Buying a house in Spain 2022: Requirements, Process & Costs. (2023)

If are thinking of buying a house in Spain as a foreigner, you will need to sort out some bureaucracy before being able to purchase any property.

The Spanish property market has many quirks, and it pays to do your research before buying a home in Spain. Knowing what to expect when buying property in Spain can help avoid any pitfalls of setting up your life abroad. Factors to be aware of when buying Spanish property include property scams, high capital gains tax, and fluctuations in the Spanish real estate market.

The steps to follow when buying a house are not always intuitive. In addition, it is necessary to have clear which taxes and expenses we will have to pay to acquire the house.

Whether you are looking for a property in coastal areas or in a large city like Madrid or Barcelona, this guide is for you.

Are there any requirements to buy a house in Spain?

The only thing you need when buying a property in Spain as a foreigner (in legal terms) is the NIE (Número de Identificación del extranjero).This number, which is unique to each individual, is essential to carry out any transaction in Spain. Since it must appear on all documents that you sign or are issued in Spain, you must have it before signing the deed. The NIE is not complicated to obtain, but it does take a long time; ask your real estate agent to make it easier for you to obtain the NIE in order to speed up the process as much as possible.

In addition, although it is not compulsory, having a bank account in Spain will make all the formalities easier, as it will make payments faster and will probably save you some commissions.

Finally, remember that once you are the owner of a property in Spain, you must appoint a tax representative if you are not resident in Spain.

How to buy a home in Spain step by step.

Although each buying process differs significantly, in general, the phases found in any real estate operation would consist of the following:

Tax and Budget Planning buying a house in spain

The costs of acquiring a house are mainly paid by the buyer, and vary from region to region. Taxes and other paid by the buyer include:

• Property transfer tax 6–10% (existing properties) / VAT (or IVA) at 10% (new properties);

• Notary costs, title deed tax and land registration fee 1–2.5%;

• Legal fees 1–2% (including VAT).

Get your NIE

Contact the Spanish administration to get your tax identification number. You don’t need a bank account to buy a house, but we advise you to get one before buying the house. Here you can check out the best bank accounts in Spain.

Search for properties in Spain

Our lawyers can help finding properties in Spain. If you feel confident enough, you can also search for a property yourself, by making use for portals like Idealista.com, fotocasa… etc. When looking for properties, you might want to make sure that the ads that you see are not scams. This is what you should look for when searching for a home in Spain:

• The qualifications of the attorneys or real estate agents engaged
• There is adequate planning approval, according to the land registration (Registro de la Propriedad).
• There are no outstanding obligations on the property
• That the structure of the property is sound (either a surveyor or an architect can do this).

Reservation agreement and letter of Intent.

When a buyer pays a fee and reserves the right to acquire a property in Spain for a set length of time (the reservation term), it is known as a reservation agreement. During the reserve period, the builder or developer states that the property will not be sold to another party.

In addition, a letter of intent may be presented by one party to another party and subsequently negotiated before execution (or signature).

Payment of the Property Transfer Tax or VAT

Pay the applicable taxes and update the Land Registry with the new information.

Costs when buying a house in Spain

If you want to know which is the average price per square meter in the main cities, you can check out the following table:

FAQs when buying a house in spain as an american.

Buying a house in spain: Deposits and Mortgages

In general, non-resident buyers in Spain can enjoy the same mortgage conditions as Spaniards, i.e. up to 80% cover in the case of a first home, and between 60 and 70% in the case of a second home.

This means that you must have a minimum of 20% of the price of the available property, plus approximately 15% extra on the cost of the property to pay taxes, lawyer’s fees, notary fees, etc. In addition, your debt cannot exceed 30-35% of your income.

Other important information to bear in mind is that mortgages in Spain are normally taken out for a minimum of five years and a maximum of thirty, with the maximum age of 75 years for completing the mortgage. It should also be noted that each institution has its own risk criteria, in which the country of residence can be included, and that properties abroad are not usually accepted as collateral, as it is difficult to reach them.

You can read more about getting a mortgage in Spain in this article.

Taxes to buying a house in spain

When you buy a property in Spain, you will be obligated to pay some taxes. Property taxes vary wether you are buying a brand new property or a resale property.

Taxes when buying a house in spain

When buying a brand new property, which is being sold for the first time, you will have to pay 10% VAT on the value of the property and the additional 1.5% on behalf of the Legal Documentation Tax.

Taxes when buying a resale property

When buying a resale property (a property that has changed hands at least once) you will be required to pay the Transfer Tax or ITP in Spanish, that is levied on a sliding scale depending on the purchase price.

For more information about property tax in Spain, you can check the linked article.

Property lawyers in Spain for buying a house in spain

If you are going to buy a property and want to save yourself future problems, it is advisable to seek advice from a property lawyer in Spain. The savings far exceed the cost of legal fees.

Buying your home is usually the largest investment for most individuals. Even those who own several properties tend to invest cautiously in the real estate market. Real estate companies always use the services of lawyers before making an investment.

In short, the services of a lawyer are often more useful for preventive than corrective purposes. But most people still hire them when it’s too late.

The effort to find a good advisor can save you a lot of trouble.

How a lawyer can help when buying a house in spain

Before entering into the purchase of a property, basic tasks of research and analysis must be carried out. It is important to check that the property is in order and that the contracts of purchase and sale and, where appropriate, mortgage loan, will not end up causing problems.

In addition, tax burdens represent a significant percentage of the operation. Together with the associated costs, they can increase the sale price by up to 20%. It is therefore a good idea to know this extra before you get a fright.