Buying A House In Spain In 2024

Published:
May 27, 2024
2076

Acquiring housing requires careful navigation of legal procedures and a keen awareness of the accommodation market. Before investing, in-depth investigation is vital to avoid scams, understand taxation, and stay ahead of market changes. 

This guide provides valuable insights for a smooth transition to homeownership in Spain, whether you’re interested in coastal areas or major cities. It outlines the necessary steps for buying a house, clarifies the associated taxes and payments, and prepares you for the unique aspects of the Spanish real estate market.

Prerequisites for obtaining home in a country 

For non-citizens buying property in Spain, the vital requirement is obtaining a NIE. This identification number is compulsory for any business dealing in a country and must be included on all signed or issued papers. So, you’ll need it before finalizing the purchase. 

While obtaining a NIE is straightforward, the process can be time-consuming. Real estate agents can help expedite the process. Additionally, albeit not required, having a country’s bank account simplifies procedure, allowing for faster payments and potentially saving on commissions.

Lastly, non-citizen owners need to choose a tax representative to handle their tax obligations.

The procedure of acquiring a housing in a state 

Here are the common steps of obtaining a house in a country, focusing on the legal and financial aspects:

Step 1: Preparing the budget

  • Understand the payments associated with purchasing, which vary by area.
  • Factor in the following buyer expenses:

    * Transfer duties (from 6% to 10% – existing housing, 10% VAT – new housing)

    * Notary charges, title deed tax, and land registration charges (from 1% to 2,5%)

    * Legal expenses (from 1% to 2% + VAT)

Step 2: Acquire NIE 

  • Turn to the country’s administration to secure your NIE, which is vital for any business dealing.
  • Consider making a country’s bank account for easier payment processing.

Step 3: Search of a housing 

  • Engage a specialist for assistance or conduct your own search for housing.
  • During your search, be wary of potential scams. Ensure the following:

    * Verify the competence of legal practitioners or real estate agents.

    * Confirm adequate planning acceptance through the Land Registry.

    * Ascertain that there are no outstanding requirements on the house.

    * Validate the structural soundness of the real estate.

Step 4: Reservation Agreement and LoI

  • Secure the house with a reservation agreement by paying a fee, granting you exclusive rights to purchase for a specific period.
  • Negotiate a letter of intent with the seller before finalizing the agreement.

Step 5: Payment of Transfer duty or VAT 

  • Pay the relevant taxes based on the housing type (existing or new).
  • Amend the Land Registry with the fresh ownership details.

This outline summarizes the key steps and considerations for non-citizens purchasing housing in a country. Remember to turn to qualified professionals for personalized guidance throughout the process.

Is it possible to acquire housing after Brexit?

Despite Brexit, British people are still able to buy houses for retirement purposes. Nevertheless, they are now subject to non-EU rules, making the procedure slightly more complex. Applying for a Non-Lucrative Visa can help streamline the purchase journey.

Costs when purchasing the housing

Here is a look at average property prices per m2 in major cities:

  • Malaga – 2091 euros
  • Santa Cruz de Tenerife – 1527 euros
  • Santander – 1868 euros
  • Bilbao – 3073 euros
  • Barcelona – 4009 euros
  • Madrid – 3682 euros
  • Valencia – 1824 euros
  • Palma de Mallorca – 2897 euros
  • Murcia – 1069 euros
  • Toledo – 1355 euros
  • Badajoz – 1221 euros

Can I acquire housing as a non-citizen?

Non-citizens are welcome to buy houses without restrictions, whether it be commercial, residential, or land. 

For those investing in property valued over 500000 euros, the Golden Visa offers different benefits.  If the property value is below this threshold, alternative options like the Spanish retirement visa or Non-Lucrative Visa are available for those seeking residency in Spain.

What concerns taxes I have to pay?

Here’s a breakdown of annual property taxes in Spain:

Residents:

Income Tax: Applies to worldwide income, including profit gains from sales.
Real Estate Tax (IBI): A local tax based on the property’s value.

Non-Residents:

Income Tax: Applies to Spanish-sourced income, including rental income and capital gains from property sales.
Property Tax: A tax depends on the cadastral value of the housing.
Non-Resident Property Tax: An extra tax levied on non-resident property owners. 

In essence, all property owners pay income tax and a form of property tax. Non-citizens, however, face an additional tax burden.

Is it possible to obtain citizenship by investing in a property?

Certainly! One of the ways the country attracts international home buyers is through its Golden Visa residency program.

Is it mandatory to convey a down payment straight to a seller?

While it’s common in many states to pay a deposit to an escrow agent, the practice in Spain differs. Here, deposits are typically paid directly to the seller, which can surprise foreign buyers accustomed to third-party escrow arrangements.

However, this doesn’t necessarily pose a significant risk. With due diligence, buyers can minimize potential issues. Key steps include:

Timing: Ensure a reasonable timeframe between the down payment and the final sale deed.
Seller’s Financial Stability: Verify the seller’s financial health to avoid complications from potential bankruptcy.
Mortgage Balance: Confirm that the outstanding mortgage doesn’t equal the purchase price, ensuring the down payment can be appropriately allocated. 

By taking these precautions, foreign buyers can confidently navigate the Spanish practice of paying down payments directly to the seller.

Deposits and mortgages

Here’s a summary of homeowner’s loan conditions for non-resident buyers:

Availability: Non-residents generally have access to similar mortgage terms as Spanish residents.

Loan-to-Value Ratios:
First Home: Up to 80% financing is possible.
Second Home:  Financing typically ranges from 60% to 70%.

Down Payment and Additional Costs:
A minimum 20% down payment is required.
An extra 15% of the housing price should be budgeted for taxes, legal fees, and other associated costs. 

Debt-to-Income Ratio:
Mortgage payments cannot exceed 30-35% of your income.

Mortgage Terms:
Mortgages typically have a minimum term of 5 years and a maximum term of 30 years.
The maximum age for mortgage completion is usually 75 years.

Other Considerations:
Each lending institution has its own risk assessment criteria, which may include your country of residence. 
Foreign properties are commonly not accepted as collateral.

The information provides a general overview, and it’s crucial to consult with specialists to receive personalized advice based on your specific circumstances.

What about taxes?

When buying a newly built property in Spain, you will have to factor in a 10% VAT charge on the property value, as well as an extra 1.5% for the Legal Documentation Tax.

When acquiring a resale home, you’ll need to cover the Transfer Tax or ITP, which is calculated on a progressive scale based on the property’s purchase price.

The assistance of a specialist

It is recommended to consult with a legal practitioner before acquiring a housing to avoid potential issues in the future. The benefits of seeking legal advice outweigh the cost of fees. 
Acquiring a home is a vital expense, and it is common for individuals to take a cautious approach in the real estate market. Real estate companies routinely engage lawyers for expert guidance prior to making investments. 
In essence, legal services are more beneficial for preventing issues rather than resolving them after the fact.

In which ways a specialist can help?

Prior to finalizing a purchase, it is vital to conduct in-depth investigation and analysis. It is crucial to ensure that the housing is in compliance and that the acquiring and sale contracts, as well as any mortgage agreements, are free of potential issues. 
Additionally, taxes and associated costs can make up a substantial portion of the overall transaction, potentially adding up to 20% to the sale price. Being aware of these extra costs beforehand can prevent any surprises.

Related insights

Cost of living in Cyprus: a detailed guide for expats

Cyprus is pretty costly for livelihood. Nevertheless, the costs are more reasonable in contrast to the UK, USA, West and North Europe. But don’t forget that it mostly depends on the city. For instance, it is more lucrative to reside in Cyprus if your wish is a big city. If you are curious about the…

Read more 19.07.2024

What is important to know when buying property in Cyprus

Buying property is always a responsible decision, that requires full comprehension of the law and regulations of the country you want to buy a housing in. This also applies to one of the most desirable places for investment – Cyprus. The island is famous for its clean remarkable sea and hot sunny days almost all…

Read more 18.07.2024

No property taxes: complete list of countries with details

Chattel real levies are imposed by officials in many states around the globe either yearly or semi-annually, with the level of charges depending on the overall price of an investor’s asset. In contrast, in the world there exist some countries with no property tax.Here, we provide a comprehensive catalogue of places with no property tax…

Read more 26.06.2024

TOP 6 countries for investment in foreign real estate in 2024. Expert opinion

Investing in chattel real abroad has gained immense popularity as a means to preserve and grow wealth. In this article about, six routes that have captured the curiosity of stakeholders in question considering questions in property for sale  from non-EU nations. We delve into why these routes are currently the utmost appealing, providing valuable insights…

Read more 25.06.2024

Advantages of buying property with a real estate agency

Acquiring estate is a complex endeavor. While saving up the necessary funds is challenging in itself, it’s only the beginning. Verifying papers, drafting contracts, navigating the purchase agreement, and registering the housing – each step presents feasible pitfalls that could leave you both financially and literally homeless.  Therefore, selecting the right seller is paramount to…

Read more 18.06.2024

Discover the benefits and pitfalls of investing in property in Bali

Bali attracts everyone from digital nomads and entrepreneurs to retirees and the ultra-wealthy. The island’s enduring popularity among tourists combines with a vibrant local market, presents lucrative chances. Nevertheless, discrete analysis is crucial. This article highlights pros and cons of investing in property in Bali and other details you may be interested in. Why Bali’s…

Read more 18.06.2024

A guide to paradise: discovering the beautiful world of Bali for property investment

Bali, the jewel of Indonesia, is no longer just a traveler’s paradise – it’s an investor’s dream realized.  The island’s allure extends far beyond its captivating beauty, fueled by a potent combination of surging tourism and unwavering economic strength. This tropical haven boasts an enviable economic track record. Indonesia’s GDP has witnessed a remarkable upswing,…

Read more 18.06.2024

Obtaining residence permit and citizenship in Turkey when buying a property

Dreaming of life under the Turkish sun? A Turkish Residency Permit is your ticket to a carefree holiday. Residency allowance not only legalizes your stay for a year or more but also opens doors for work, depending on the type of document obtained. Learn who can get the coveted status, under what terms, and what…

Read more 03.06.2024

NIE NUMBER in Spain: Definition, Types, Procedure and Papers

Provided that you are a non-citizen, buying a property in Spain is possible with the NIE. It is your unique number as a non-citizen. It’s vital for various activities, from buying housing to making a bank account. However, it’s important to note that the NIE alone doesn’t grant lawful residency. This article will guide you…

Read more 28.05.2024

How to Purchase a Property in Spain

Buying a property in another state offers numerous chances, from generating rental income to becoming a resident or even a citizen. With a diverse range of places to choose from, finding the ideal house in Spain is within reach. While the acquiring procedure may appear daunting at first, this guide provides a clear and concise…

Read more 28.05.2024

Gaming license in Portugal

The gaming industry in Portugal has seen substantial growth, prompting both local entrepreneurs and global investors to explore opportunities in this lucrative market. Understanding the legal framework for obtaining a gaming license in Portugal is essential for those interested in documenting this sector. This comprehensive guide covers the essentials of the gaming-license process, the associated…

Read more 27.05.2024

Buying A House In Spain In 2024

Acquiring housing requires careful navigation of legal procedures and a keen awareness of the accommodation market. Before investing, in-depth investigation is vital to avoid scams, understand taxation, and stay ahead of market changes.  This guide provides valuable insights for a smooth transition to homeownership in Spain, whether you’re interested in coastal areas or major cities….

Read more 27.05.2024