. Consult with tax professionals familiar with Spanish tax laws to ensure compliance and effectively manage your tax obligations.

6. Property Appraisal and Valuation

Obtaining a proper property appraisal and valuation is crucial in Spain. Work with certified appraisers to determine the fair market value of the property and ensure that you're making an informed investment decision. An accurate appraisal will also help with mortgage applications and negotiations.

7. Cultural and Language Differences

Moving to Spain involves adapting to a new culture and potentially a different language if you are not already fluent in Spanish. Familiarize yourself with the local customs, laws, and social norms to facilitate a smoother transition and avoid misunderstandings or potential conflicts in the future.

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Everything you need to know is included in our Spain Property Pack

What are the required documents for a real estate transaction in Spain?

When buying a property in Spain, the following documents are required:

1. Copy of the buyer's passport or ID card

2. Certificate of non-residency (if applicable)

3. Power of attorney (if applicable)

4. Mortgage deed (if applicable)

5. Sales contract with the seller

6. Notary deed

7. Property registration certificate

We review each of these documents and tell you how to use them in our property pack for Spain.

What strategies can you employ for successful negotiation with Spanish people?

When negotiating to purchase a property in Spain, it is important to understand and appreciate Spanish culture, which is rich in history, traditions, and a strong sense of community.

Spanish people highly value personal relationships and trust in business dealings. It is advisable to approach negotiations with a friendly and respectful attitude, taking the time to establish a genuine connection with the local seller.

Honesty and transparency are greatly valued in Spanish culture. It is crucial to be straightforward and clear about your intentions, expectations, and the terms of the sale. Open communication and a direct approach are generally well-received.

Patience is key during negotiations in Spain. The decision-making process may take time, and it is important to show understanding and flexibility. Demonstrating patience and a willingness to engage in meaningful discussions can foster trust and contribute to successful outcomes.

Familiarizing yourself with the local real estate market and legal procedures is essential. Conduct thorough research on property laws, regulations, and any associated costs such as taxes, fees, and maintenance expenses. This knowledge will empower you during negotiations and ensure a smooth transaction.

Lastly, embracing Spanish culture and customs can help create a positive impression. Showing an interest in the country's vibrant culture, cuisine, and traditions can help foster a harmonious relationship with the local seller and enhance your overall experience of buying a property in Spain.

Are bank loans available to foreign nationals in Spain?

Yes, foreigners can obtain property loans in Spain. The Spanish banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.

When seeking a property loan in Spain as a foreigner, you may consider the "Residence by Investment" program, also known as the "Golden Visa," which provides a pathway to residency and offers favorable conditions for real estate investments.

Some banks in Spain that can grant mortgages to foreigners include Banco Santander, BBVA, and CaixaBank.

Additionally, mortgage rates in Spain for a 20-year term range from 0% to 4%, which are considered favorable, providing borrowers with appealing financing opportunities.

What are the taxes related to a property transaction in Spain?

Here is a breakdown of taxes related to a property transaction in Spain.

Tax Description Calculation Who pays
Rental Income Tax Tax on rental income generated from the property A flat tax of 24% of gross rental income Owner
Imputed Property Tax Tax on the cadastral value of the property, if not rented out 1.1% or 2% of the cadastral value of the property Owner
Value Added Tax (VAT) Tax on the sale of new properties 7% to 10% of the property value, depending on the specific type of property and location Buyer
Stamp Duty (AJD) Tax on various legal and administrative documents in case of new properties Varies from 0.5% to 1.5% of the property sale price, depending on the location Buyer
Property Transfer Tax (ITP) Tax on the transfer of pre-owned properties Varies between 7% and 10% of the property sale price, depending on the region in Spain Buyer
Capital Gains Tax Tax on the capital gain from the sale of a property Between 19% and 24% on the difference between the sale and purchase prices Seller
Property Tax (IBI) Annual tax on the property's taxable value paid to the municipality From 0.4% to 1.1% of the property cadastral value, depending on the Spanish region Owner
Wealth Tax Annual tax on the net worth of individuals 0.2% to 3.5% of the property cadastral value Owner

What fees are involved in a property transaction in Spain?

Below is a simple breakdown of fees for a property transaction in Spain.

Fee Description Calculation Who pays
Land Registry Fee Fee for registering the property transfer Between 0.5% and 1% of the property value Buyer
Notary Fee Fee for the notary services Ranges from 0.1% to 0.5% of the property purchase price Buyer
Legal Fee Fee for legal services related to the property transfer 1% to 2% of the property sale price, depending on the complexity of the transaction Buyer
Real Estate Agent Commission Fee charged by real estate agents for their services Range from 2% to 10% of the property purchase price, depending on the type of property Seller

Buying real estate in Spain can be risky

An increasing number of foreign investors are showing interest in Spain. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Spain