Spain’s property market readjusted itself following the 2008 crisis making it once again an attractive destination for foreign property buyers. It can take up to three months to formalise a real estate purchase and buyers should account for 12–15% additional costs and taxes that vary depending on the region where their property is located. If a mortgage is taken out, the additional expenses increase by circa 2–3% of the purchase price.

How it works in Spain:

1. Find a property. A local real estate agency offers properties that match your preferences as a buyer. The city, district and your budget are the main things to take into account. Once you have found one or more options that interest you, the agency will arrange viewings. Don’t hesitate to ask your real estate agent any questions about the property, payment procedures or potential discounts.

We recommend finding out about the age of the property, materials used in its construction and paying particular attention to the quality of the finishing design. While you search, it’s also a good idea to start Step 2 and 3 of the purchasing process.

2. Open a bank account. You will need your passport, proof of residence, an income statement for the last three months and a tax statement. You also should be ready to provide the bank with documents showing legitimate origin of money due to strict rules concerning money laundering. Self-employed people will need a statement showing that they own a company, or have a share in one, and where this company is registered with a description of business they do (e.g. link to company website).

If you want to take out a mortgage in Spain, you will need to open an account with the same bank.

3. Get your tax identification number. As a foreign citizen, you will be assigned a‘Número de Identificación de Extranjero’ (also known as NIE) by the tax authorities. You need this to open a bank account, purchase property or vehicles, make financial transactions and/or start a business. The NIE does not entitle the holder to cross the national border and reside in Spain. To get your number, you have to fill out an EX-15 application in Spanish specifying your purpose and send in your original passport as well as a copy of its pages with personal data to Spain's Consulate General in your country of residence.

4. Sign the preliminary sales contract and pay the deposit. Once you have chosen your property, you will need to sign the preliminary sales contract (contrato privado de compraventa) which sets out the price and the payment procedure. Your deposit is non-refundable and valued at approximately 10% of the property price. If you change your mind and decide not to buy the property, the down payment cannot be used to buy a different property. However, if the seller cancels the transaction, they must pay twice the amount of the deposit to you. The final sales transaction is then scheduled with the help of your agent who will prepare the final sales contract. Now that your deposit has been made, you will need to settle the final sum within two months.

5. Apply for a mortgage (if applicable). It can take up to three weeks to get an answer once your mortgage application has been submitted.

6. Sign the final sales contract. The contract is signed before a notary and both you and the seller will receive certified copies of the property deed. At this stage, you will also make the final payment. Expect to receive the original sales contract (escritura pública) from the notary within three months. In Spain, the real estate agent’s commission varies from 3% to 5% of the purchase price and is always paid by the seller.

7. Register your property. In order to validate your investment, you need to record the transaction with the Spanish Property Registry (registro de propriedad). It can take up to three months to get proof of registration (nota simple informativa).

Taxes and charges

Newly built property is subject to 10% VAT (Impuesto sobre el Valor Añadido, IVA) and 1% stamp duty (Actos Jurídicos Documentados, AJD) on average, depending on the region. However, buyers in the Canary Islands will be charged the Canary Islands General Indirect Tax (Impuesto General Indirecto Canario, IGIC) at 4.5% instead of VAT. Land and commercial property acquisitions in Spain are subject to 21% VAT.

ITP rates in Spain's autonomous regions, %

Álava
(Basque Country)
6.0
Andalusia 8.0–10.0
Aragon 7.0
Asturias 8.0–10.0
Balearic
Islands
8.0–10.0
Biscay
(Basque Country)
6.0
Canary
Islands
6.5
Cantabria 8.0 or 10.0
Castile and
León
7.0
Castilla-
La Mancha
8.0
Catalonia 10.0
Extremadura 8.0, 10.0 or 11.0
Galicia 7.0
Gipuzkoa
(Basque Country)
7.0
La Rioja 7.0
Madrid 6.0
Murcia 7.0
Navarre 6.0
Valencia 10.0

The notary fee and property registration charge are valued at approximately 0.2–2.0% of the purchase price, while more expensive properties actually incur fewer expenses. For instance, a house worth €160,000 is subject to notary fees in the amount of 1.75%, while a transaction worth €1M will only be charged 0.2%.

Existing property is subject to property transfer tax (Impuesto sobre Transmisiones Patrimoniales, ITP). The rates depend on the location of your purchase: each autonomous region has its own ITP, except the Basque Country , which has one for each of its three provinces.

 
 
Free advice on real estate in Spain
Marina Filichkina
Head of Sales
+44 20 3608 1267
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