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FAQ: Acquiring Property in Spain
Investing with Confidence in Spanish Real Estate. Understanding the Key Steps and Legal Implications for a Successful Purchase.
The NIE (NĂșmero de IdentificaciĂłn de Extranjero) is a personal and unique tax identification number, essential for any economic and legal transaction in Spain. It is absolutely necessary for:
- Opening a bank account.
- Purchasing real estate.
- Contracting services (water, electricity, internet).
- Declaring your taxes.
Yes, opening a bank account in Spain is highly recommended and almost essential. It will allow you to:
- Transfer the necessary funds for the purchase.
- Pay taxes and fees related to the acquisition.
- Set up direct debits for utility bills once you own the property (water, electricity, gas, etc.).
- Manage recurring payments such as community fees or IBI (Impuesto sobre Bienes Inmuebles, the Spanish equivalent of Property Tax).
Although not legally mandatory, engaging a solicitor specialised in Spanish property law is very highly recommended, especially for an international investor. The solicitor will protect your interests by:
- Verifying the legal status of the property (title deed, charges, mortgages, urban planning compliance).
- Negotiating the clauses of the arras contract (deposit agreement).
- Representing your interests with the seller, banks, and notary.
- Ensuring compliance with all legal and tax formalities.
The property buying process in Spain generally follows these steps:
- Obtaining the NIE and opening a bank account: Basic administrative formalities for international investors.
- Property Search and Selection: Defining criteria and viewings.
- Offer to Purchase and Negotiation: Agreement on price and conditions.
- Signing the arras contract or deposit agreement: Payment of a deposit, usually 10% of the sale price.
- Due Diligence (Legal and Technical Checks): The solicitor verifies the property's compliance (cadastre, Land Registry, permits, charges).
- Signing the escritura pĂșblica de compraventa: The signing of the final deed of sale before the notary, with key handover and payment of the balance.
- Registration and Tax Payment: The solicitor handles registration with the Land Registry and payment of acquisition taxes.
The arras contract is a private agreement between the seller and buyer, sealing the intention to sell and buy a property at an agreed price. It is very important because it:
- Sets the sale price and conditions.
- Binds both parties (generally with a forfeiture clause).
- Specifies the deposit amount (often 10% of the total price).
Before signing the escritura, a thorough due diligence is paramount. Your solicitor will notably verify:
- The title deed at the Registro de la Propiedad (Land Registry) to ensure the seller is the legal owner and the property is free of encumbrances (mortgages, embargoes).
- The absence of debts with utility providers and the community of owners.
- The property's urban planning compliance (building permits, occupancy licenses).
- The energy performance certificate.
- The absence of cargas (liabilities or encumbrances) or undeclared tenants.
Taxes vary depending on whether the property is new or resale. Here is a summary table of the main acquisition taxes:
The rate of ITP and AJD depends on the Autonomous Community where the property is located.
| Type of Tax | New Property | Resale Property |
|---|---|---|
| IVA (VAT) | 10% of sale price (residential) | Not applicable |
| ITP (Impuesto sobre Transmisiones Patrimoniales â Property Transfer Tax) | Not applicable | Variable (6-11% depending on region and property type) |
| AJD (Actos JurĂdicos Documentados â Stamp Duty) | 0.75% - 1.5% of price (depending on region) | 0.75% - 1.5% of price (if notarised deed is required for registration) |
| PlusvalĂa Municipal | Not applicable to buyer | Theoretically payable by the seller, but often negotiated to be paid by the buyer. |
The rate of ITP and AJD depends on the Autonomous Community where the property is located.
Yes, in addition to taxes, various professional and administrative fees must be budgeted for. These costs generally represent between 2% and 4% of the purchase price, on top of taxes. They include:
- Solicitor's fees (approximately 1% + VAT).
- Notary fees for drafting the escritura pĂșblica.
- Registration fees at the Registro de la Propiedad (Land Registry).
- Administration fees (GestorĂa) for administrative processing and tax payments.
- Mortgage arrangement fees if you take out a loan.
The PlusvalĂa Municipal (officially Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) is a local tax levied by the town hall on the increase in value of the urban land on which the property is built, since its previous acquisition. It is not related to the actual capital gain from the sale, but to the period of ownership and the cadastral value of the land.
Legally, the seller is liable for this tax. However, it is common, especially in negotiations for a resale property, for parties to agree that the buyer will cover part or all of this tax. It is crucial to clarify this point in the arras contract.
Legally, the seller is liable for this tax. However, it is common, especially in negotiations for a resale property, for parties to agree that the buyer will cover part or all of this tax. It is crucial to clarify this point in the arras contract.
Yes, it is entirely possible for an international investor to obtain bank financing in Spain. Spanish banks offer mortgages (hipotecas) to non-residents, generally with specific conditions:
- A larger down payment (often 30% to 40% of the purchase value for non-residents, compared to 20% for residents).
- Potentially slightly different interest rates.
- A rigorous solvency assessment based on income and expenses in the country of origin.
The signing of the escritura pĂșblica de compraventa (public deed of sale) is the final and official step in the acquisition. It takes place before the notary and is a key moment:
- The notary reads the deed aloud and ensures that all parties understand and accept the terms.
- They verify identities, powers of attorney (if a party is represented), and that all legal conditions are met.
- The payment of the balance of the sale price is generally made by certified bank cheque or instant bank transfer.
- Key handover takes place at this time.
- The notary then sends a copy of the deed to the Registro de la Propiedad (Land Registry) for registration.
Once you are the owner, several annual charges and taxes must be considered:
- The IBI (Impuesto sobre Bienes Inmuebles): Local Property Tax, calculated on the cadastral value of the property, payable annually to the town hall.
- The Non-Resident Income Tax (IRNR - Impuesto sobre la Renta de No Residentes): If the property is not rented out, a deemed income is imputed and taxed. If it is rented, actual rental income is taxed.
- Community fees (Gastos de Comunidad): If the property is part of a community of owners, for the maintenance of common areas.
- Utility bills (water, electricity, gas, internet, home insurance).
- Refuse collection fee (Tasa de Basuras).
The Spanish law relating to the Golden Visa (or investor visa) has undergone significant recent changes, with the removal of the direct real estate investment option in April 2024. Consequently, the acquisition of a property no longer, in itself, grants the right to obtain this residence permit. Investment options to obtain the Golden Visa now focus on investments in companies, funds, or public debt. For up-to-date and personalised information, a consultation with our experts is highly recommended.
The choice between new build and resale depends on each investor's preferences and objectives:
- New Build Property: Advantages: Developer guarantees, customisation possible (off-plan), better energy performance, generally more modern. Disadvantages: Often higher purchase price, VAT (IVA) at 10% + AJD (Stamp Duty), construction lead times.
- Resale Property: Advantages: Potentially lower price, classic charm, negotiation possibility, no VAT (ITP at 6-11%), immediate availability. Disadvantages: Possible renovation work, hidden costs, lower energy performance, risks associated with age.
At Voguimmo, we offer comprehensive and personalised support to our UK/US investor clients. Our expertise covers all aspects of your project:
- Strategic Advice: Defining your objectives, identifying the most relevant regions and property types.
- Search and Selection: Access to a vast portfolio of properties and tailored search.
- Legal and Tax Assistance: Our team of legal experts guides you through all legal complexities (NIE, bank account, arras contract, notary, taxes).
- Negotiation: Representing your interests to secure the best conditions.
- Post-Acquisition: Assistance with rental management, administrative procedures, and integration.
