31 08 2022

Requirements to buy a house in Spain as a foreigner


In Spain, the price of housing in the capitals is lower than in the rest of Europe, it can even be up to four times lower. That is why many foreign buyers decide to invest in housing in Spain. The economic effort for them is much lower than for Spanish buyers. 


In addition, the profitability of housing in Spain is currently around 6.5% according to the Banco de España, which makes it a very attractive investment. Needless to say, the location, the climate of the peninsula, its wide area of ​​beaches and impressive nature, and its excellent quality of life make Spain one of the favorite destinations to establish a residence, acquire a vacation home, or for real estate investment. 


However, if you are a foreigner who is not familiar with the process of buying a home in Spain, it may seem like a slow and tedious process. Taxes, expenses, paperwork... There are many aspects that you must consider when buying a house. That is why today we are going to address all the steps and requirements that you should know if you are thinking of investing in housing in Spain.


Can a foreigner buy a house in Spain?

Data says it all: Spain is the most chosen European destination to invest in housing, not only for Spaniards, but especially for international buyers. So, although at first, it seems like a complex procedure, yes, a foreigner can buy a house in Spain. Now, it is very helpful to know how to do it step by step and study the Spanish real estate market in depth before investing. 

First things first: you should know that it is not necessary to have a bank account in Spain to be able to invest in a house, although it will greatly simplify the process of paying taxes and other extra costs. The purchase must be made in the presence of a notary and registered in the Property Registry (Registro de la Propiedad). The price of this registration will depend on the value of the property and its location, although it usually ranges between 600 and 1.000 euros.

Where should I register my property? Spain is divided into districts, in other words, mortgage districts. There is a Property Registry for each district. On the Registrars of Spain web page you can consult more information about this procedure and find out which mortgage district corresponds to your area. 

One of the toughest but most important parts when buying a house in Spain as a foreigner is paying taxes. Real estate investment in Spain is taxed by the following taxes:

  • IVA (Value Added Tax): for new homes or first transfers, 10% is paid throughout the Spanish territory, except in the Canary Islands, which pays 6.5% of the General Indirect Canary.
  • ITP (Property Transfer Tax): the tax paid for second-hand or second-hand housing. It is taxed between 6 and 10% depending on the Autonomous Community where the residence is located. 
  • Throughout the year you also have to pay other taxes such as the IBI (Real Estate Tax), the Wealth Tax (Impuesto sobre el Patrimonio), and if you do not reside in Spain on a regular basis, you have to pay the Property Tax Non-Resident Income (Impuesto sobre la Renta de No Residentes).

Apart from taxes, there are other expenses that must be consider when buying a house:

  • Public deed and other notary expenses.
  • Registration of the property in the Land Registry.
  • In case of requesting a mortgage, you must consider the associated expenses, such as the appraisal in the presence of a notary or the interests on the loan.


Requirements to buy a house as a foreigner

We already know the steps we must follow to purchase a home in Spain, but what are the requirements? Let’s see that.

Whether you are a buyer from a country of the European Union or from outside, in Spain you will not find restrictions on real estate investment. Of course, the essential requirement to be able, as a foreigner, to buy a house in Spain, is to have a Foreigner Identity Number (NIE), which will be the way to identify yourself as a buyer in the house purchase contract and to pay the necessary taxes and expenses. To apply for the NIE, you just have to go to a police station in Spain or the Spanish embassy in your country and submit the EX-15 form duly completed and signed.

And a bonus: opening a bank account in Spain, as we have already seen, is not an essential requirement, but we anticipate that it can make things much easier when it comes to paying taxes and other expenses associated with buying a house.


Tips for buying a new home

Lastly, here are a few tips for buying a new house if you are a foreigner that we recommend you to follow in this situation:

  • See (either in person or by videoconference) the property before making any payments. It is important to check that everything is in order.
  • Go in person or through a proxy (a lawyer) to the Property Registry to check all the documents and the legal status of the house to avoid scams. 
  • Use the services of a real estate agency like Prime Invest. Especially if you are a foreigner, having an agent who knows the market perfectly, and all the paperwork and requirements necessary to buy a house will give you peace of mind and security.

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