Rules for buying a house in Spain

Rules for buying a house in Spain

To buy a property in Spain you must adhere to the following rules

The NIE number

To buy a house in Spain as a non-resident (you are in Spain for fewer than 183 consecutive closed days), you must have an NIE number (Número de Identificación de Extranjero). This number allows you to carry out transactions such as property purchases and other legal procedures. You can apply for this NIE number at the Spanish embassy or consulate in your country, or in Spain at the immigration office or police stations that issue this procedure. If you are staying in Spain for more than 183 consecutive closed days, you will need the NIE number to apply for residency.

Reservation and reservation document

Once you've found a suitable property, you'll need to sign a reservation document (Contracto de Compraventa). This is a private agreement between the buyer and seller that reserves the property while finalizing the sale. The initial deposit to reserve the property will be approximately €3,000 to €6,000. The reservation contract also specifies the deadline for signing the deed of sale, the payment method, and any other conditions.

Open a Spanish bank account

If you're a non-resident and want to buy a house in Spain, it's recommended to open a Spanish bank account. This account will facilitate direct debit payments and simplify the process of complying with regulations to prevent money laundering. It's also useful for paying utility bills and avoiding potential complications with international transfers. The account will also help cover notary fees and other costs related to the purchase, such as taxes and legal fees.

Formalize the sales contract

The purchase contract is essential in the process of purchasing a property in Spain by a non-resident. It contains information such as the final price, the payment method, and the terms and conditions for the transfer of ownership. This ensures that the sale is conducted transparently and fairly, in accordance with Spanish law.

Check by lawyer

It is mandatory to have the following documents checked. This is often done with the assistance of a Spanish lawyer:

• Property papers: are they complete and correctly registered?
• Building permits: was the house built legally?
• Mortgages and debts: is there no debt/mortgage on the property?
• Municipal taxes: have all taxes been paid?

Signing of the public deed

The purchase is finalized with the signing of the public deed at the notary. During this deed, the buyer pays the outstanding balance for the property and the transfer of ownership takes place. Once this deed is signed, you must register the property in the name of the new owner with the land registry. To register the purchase and sale, three documents are required:

• Proof of ownership
• Proof of payment of the associated taxes
• Simple Note from the Land Registry

Taxes and costs

• IVA (VAT): applies to new construction, this is 10% of the value of the property
• ITP: transfer tax on existing homes, usually 10%
• AJD (Impuesto de Actos Jurídicos Documentados): this tax is paid when signing the deed of sale of a new-build home and depends on the value of the property and the region where it is located
• IBI (Impuesto sobre Bienes Inmuebles): an annual tax that must be paid on the ownership of a property in Spain
• IRPF or IRNR: If you live in Spain, you pay IRPF. If you are a non-resident, you pay IRNR (Impuesto sobre la Renta de No Residentes), which applies to income from real estate.

Additional costs include the notarial deed, registration of ownership in the land registry and, if you take out a mortgage, the costs of valuation, notary and mortgage tax.

Mortgage rules for foreigners

If you need a Spanish mortgage, be aware of specific regulations. Spanish banks typically finance 60-70% of the property's value and often have additional requirements for foreigners. Additional documentation or guarantees, such as payslips or proof of assets, may sometimes be required.

Frequently Asked Questions (FAQ)

• Do I need a NIE number to buy a property in Spain? Yes, everyone who wants to buy a property in Spain needs an NIE number.
• Do I need a Spanish bank account? Yes, you do need one to pay taxes, utilities, and to legally complete the purchase. These days, it's more common for utility companies to accept foreign bank accounts for direct debits.
• Is a reservation contract required when purchasing? Yes, it officially secures the property for you and prevents miscommunication.
• Am I entitled to a mortgage in Spain as a foreigner? Everyone has the right to apply for a mortgage, but whether it is actually granted depends on their financial situation.

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Discover more:

• Buying a house in Spain
• New construction in Spain
• Investing in a home