Buying Property in Spain: A Real Estate Lawyer Shares Top Tips for Expats
By Max Milano (Travel Writer)
You’ve worked hard for this, and now your dream of owning a property in Spain is close. You just need to find a good real estate agency in the area you're interested in, view some properties, and make an offer on your ideal Spanish home. After all, you’ve purchased property in your home country before, and the process—at least in America—is managed by a well-oiled, efficient machine of real estate agents with slick brochures and anonymous escrow companies that take care of all the pesky details like distributing payments to mortgage companies and sellers. They’ll even send a notary to your home or office so you can sign the paperwork in privacy and comfort, and all of this happens without you ever knowing who the previous homeowner was or who bought your old house.
Well, let’s just say—you’re not in Kansas anymore. You’re in Spain now, so buckle up, because buying a home here is a bit of a bumpy ride. It’s a crash course in Spanish folklore, obscure legal practices, and a death by a thousand cuts of municipal taxes and fees that appear and disappear from your escrow with little to no explanation. And this is when things are going smoothly! Never mind the horror stories circulating around the Costas about crumbling beachfront villas or the long-lost relatives of the previous owner who refuse to leave your new home (they’re your problem now!).
That’s why one of the first tips given to expats buying homes in Spain is to run straight from the notary to a locksmith to change the locks and install an anti-squatter security system. Because "okupas"—as squatters are called in Spain—are as common as bad paella on Las Ramblas in Barcelona.
But it’s not all doom and gloom. The trick is to go with the flow, enjoy the experience, and embrace the Spanish quirks in the property purchasing process. However, whatever you do, for the love of all that is dear: Lawyer up!
Lawyer Up!
Why Do You Need A Lawyer When Purchasing Property In Spain?
“But I like my real estate agent in Spain, why would I need a real estate lawyer?” This statement will age like milk left out in the Andalucian sun. One of the first realities to face when purchasing a property in Spain is that the real estate agencies work for the sellers, not for you, the buyer. The seller could be another expat, thereby potentially avoiding language issues (in Spain you have to have a rather deep and uncomfortable involvement with the previous owner, eerily reminiscent of a prolonged divorce), but more often than not, the sellers will be Spanish. Between the language barrier and the byzantine maze of paperwork, taxes, and fees that you have to navigate, it will almost be impossible to manage, even if your Spanish is half-decent, without a solid lawyer on your side.
How To Pick a Good Real Estate Lawyer for Your Property Purchase in Spain
Do your homework and review all the English-speaking lawyers in your desired area. Check their reviews on GoogleMyBusiness and ask for references. Meet with them. Be wary if they claim they work in your area but really don’t. Focus on lawyers with an actual office in your area and staff. You will thank me later, since having a specific location to go to when unexpected issues come up (and they will) is worth the fee the lawyer charges for their services—and then some.
A Real Estate Lawyer’s Essential Guide for Expats: How to Buy Property in Spain
Given all the issues discussed above, we reached out to our local English-speaking real estate lawyer, Dr. Salva Ferrer, to ask him the top FAQs expats have about the real estate purchasing process in Spain and get a rundown of what that process looks like from beginning to end.
Ask A Lawyer: Buying Property in Spain FAQ
Here are the most frequently asked questions that expats routinely ask English-speaking real estate attorney Dr. Salva Ferrer about their real estate purchasing process in Spain.
1. Do I Need to Be in Spain During The Property Buying Process?
Your real estate lawyer can manage all stages of your property purchase or sale in Spain on your behalf by using a Power of Attorney.
2. How Do I Obtain a Spanish NIE and Is It Necessary to Be in Spain to Process It?
Your real estate attorney can obtain your NIE on your behalf by using a Power of Attorney. So, it’s not necessary for you to be in Spain to process it. If you are in Spain, your lawyer can also arrange the necessary appointment at the police station and go with you to ensure you have all the correct documentation to avoid any delays in obtaining the NIE.
3. Do I Need to Have a Bank Account in Spain in Order to Purchase Property?
Yes, it is highly recommended to open a bank account in Spain if you plan to purchase property there. While it's not legally required to have a Spanish bank account to buy property, the vast majority of financial transactions related to purchasing real estate, such as mortgage payments, utility bills, local taxes, and other fees, will need to be processed through a local bank. Opening a Spanish bank account simplifies the process and helps avoid any potential complications related to currency exchange or international transfers. It’s also a requirement if you plan to take out a mortgage from a Spanish bank.
Your real estate lawyer will advise you on the best bank to approach for opening an account as an expat. In some cases, you can use an online bank, but this is more common in transactions involving two expats buying or selling property to each other, as most Spanish sellers will prefer a traditional bank wire or a cashier’s check from a recognized Spanish bank.
4. Is a Survey Compulsory for My Purchase in Spain?
No, a survey is not compulsory when purchasing property in Spain, but it is highly recommended, especially for older properties or rural homes. Unlike in some other countries, such as the UK or the USA, where a survey is often a standard part of the buying process, Spain does not legally require one. However, getting a survey done can help identify potential structural issues or other problems with the property that may not be immediately obvious.
A survey can provide peace of mind and potentially save you from unexpected costs in the future. It can also be useful in negotiating the purchase price if the survey reveals any significant defects.
Your real estate lawyer will help you arrange for a surveyor (known as a perito) to assess the property before you finalize the purchase. As the buyer, you will be responsible for covering the expense of the surveyor. When a mortgage is involved, the bank will conduct its own survey, but this will focus on the property's value to protect the bank in case of default, not a deep structural review.
5. What Taxes Will I Have to Pay When I Purchase Property in Spain?
When purchasing property in Spain, you will be responsible for several taxes. These taxes vary depending on whether the property is new or second-hand and the region where the property is located. Here’s a breakdown of the most common taxes you’ll need to pay:
Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP):
This tax applies if you are purchasing a second-hand (resale) property. The rate typically ranges from 6% to 10% of the property purchase price, depending on the region. For example, in Valencia, it’s usually 10%.
VAT (Impuesto sobre el Valor Añadido or IVA):
If you are purchasing a new property from a developer, you will need to pay VAT. The standard VAT rate is 10% of the purchase price. For commercial properties or land, the VAT is 21%.
Stamp Duty (Actos Jurídicos Documentados or AJD):
This is payable on new properties and is usually between 0.5% and 1.5% of the property price, depending on the region. Stamp duty is also paid if you're taking out a mortgage.
Notary and Land Registry Fees:
You’ll need to pay the notary for drafting the deed of sale and the land registry for registering the property in your name. Notary fees are typically between 0.5% and 1% of the property price. Land registry fees are usually similar to notary fees.
Plusvalía Tax (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana):
This is a municipal tax on the increase in the value of the land since the last sale. Although the seller usually pays this tax, the buyer should confirm who is responsible for it in the contract. It can vary depending on the location and the number of years the property has been owned.
Ongoing Property Taxes:
After the purchase, you’ll need to pay an annual local property tax (Impuesto sobre Bienes Inmuebles or IBI), which is based on the cadastral value of the property. The rate varies by municipality, typically between 0.4% and 1.1% of the property's cadastral value.
These are the main taxes and fees you will encounter when purchasing a property in Spain. It’s essential to budget for these costs to avoid surprises, and consulting with a real estate lawyer can ensure all taxes and the entire home purchasing process in Spain is handled correctly.
Stay tuned to GuiriGuru for more Spain explorations and weekly expat tips.
Max Milano is a travel writer and photographer based in Los Angeles, California, and Valencia, Spain. His latest photography book, Mexico City Noir, Life Under The Volcanoes, is Available on Amazon. Bookings and Prints of his photographs are available at MaxMilanoPix.