Buyer's Guide
In order to get a better understanding of the purchase process and costs involved when buying a property in Andalucia, we have put together a guide below helping to understand the basic and most important information.
You can download the guide here in PDF format.
The Process of Buying a Property in Spain
- The first step is to reserve the property by signing a contract with a refundable deposit (usually between €3,000 to €6,000). A lawyer should perform legal checks and will provide in writing a detailed and accurate report including property ownership, debts or encumbrances and that all legal checks have concluded.
- A private contract is then signed by both parties with the agreement, payment terms and completion date (if new build). The buyer then pays a non refundable deposit (usually a percentage of the purchase price).
- The sale is finalised at a notary’s office where the buyer and seller sign the Deed of sale.
Basic Necessary Formalities
- Spanish N.I.E. (Foreigner ID Number issued by police authorities) is mandatory to buy property and obtain utilities. Apply early as processing can take time.
- A Spanish bank account is mandatory for utilities.
- Spanish Will. Not mandatory but without it, finalising an inheritance procedure can take up to 2 years.
- Power of Attorney. You could delegate a Spanish lawyer to be your legal representative that will allow them to sign contracts and other purchase-related documents on your behalf whether you are in Spain or not.
Taxes
- New Properties: The IVA tax (VAT) is applicable to the purchase of new properties and urban plots (which have never been transferred before). It amounts to 10% of the purchase price, and 21% for the purchase of urban plots. This tax must be paid on each instalment. In addition, obtaining the title deed is also subject to Stamp Duty at 1,2%.
- RESALES When properties have been already transferred before, the applicable rate is not IVA but ITP tax (transfer tax). The rate of ITP is 7% of the property purchase price. Note that the total costs associated to a property purchase transaction are normally between 10% and 14% of the purchase price (without a mortgage involved).
- Property owners in Spain must file annual tax returns. The tax is based on a calculated imputed income (up to 2% of Cadastral Value of the property which is significantly lower than the market value), and the rates are 19% for EU residents and 24% for non-EU residents.
Mortgages
- Foreigners and non-residents can apply for a mortgage with Spanish banks. They require:
- Income verification, limit payments to 30-35% of your income and a maximum 30-year term with repayment ending by age 70-75.
- The bank will order an independent valuation of the property you want to request a mortgage for.
- Non-residents can typically borrow up to 65%, while residents can go up to 80% of the property value.
- Depending whether you are employed, self-employed or retired the bank will typically request Pay Slips, Tax Returns, Bank Statements, Reference from bank, Report from accountant or Company certificate.
- Mortgage setup costs include opening commissions, insurance, and legal fees.
Legal Requirements for Residency
- If you are a citizen from a European Union country, from the European Economic Area (EEA), or from Switzerland, you just need to get your Identification Number in Spain (NIE) and your EU registry certificate.
- A visa or a residence permit won’t be required in order to stay legally in the country for the long run.
Temporary Resident Permits ( Non EU )
- If you are planning to live in Spain for more than 90 days per year, you must apply for a temporary residency permit. Temporary residencies last up to 4 years. Usually, initial cards are for 1 year under the general immigration regime, and 3 years under the Entrepreneur’s law. Once that period ends, and provided that you still meet the initial requirements, you can renew your temporary residence permit for an additional two years. Bear in mind that not all permits do allow you to work in Spain.
- After 5 years of uninterrupted living in Spain with your permit or visa, you will be eligible to apply for permanent residency, a permit that will allow you to live and work in Spain indefinitely.
- The requirements are simple. You just need your passport, current residency card, completed EX-11 form, clear criminal records for the last 5 years, and proof of payment of fees. And, most importantly, you can’t have left Spain for more than 6 months for any single year and no more than 10 months in total during the 5-year period.
Legal Requirements for Nomad Visa
- In January 2023, Spain launched their Digital Nomad Visa as part of the new Startup Act, a group of measures designed to encourage entrepreneurship and foreign investment. New Spain remote work visa allows non-EU/EEA remote workers and freelancers to live and work in Spain for up to 12 months in the first instance, renewable for up to five years.
- Applicants must prove that they have a minimum income of €2,160 per month to apply, with higher income brackets if you will be accompanied by a partner or children.
- Remote workers must also show that they have a stable contract, that they have permission from their company to work in Spain, and that their company has been in business for at least one year. Unlike many other Digital Nomad Visas, up to 20% of a freelancer’s income can come from Spanish clients.
- Successful applicants will also be eligible to apply for a Spanish residency permit, which will enable them to travel around the European Union. Most visa holders will become tax residents and are eligible to pay a special reduced tax rate of 24% on income up to €600,000 per year. Spain has double taxation agreements with 90 other countries.
Legal Requirements for Golden Visa
- On the 30th of September 2013, the Spanish Parliament approved a new law (Law 14/2013), which seeks to encourage new business initiatives within an international scope and regulates how to obtain a residence permit when investing in Spain. By means of the new Law, non-European citizens could be entitled to obtain said permit (allowing to travel within the Schengen zone), whenever they are prepared to carry out a significant capital investment in Spain. Only certain types of investment are included in this group.
- Those would be the following:
- Real Estate investments of a minimum amount of €500,000.00 (per person, excluding loans/mortgages).
- Capital Investments. When investing on Spanish Public Debt, the minimum amount is €2,000,000.00; when investing on shares of Spanish Companies or bank deposits the minimum amount is €1,000,000.00.
- Investment in Projects that could be considered of public interest.
- This Visa is expected to finish by the end of 2024.
