Looking To Save Time & Money When Buying Your Dream Home In Spain?

Purchasing a holiday home abroad might appear daunting and complex to some; however, Spain is very accommodating to foreign buyers, making the purchasing process comparatively straightforward and secure.

When coming from abroad and looking to buy a home in Spain, you simply need to make sure that a few basic conditions are met:

• Obtain a NIE number (Número de Identificación de Extranjero): This is an essential tax identification number for foreigners in Spain, required for purchasing property in the country. You can obtain this number either by contacting the Spanish embassy in your home country or through self-application at a local police station in Spain. In both instances, you must complete an official application form known as "EX-15," ( download it here via the Spanish Police website), and gather necessary personal documents. These documents include a copy of a valid passport, proof of the request's purpose (e.g., a purchase agreement or employment contract), and a passport photo. Generally, there is a nominal fee of approximately €9-12 for issuing a NIE, which varies by municipality/region. Often, you will receive the number within a few days, but the process can be slower, so it's advisable to apply as early as possible. The NIE must be obtained before signing the final deed for the property purchase. As always, we are here to assist you in applying for your NIE number.
• Open a bank account in a Spanish bank: Setting up a bank account in Spain is the second crucial step for foreigners looking to purchase a home. While the process may vary slightly across different banks, several common guidelines and requirements are generally applicable. This type of account is usually designated for non-residents who have financial interests in Spain but do not reside in the country permanently. To streamline the process, we recommend preparing a few essential documents in advance: a copy of your passport, your NIE number, evidence of employment or economic activity (such as an employment contract and/or recent payslips), and proof of a Spanish address (which could be a rental agreement or proof of home ownership). Choosing a bank branch on the Costa del Sol with English-speaking staff and an English-based online banking option can significantly simplify your banking experience. We are eager to assist you in setting up your bank account.
• Secure your financing well in advance: While not obligatory, securing your financing before beginning your property search in Spain is a wise strategy that can place you in a much stronger position to negotiate a favorable deal. Pre-arranging your financing offers several significant benefits: It strengthens your bargaining power, allows you to act swiftly when you find the ideal property (preventing it from being sold to someone else), avoids the disappointment of failed financing applications, provides a clear financial picture and a realistic budget, and significantly reduces stress related to the purchasing process. In essence, having your financing ready puts you in a better position to move quickly when necessary — a crucial advantage when it comes to special offers, distressed sales, and prime investment opportunities.
• Consult a English-speaking property solicitor in Spain: While this step is optional, we highly recommend enlisting a lawyer who specializes in Spanish property law to review all pertinent documents and ensure the legal integrity of your property transaction. He or she will be able to verify whether the property you intend to purchase is free of any outstanding debts or legal issues. Moreover, through a power of attorney, your lawyer can handle various neccesary tasks on your behalf, such as obtaining a NIE number, setting up a bank account, and signing necessary documents. This will save you both time and money by eliminating the need for multiple trips to Spain during the purchasing process. The cost for a power of attorney typically ranges from €75 to €150 and is payable to the local notary office responsible for its authorization.

Spain boasts numerous incredible areas and regions, with the most favored locations being the Balearic Islands, the Costa Brava, and notably the Costa del Sol, renowned for having Europe's finest and most stable climate. It also hosts some of the world's most coveted resorts, including Marbella, Malaga, Fuengirola, Benalmadena, Mijas Costa, Estepona, and Sotogrande.

For first-time buyers in Spain, it's crucial to thoroughly acquaint yourself with what different areas have to offer before committing to a significant or minor real estate investment. To this end, consider the following points:

• Define your needs and preferences: Start by identifying what matters most to you in your daily life. This can range from practical aspects such as the size of the home, type, style, and number of rooms, to more subjective values like the proximity to the beach, a vibrant urban atmosphere versus peaceful rural settings, access to amenities like schools and hospitals, a variety of leisure activities, an area with a significant expat community, or perhaps the desire for an environment that's as authentically Spanish as possible.
• Search and find inspiration online: Nowadays, there's an abundance of quality websites and online guides catering to virtually all languages and nationalities, designed to assist non-Spanish individuals in gaining a deeper understanding of the diverse regions and areas in Spain. Moreover, YouTube is an exceptional visual tool that allows you to "feel" the areas, rather than merely reading about them.
• Engage with dedicated Facebook groups: Social media platforms can be invaluable sources of information. Numerous groups and pages are focused on life in Spain, either broadly or in specific regions, where you can pose questions and receive insights from fellow countrymen familiar with Spain.
• Contact a real estate agency: After you've narrowed down your choices to a few attractive areas, it's a good idea to contact a skilled real estate agency that speaks your language on the Costa del Sol. This approach allows you to obtain detailed information about the property market in your areas of interest and receive suggestions for specific properties that meet your personal criteria.
• Gain control over your finances: It's highly beneficial to secure control over the financing for your potential home purchase in Spain early on. This approach not only solidifies your standing as a buyer but also grants you a clear perspective on your financial capacity and limitations, which enables you to target properties within a realistic price range. Additionally, it enhances your appeal to sellers by removing the risk of financing rejection at a later stage, which can expedite the transaction process and strengthen your negotiating position. Sellers are generally more open to price negotiation when they are confident that financing is already arranged, marking you as a serious buyer.
• Visit Spain: There's no substitute for personal experience and firsthand impressions. Arrange a trip to explore the areas you're interested in to gain that invaluable 'gut feeling', soak up the local atmosphere, interact with residents, and inspect potential properties.

The process of buying a home in Spain typically unfolds in several stages, as follows:

• Identifying needs and budget: Start by assessing and researching the type of property that meets your requirements. Next, ascertain the amount you are willing and able to invest. Finally, consider the type of financing you anticipate needing for the purchase.
• Creating a shortlist of potential properties: Begin by using a one of the major property portals in Spain to find properties that match your precise needs. Alternatively, consider working with a local real estate agent. They can help by offering a selection of properties that fit both your budget and preferences.
• Organizing an inspection trip: Schedule a meeting with your real estate agent and travel to Spain to personally inspect the properties you've previously selected.
• Submitting an offer and negotiating: After identifying the ideal home, the next step involves making an offer. Prior to any potential negotiations, it's crucial to analyze market prices and develop a strategy with your real estate agent. Some agents possess considerable experience and exceptional negotiation skills, so choosing a professional agent is vital. The right agent can significantly influence the outcome, determining whether you secure a favorable deal or not.
• Engaging a property lawyer: If you haven't already done so, now is the ideal time to consult with a skilled real estate lawyer. While not obligatory, it's strongly advised to ensure that the legal facets of your property transaction are handled correctly and in accordance with the law. Additionally, if desired, your lawyer can manage tasks such as opening a bank account, applying for a NIE number, and signing documents on your behalf through a power of attorney, eliminating the need for your physical presence in Spain.
• Reservation agreement: Once you and the seller agree on the price, the next step involves signing a standardized reservation document that outlines the general terms of the transaction. It is strongly advised to include a general legal disclaimer when signing a reservation agreement. Typically, a reservation fee between €6.000 and €20.000 (depending on the property's price) is paid at this stage. For increased security, especially in the face of potential legal issues arising from the property's legal review, it is recommended to deposit this fee into your lawyer's client account instead of directly transferring it to the estate agent or seller. Following the payment of this fee, the property will be reserved for you, which means it will be removed from the market.
• Final purchase contract: After the preliminary reservation agreement is signed and your lawyer has finished their legal due diligence (typically within 1-2 weeks), a comprehensive purchase agreement, also referred to as a Private Purchase Contract or "Contrato Privado de Compra Venta," needs to be prepared. This agreement covers all essential terms and conditions in detail. Upon signing the Private Purchase Contract, it is customary to transfer 10% of the purchase price (though sometimes more), to the seller as a standard part of the process.
• Deed and key handover: On the designated date of ownership transfer, which generally falls between 2 to 12 weeks after the purchase contract is signed, the balance of the purchase price is to be paid to the seller. This payment usually occurs at a notary's office, with both your legal representative and the seller's legal representative in attendance to finalize the transaction. This step ensures the property is legally registered under your name, officially making you the new owner.

Understanding the different taxes and fees linked to purchasing property in Spain is essential, as they may be quite different from those in your home country and could come as a surprise.

When you buy property in Spain, you must take into account that a total surcharge of between 7,5-12% of the agreed purchase price will be added, depending on whether you are buying a resale home or a newly built home/project sale. 

For resale properties, 7% property tax must be added, while for the purchase of newly built properties/project sales, 10% VAT (IVA) and a stamp duty of 1,2% must be charged instead.

Applicable to both types of home purchase, notary fees (0,2-0,5%) and land registration tax (0,1-0,25%) must also be charged.

Summary of costs related to purchasing a home on the Costa del Sol:

• Property transfer tax: 7% of the property's price (only applies to resale properties).
• VAT + stamp duty: 10% of the property's price (only applies to new construction/project sales).
• Stamp duty: 1,2% (only applies to new construction/project sales).
• Land registry fee:0,1-0,25% of the property price.
• Notary fees: 0,2-0,5% of the property price.
• Total: ≈ 7,5-12% of the property price.

If you are a foreigner looking to sell or lease your property in Spain, it is important to be aware of several taxes that may apply.

During a property sale, similar to most European countries, you may be subject to property capital gains tax if you sell the property for a profit. In such cases, the profit earned from the sale is taxed at 18% by the Spanish tax authorities.

Additionally, the Plusvalía tax is imposed at the municipal level, calculated based on the duration of property ownership prior to its sale. It represents a percentage of the sale price as well, albeit much lower, ranging from 0,08% to 0,45%.  

Should you choose not to handle the sale of your property personally, you must also consider the costs associated with employing an estate agent, which typically range from 3% to 6% of the sale price.

For properties utilized as rental investments, the rental income is taxable in Spain. It is important to note that operational and interest expenses cannot be deducted from this income. The applicable tax rate for rental income is 24%.

Yes, as a foreigner, it's possible to secure mortgage loans in Spain. Here's what you need to know:

Qualification: Spanish mortgage lenders impose no restrictions based on the purchase price or your nationality. Approval depends on your overall financial situation and any specific requirements of the bank.

Documentation: When applying for a mortgage in Spain, you'll need to present a valid passport, proof of consistent income and employment history, and evidence of sufficient disposable income after covering fixed expenses. For self-employed individuals, the most recent annual report and a current balance sheet are usually required.

Equity/down payment: Expect to provide nearly 40% of the property's price in self-financing when purchasing a home in Spain. This is due to the typical maximum loan-to-value ratio of 70%, plus 7.8-13% in taxes and duties payable to the state and municipality at the time of purchase.

Interest rates: Foreigners often face slightly higher interest rates compared to Spanish nationals. Currently, the rates are between 3.8% to 4.6%.

The process: Securing a mortgage in Spain can be done independently by contacting a bank directly, or through the assistance of your estate agent and/or lawyer. It's crucial to choose a reputable bank and broker.

Overall, obtaining a mortgage in Spain probably bears similarities to the process in your home country, though the products and solutions offered might have more limitations than those available to Spanish citizens.

No, and this lack of requirement is rooted in Spanish law. Specifically, there are no obligatory qualifications or registration processes for someone to identify as a real estate agent in Spain. Consequently, a significant number of real estate agents operating, for example, on the Costa del Sol, do not possess a license or have formal training. This situation has occasionally led to a somewhat negative perception of the industry and concerns over the quality of services provided by some agents. However, it's important to note that there are also many reputable, experienced, and professional agents in the market, some of whom may hold licenses and certification. Therefore, it's crucial to carefully select your real estate agent.