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Requirements for buying a house in Spain as a foreigner

In Spain, the price of housing in major cities is much lower compared to the rest of Europe, sometimes even up to four times lower.

That’s why many foreign buyers decide to invest in real estate in Spain. The financial effort for them is much smaller compared to Spanish buyers.

Furthermore, the profitability of housing in Spain is currently around 6.5% according to data from the Bank of Spain, making it a very attractive investment.

Needless to say, the location, the country’s climate, its extensive coastline and impressive nature, and its excellent quality of life make Spain one of the favorite destinations to establish residence, acquire a vacation home, or for real estate investment.

However, for foreigners unfamiliar with the process of buying property in Spain, it may seem like a slow and tedious procedure. Taxes, expenses, paperwork…

There are many aspects you must take into account in a property buying process. That’s why today we bring you all the steps and requirements you need to know if you’re considering investing in real estate in Spain.

Can a foreigner buy a house in Spain?

The data speaks for itself: Spain is the most chosen European destination for investing in real estate, not only for Spaniards but especially for international buyers.

So, although it may initially seem like a complex process, yes, a foreigner can buy a house in Spain without any impediments. However, it is necessary to have a good understanding of the step-by-step process and thoroughly study the Spanish real estate market before diving into the investment.

The first thing you should know is that it is not necessary to have a bank account in Spain to invest in a house, although having one will simplify the process of paying taxes and other additional costs.

The purchase must be made before a notary and registered in the Land Registry. The registration fee will depend on the value and location of the property, but it usually ranges between 600 and 1,000 euros.

Which registry should I register my property in? Spain is divided into jurisdictions, or in other words, mortgage districts. There is a Land Registry for each district.

On the website of the Registradores de España, you can find more information about this process and determine which mortgage district corresponds to your property.

One of the heaviest but important parts when buying a property in Spain as a foreigner is the payment of taxes. Real estate investment in Spain is subject to the following taxes:

  • VAT (Value Added Tax): For new or first-time transfer properties, a 10% VAT is paid throughout the Spanish territory, except in the Canary Islands, where a 6.5% Canary Islands General Indirect Tax is paid.
  • ITP (Transfer Tax): This tax is paid for second-hand or second transfer properties. It is taxed between 6% and 10% depending on the Autonomous Community where the residence is located.
  • Throughout the year, there are also other taxes to consider, such as the IBI (Property Tax), the Wealth Tax (in some cases), and if you do not reside in Spain on a regular basis, you must pay the Non-Resident Income Tax.

In addition to taxes, there are other expenses to take into account when buying a property:

  • Public deed and other notary fees.
  • Registration of the property in the Land Registry.
  • In the case of obtaining a mortgage, associated costs such as appraisal fees and loan interests should be considered.

Requirements for buying a house as a foreigner

Now that we know the steps to follow to purchase a property in Spain, let’s discuss the requirements that need to be met. Here’s an explanation:

Whether you are a buyer from a European Union country or from outside the EU, there are no restrictions on real estate investment in Spain. However, the essential requirement for foreigners to buy a house in Spain is to have a Foreigner Identification Number (NIE). This number will identify you as the buyer in the purchase contract of the property and for the payment of taxes and associated expenses.

To apply for an NIE, you simply need to visit a police station in Spain or the Spanish embassy in your country and submit the duly completed and signed EX-15 form.

As a bonus tip, opening a bank account in Spain is not an essential requirement, but it can greatly facilitate the process of paying taxes and other expenses associated with buying a property.

Tips for buying a new property

Finally, here are a few tips for buying a new property as a foreigner that we recommend following in this situation:

  • View the property (either in person or via video conference) before making any payments. It is important to verify that everything corresponds to what you are purchasing.
  • Visit the Land Registry in person or through a representative (such as a lawyer) to check all the documents and the legal status of the property to avoid scams.
  • Seek the services of a real estate agency like Lighthouse Living. Especially if you are buying from outside Spain, having an agent who is familiar with the market, all the necessary procedures, and requirements for buying a house will provide you with peace of mind and security.
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