Buying Property in Spain: A Foreigner's Legal Checklist

What types of real estate ownership exist in Spain?

The main form of property ownership in Spain is freehold (plena propiedad), which gives you full ownership of the land and buildings. Many apartments and townhouses fall under horizontal property rules (propiedad horizontal), where you own a unit plus a share of common areas, and a community of owners manages shared costs. Spain also recognises other rights like usufruct (right of use) and bare ownership, which are common in estate and tax planning.

Key ownership structures

• Full ownership (plena propiedad / dominio)
  • You own the property and land outright.
  • Registered in the Registro de la Propiedad (Land Registry).
  • Most villas, townhouses, and many apartments use this form.
• Horizontal property (propiedad horizontal)
  • Applies to buildings divided into independent units (flats, offices, parking spaces).
  • You own:
    • Your private unit (e.g., the apartment), and
    • A percentage (cuota) of common elements (staircases, lifts, pool, gardens), expressed in the title deed and community statutes.
  • Regulated by the Ley de Propiedad Horizontal and community bylaws.
  • Community of owners (comunidad de propietarios) votes budgets, rules, and major works.
• Usufruct and bare ownership (usufructo y nuda propiedad)
  • Usufructuary has the right to use and enjoy the property (including renting) during a set period or lifetime.
  • Bare owner holds the underlying ownership but cannot use it until the usufruct ends.
  • Common in inheritance planning where parents keep usufruct and children receive bare ownership.
• Leasehold and long-term rights
  • Pure leasehold (similar to UK) is rare, but long-term leases (arrendamientos de larga duración) and administrative concessions exist.
  • Coastal and port areas may be subject to concessions under the Ley de Costas, not full freehold.
• Company ownership
  • Property may be owned by a Spanish company (S.L.) or foreign entity.
  • Used in some investment or tax structures, but increases compliance and can affect tax on disposal and wealth tax.

How does the process of buying property in Spain work?

Buying property in Spain usually follows three stages: reservation, private contract (often with a deposit), and completion at a notary with registration in the Land Registry. For a straightforward purchase, the process can take 6-12 weeks, but financing, planning checks, or seller issues can extend this. Foreigners must secure an NIE, ensure funds are documented for anti-money laundering checks, and conduct thorough due diligence before paying any significant deposit.

Step-by-step purchase process

1. Define your strategy and budget
   • Clarify if the property will be:
     • Your main home
     • Holiday home
     • Rental or investment property
   • Set a realistic budget including 10-15% extra for taxes and costs.
2. Get your NIE and set up banking
   • Obtain a NIE (Número de Identificación de Extranjero), required for any property purchase.
   • You can apply:
     • At a Spanish police station (Comisaría de Policía) with foreigner office.
     • At a Spanish Consulate in your home country.
   • Open a Spanish bank account if possible to ease payments of taxes and utilities.
3. Engage professionals early
   • Independent real estate lawyer (abogado) acting solely for you.
   • Tax adviser if you are non-resident or planning rentals.
   • Surveyor/architect for structural or planning checks, especially in rural or older properties.
4. Search and initial checks
   • View properties and request:
     • Copy of title deed (escritura) or Land Registry data.
     • Latest property tax (IBI) receipt and community fee receipts.
   • Your lawyer orders a nota simple from the Registro de la Propiedad to confirm ownership, charges, and encumbrances.
5. Reservation document (optional but common)
   • You may sign a brief reservation agreement with the agent or seller and pay a small reservation fee (e.g., 3,000-10,000 EUR).
   • The property is usually taken off the market for a short period while formal checks are done.
   • Read the refund conditions carefully; many are non-refundable if you withdraw without cause.
6. Due diligence and private contract (contrato de arras)
   • Once checks are satisfactory, lawyers negotiate a deposit contract, often arras penitenciales under article 1454 of the Civil Code.
   • Typical deposit is 10% of the price, paid to the seller or an escrow account.
   • If you back out without a contractual reason, you lose the deposit; if the seller backs out, they must repay double the deposit.
   • Contract should clearly cover:
     • Exact property description and boundaries
     • Price and payment schedule
     • Included fixtures and furniture
     • Completion date and conditions (e.g., mortgage, obtaining licenses)
7. Mortgage and financing
   • If you need a mortgage, negotiate with Spanish banks and obtain a formal offer.
   • Under Ley 5/2019 on real estate credit contracts, the bank must provide pre-contractual information and you must attend the notary in advance to confirm you understand the terms.
   • Non-residents are typically offered 60-70% loan-to-value; residents may reach 80% or more.
8. Completion at the notary (escritura pública)
   • The public deed of sale (escritura de compraventa) is signed in front of a Notario.
   • On completion day:
     • You pay the balance of the price (often via banker's cheques or bank transfer).
     • The notary reads the deed, confirming identities, price, payment method, and charges.
     • Both parties sign; keys are handed over.
   • If there is a mortgage, you sign the mortgage deed (escritura de préstamo hipotecario) in the same session.
9. Post-completion: taxes and registration
   • Your lawyer or gestor pays the transfer tax (ITP) or VAT/AJD within the legal deadline (usually 30 working days from signing).
   • The deed is submitted to the Land Registry for inscription, which may take a few weeks.
   • They also handle:
     • Changing utilities (electricity, water, gas) into your name
     • Registering you with the community of owners
     • Setting up direct debits for IBI and community fees

What taxes and costs apply when you buy property in Spain?

When you buy property in Spain, you pay either transfer tax (ITP) on resales or VAT plus stamp duty (AJD) on new builds, plus notary, Land Registry, and professional fees. As a rule of thumb, expect total acquisition costs of roughly 10-15% of the purchase price, varying by region and whether you use financing. Non-residents also need to budget for bank fees and possibly currency conversion costs.

Main purchase taxes

• Resale property: Transfer Tax (Impuesto sobre Transmisiones Patrimoniales Onerosas - ITP)
  • Applies when you buy from a private seller.
  • Rate set by Autonomous Communities - generally 6-10% of the declared purchase price.
  • Examples (approximate standard rates, as of 2024):
    • Madrid: 6%
    • Andalusia: 7% (flat for most residential purchases)
    • Catalonia: 10% (standard, with some reduced rates in specific cases)
    • Valencian Community (Costa Blanca): 10%
• New builds: VAT (IVA) and Stamp Duty (Actos Jurídicos Documentados - AJD)
  • Applies when you buy directly from a developer or buy a newly built property for first occupation.
  • Residential VAT (IVA) is usually 10% of the price.
  • AJD rate varies by region, generally 0.5-1.5% of the price (or mortgage liability for the mortgage deed).
  • For commercial property or plots of land, VAT is often 21% plus AJD.

Other typical acquisition costs

Indicative total cost example

• Resale apartment in Madrid for 300,000 EUR without mortgage:
  • ITP (6%): 18,000 EUR
  • Notary, registry, gestoría: approx. 1,300-1,800 EUR
  • Lawyer: approx. 3,000 EUR (1%)
  • Total acquisition cost: approx. 22,300-22,800 EUR (about 7.5%)
• New-build villa in Andalusia for 500,000 EUR with mortgage:
  • VAT (10%): 50,000 EUR
  • AJD (say 1.2% on price + mortgage): approx. 6,000-8,000 EUR
  • Notary, registry, gestoría (sale + mortgage): approx. 2,000-3,000 EUR
  • Valuation and bank fees: approx. 800-1,500 EUR
  • Lawyer: approx. 5,000 EUR (1%)
  • Total acquisition cost: around 64,000-67,500 EUR (about 13-14%)

How are ongoing property taxes and costs in Spain calculated?

Owners in Spain must pay annual property tax (IBI), community fees if applicable, and sometimes waste collection or other local charges. Non-resident owners also face Spanish income tax on rental income and even on deemed income for personal-use properties, plus possible wealth tax depending on asset values and region. These ongoing costs can easily reach 1-2% of the property value per year, especially if you include maintenance and insurance.

Local property taxes

• IBI (Impuesto sobre Bienes Inmuebles)
  • Annual municipal property tax based on cadastral value (valor catastral), not the market price.
  • Rates set by each Ayuntamiento (local council):
    • Urban property: typically 0.4-1.1% of cadastral value.
    • Rural property: typically 0.3-0.9%.
  • Payable by whoever is owner on 1 January of each year.
• Waste collection and local fees
  • Some municipalities bill domestic waste collection (tasa de basura) separately.
  • Other local charges may apply (driveway access, street lighting contributions in some developments).
• Community fees (gastos de comunidad)
  • Applies if your property is part of a comunidad de propietarios.
  • Covers maintenance of common areas, lifts, pools, gardens, insurance of the building structure, and sometimes heating or concierge.
  • Divided according to your share (coeficiente) stated in the title deed.
  • Outstanding community fees are attached to the property, not only to the previous owner, so buyers must check for arrears.

Income tax on rental and personal-use properties

• Residents (IRPF)
  • Declare net rental income in your annual personal income tax (IRPF) return.
  • For long-term residential letting, individual resident landlords may benefit from a reduction (often 50% or more) on net rental income, subject to conditions and frequent legal changes.
  • You deduct allowable expenses such as IBI, community fees, insurance, interest, amortisation, repairs, and management costs.
• Non-residents (Impuesto sobre la Renta de no Residentes - IRNR)
  • If you rent the property:
    • Taxed on net rental income (EU/EEA residents can deduct expenses; other non-residents often cannot).
    • Rate currently:
      • 19% for EU/EEA residents.
      • 24% for other non-residents.
    • Returns typically filed quarterly.
  • If you do not rent the property:
    • Tax on imputed income: a percentage (usually 1.1% or 2%) of cadastral value multiplied by the tax rate (19% or 24%).
    • Filed annually, even if you receive no actual income.

Wealth tax and new solidarity tax

• Wealth tax (Impuesto sobre el Patrimonio)
  • Applies to high net worth individuals on net assets, including Spanish property.
  • Non-residents are taxed only on Spanish assets; residents on worldwide assets.
  • There is a general state allowance (e.g., 700,000 EUR per person plus special allowance for main residence), but regions can modify rates and allowances. Madrid, for example, has effectively eliminated wealth tax for its residents.
• Temporary solidarity tax on large fortunes
  • Introduced as a temporary state-level tax to top up wealth tax for very large fortunes.
  • Applies mainly to individuals with net assets above a high threshold (multi-million level).

Other ongoing costs

• Home insurance (building and contents)
• Maintenance and repairs (routine plus inevitable major works such as roofs, lifts, facade)
• Utilities (electricity, water, gas, internet)
• Property management if you rent or do not live in Spain (key-holding, cleaning, check-in, accounting)

What should you check in due diligence before buying property in Spain?

Robust due diligence in Spain means verifying legal ownership and charges, cadastral and planning data, building licenses, community debts, and that what you see matches what is legally registered. You should never rely solely on the seller or agent; get a nota simple, review the planning status with the town hall, and confirm that all extensions and works are legal. These checks prevent problems like illegal constructions, unpaid debts, fines, or even demolition orders.

Core legal and registry checks

• Land Registry (Registro de la Propiedad) - Nota Simple
  • Confirms:
    • Current owner and acquisition title
    • Property description and boundaries
    • Mortgages, embargoes, easements, and other encumbrances (cargas)
  • Your lawyer checks that:
    • The seller is the registered owner.
    • There are no undisclosed charges or that they will be cancelled on or before completion.
• Cadastral (Catastro) records
  • Verify the property in the Catastro Inmobiliario (a separate registry for tax and mapping).
  • Check:
    • Cadastral reference number (referencia catastral)
    • Surface area and use
    • Whether the building and extensions in reality match the cadastral plan
  • Discrepancies between Land Registry, Catastro, and reality must be evaluated and often regularised.

Planning and urbanistic checks

• Urban classification and planning status
  • Confirm with the Ayuntamiento:
    • Whether the land is urban, urbanisable, or rustic (suelo urbano, urbanizable, rústico)
    • Applicable planning regulations (Plan General de Ordenación Urbana or equivalent)
    • Any ongoing or planned expropriations, road widenings, or development projects
• Building and occupancy licenses
  • Request copies of:
    • Building license (licencia de obra)
    • First occupancy license (licencia de primera ocupación) or habitation certificate (cédula de habitabilidad)
  • Essential for:
    • Connecting utilities
    • Obtaining a mortgage
    • Renting legally, especially for holiday lets
• Illegal or unregularised works
  • Common in rural houses or older properties (extensions, pools, terraces built without license).
  • Your lawyer or architect should check:
    • If such works are legalisable or already time-barred from enforcement under regional rules.
    • Whether fines, demolition orders, or proceedings exist.
• Coastal and protected zones
  • Near the coast, check for restrictions under the Ley de Costas and whether the land is within the maritime-terrestrial public domain or its protection zones.
  • In rural or natural areas, verify Natura 2000 or local environmental protections.

Financial and occupation checks

• Community of owners
  • Request:
    • Certificate from the administrator confirming no outstanding community fees.
    • Latest minutes of community meetings to see if major works or special assessments are planned.
• Local taxes and utilities
  • Check:
    • IBI and garbage tax are paid up to date.
    • No significant unpaid utility bills that could lead to supply cuts.
• Tenants and occupiers
  • Verify whether:
    • There are tenants under existing rental contracts (especially under the LAU 29/1994 on urban leases).
    • Any rights of stay or options to purchase exist.
  • Rental contracts might be binding on the new owner, so you must know the terms in advance.
• Technical survey
  • Not legally mandatory but advisable, particularly for:
    • Rural properties
    • Older buildings
    • Properties with visible cracks, damp, or structural concerns
  • A qualified architect or surveyor can highlight structural issues and estimate repair costs.

How can foreigners and non-residents buy property in Spain?

Foreigners, including non-EU citizens, can freely buy and own property in Spain, subject to standard money laundering checks and some special rules for properties in sensitive military zones. You will need an NIE number, proof of the origin of funds, and generally a Spanish bank account to complete the purchase. Non-residents should also plan early for Spanish tax registration and consider the impact of owning directly versus through a company.

Key requirements for foreign buyers

• NIE (Número de Identificación de Extranjero)
  • Mandatory for:
    • Buying property
    • Paying taxes
    • Connecting utilities
  • Apply via:
    • Spanish Consulate in your country, or
    • Police/foreigner office in Spain, often with appointment (cita previa).
• Anti-money laundering (AML) checks
  • Banks, notaries, and sometimes agents must comply with AML regulations.
  • Expect to provide:
    • Passport and identification documents.
    • Proof of source of funds (e.g., savings, sale of another property, inheritance).
    • Possibly tax residence certificates or company documents if using a corporate structure.
• Bank account and transfers
  • Having a Spanish bank account simplifies:
    • Payment of purchase price and taxes
    • Ongoing utility and tax direct debits
  • Use regulated currency transfer providers or your bank to move funds to Spain.

Financing for non-residents

• Spanish banks commonly lend to non-residents, but:
  • Loan-to-value is usually 60-70% of purchase price or bank valuation, whichever is lower.
  • Interest rates and conditions may be less favourable than for residents.
  • Banks assess income and debts in your home country.
• Documentation can include:
  • Tax returns and payslips or accounts if self-employed
  • Credit reports
  • Existing loan statements

Golden Visa and residence options

• Investor residence permit (so-called Golden Visa)
  • Under Law 14/2013, non-EU investors may obtain a residence permit if they invest at least 500,000 EUR in Spanish real estate (free of charges).
  • The programme has been under political review, so conditions and availability may change; check current status before relying on it.
  • Benefits include the ability to live and work in Spain and travel within Schengen, provided other conditions are met.
• Other residence routes
  • Non-lucrative residence visas (without work) are available in some cases for those with sufficient income and health coverage.
  • Property ownership alone does not automatically grant tax residency; tax residency is based primarily on days spent in Spain and centre of economic interests.

Special restrictions

• Some properties in areas classified as of national defence interest (usually near military zones or certain islands) may require additional authorisation for non-EU buyers.
• Your lawyer should check this early if you are buying in potentially sensitive locations.

How does selling property in Spain work and what taxes will you pay?

Selling property in Spain involves choosing an agent, preparing documents, accepting an offer, signing a private contract, and completing the sale at a notary. The main seller-side taxes are capital gains tax and municipal plusvalía, plus potential early repayment penalties on mortgages. Residents may access valuable reductions or exemptions on their main home, while non-residents pay a flat capital gains rate and suffer a withholding at completion.

Steps to sell a property

1. Preparation and pricing
   • Gather documentation: title deed, IBI receipts, community fee statements, energy performance certificate (certificado de eficiencia energética).
   • Agree on listing price with the agent based on local comparables and market conditions.
2. Marketing and offers
   • Most sellers use estate agents who advertise on portals and manage viewings.
   • Typical agency commission is 3-5% plus VAT, usually paid by the seller.
3. Reservation and deposit contract
   • Once you accept an offer, the buyer may pay a reservation fee and then a 10% arras deposit.
   • Ensure any conditions (e.g., subject to mortgage approval, obtaining licenses) are clearly written.
4. Completion and handover
   • At the notary, you sign the sale deed, receive the price (often net of taxes or retentions), and hand over keys and utility information.
   • If there is an existing mortgage, the bank often attends to cancel it simultaneously.

Capital gains tax (CGT) on sale

• Residents (IRPF)
  • Pay CGT on the gain (sale price minus acquisition cost and allowable expenses such as taxes and improvements).
  • Current progressive rates (approximate as of 2024):
    • 19% for the first 6,000 EUR of gain
    • 21% from 6,000 to 50,000 EUR
    • 23% from 50,000 to 200,000 EUR
    • 27% from 200,000 to 300,000 EUR
    • 28% above 300,000 EUR
  • Possible reliefs:
    • Main residence reinvestment relief: if you reinvest the proceeds in another main residence within a set period.
    • Over-65 main residence exemption: residents over 65 selling their main residence may be fully exempt under certain conditions.
• Non-residents (IRNR)
  • CGT rate is:
    • 19% for EU/EEA residents.
    • 24% for non-EU/EEA residents on rental income, but capital gains on property are often taxed at 19% regardless of nationality; always check current rules.
  • There is usually a 3% withholding of the gross sale price retained by the buyer and paid to the Tax Agency as a payment on account of your CGT.
  • You file a specific non-resident tax form to calculate the final tax and reclaim any excess of the 3% withholding.

Municipal plusvalía tax (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana)

• Local tax on the increase in cadastral land value over the time you held the property.
• Each municipality sets rates within legal limits, subject to recent Constitutional Court decisions that forced reforms.
• Since reforms:
  • There are alternative methods of calculation, and taxpayers can choose the more favourable in some cases.
  • If no real gain exists, the tax may be reduced or not due, but application is complex and evidence-based.
• Often negotiated at completion who pays (usually seller in practice, but it is a matter of contract).

Other potential seller costs

• Early redemption or cancellation fees for mortgages.
• Agency commission plus VAT.
• Energy performance certificate (required for marketing the property).
• Legal and tax advisory fees.

What rules apply if you want to rent out your Spanish property (long-term and holiday lets)?

Long-term rentals in Spain are mainly governed by the Urban Leases Act (LAU 29/1994), which protects tenants with minimum contract durations and specific rules on deposits and rent updates. Short-term holiday rentals are regulated regionally and locally, often requiring tourist licenses and registration, with some cities imposing strict limits or moratoria. In both cases, you must declare rental income to the Spanish tax authorities and comply with safety and data registration obligations.

Long-term residential rentals (arrendamientos de vivienda)

• Governed by LAU 29/1994 with major reforms in 2013 and 2019.
• Key features:
  • Minimum mandatory term for the tenant:
    • 5 years if landlord is an individual.
    • 7 years if landlord is a company.
  • After this period, tacit extensions apply unless one party gives notice.
  • Security deposit:
    • At least 1 month of rent by law for residential leases.
    • Additional guarantees allowed but often regulated by regional practice.
  • Rent updates typically linked to official indices (CPI or specific indices), subject to legal caps or special rules in some regions.
• Tenant protections:
  • Eviction for non-payment follows a judicial or sometimes expedited process, but timing can be significant.
  • Clauses contrary to mandatory LAU provisions may be null and replaced by statutory rules.

Holiday rentals and tourist apartments (viviendas de uso turístico)

• Regulated by Autonomous Communities and often by municipalities.
• Typical requirements:
  • Tourist license or registration number from regional tourism authority.
  • Compliance with habitability and safety standards (occupancy, equipment, emergency information).
  • Registration of guest data with police or Guardia Civil for security purposes.
• Cities such as Barcelona, Valencia, Madrid, and some islands have:
  • Quota systems or zoning restrictions.
  • Moratoria on new licenses in some central areas.
  • High fines for illegal tourist rentals.
• Community of owners can sometimes restrict or prohibit holiday rentals if their bylaws are amended following legal requirements.

Taxation of rental income

• Residents:
  • Declare net rental income in annual IRPF as savings or general income depending on circumstances.
  • Can deduct expenses such as IBI, community fees, insurance, interest, maintenance, and amortisation.
• Non-residents:
  • File quarterly non-resident tax returns for rental income.
  • EU/EEA residents may deduct expenses; others typically taxed on gross income.
  • Rates usually 19% (EU/EEA) or 24% (others).

When should you hire a lawyer or other real estate expert in Spain?

You should hire a Spanish real estate lawyer as soon as you are seriously considering a purchase or sale, and definitely before signing any reservation or deposit contract. Lawyers, tax advisers, and technical experts protect you from legal pitfalls, hidden costs, and structural or planning problems that are not obvious to non-experts. For non-residents or complex properties, proceeding without professional help is a high-risk strategy.

Situations where a lawyer is essential

• Any non-resident transaction
  • You will need help with NIE, bank compliance, tax registration, and understanding region-specific rules.
• Rural or coastal properties
  • Planning, environmental, and coastal rules are complex and enforcement can be strict.
  • Illegal constructions are common; a lawyer and technical architect should check legality and regularisation options.
• Properties with tenants or rental history
  • LAU rules and regional rental regulations require careful review of existing contracts.
  • Unclear or informal arrangements can create long-term risks or prevent you from using the property as planned.
• Company or investment structures
  • Acquiring via a company or buying shares in a property-owning company involves corporate and tax due diligence.
  • Specialist advice is crucial for VAT, transfer tax, and exit strategy.

Other experts to consider

• Tax adviser (asesor fiscal)
  • Helps plan holding structure, rental taxation, wealth tax exposure, and estate planning across jurisdictions.
• Architect or surveyor (arquitecto / perito)
  • Evaluates structural condition, hidden defects, and compliance of extensions or pools.
• Gestor / property manager
  • Assists with local paperwork and day-to-day management, especially when you are not in Spain.
• Specialist rental manager
  • For holiday lets, manages marketing, bookings, check-in, cleaning, and reporting to authorities.

What are the next steps if you want to buy property in Spain?

The practical next steps are to clarify your usage and budget, shortlist regions and property types, and set up your legal and banking framework before committing to any property. Once you have an NIE, a Spanish bank account, and a trusted legal team, you can start viewing properties and moving decisively when the right opportunity appears.

Action plan

1. Define goals and budget
   • Decide your main purpose: own use, mixed use, or pure investment.
   • Calculate maximum purchase price plus 10-15% for costs.
2. Choose region and property type
   • Compare areas based on climate, access, rental demand, and regional tax rates.
   • Decide if you prefer a community property (with shared amenities) or a standalone house, and whether rural or urban suits you.
3. Engage a lawyer and start NIE process
   • Select an independent lawyer in the region of interest.
   • Begin your NIE application and gather proof of funds and identity documents.
4. Talk to banks or brokers
   • Check mortgage eligibility, indicative rates, and maximum loan amount if you plan to finance.
5. Search and shortlist properties
   • Use reputable agents and portals, and schedule viewings.
   • When you find a serious candidate, send the details to your lawyer before paying any deposit.
6. Proceed with due diligence and structured contracts
   • Let your lawyer manage the nota simple, planning checks, and negotiation of reservation and arras contracts.
   • Ensure all conditions you need (mortgage approval, license confirmations, completion timing) are in writing.
7. Plan for ownership and management
   • Decide how you will manage the property, pay ongoing taxes, and, if renting, comply with local rental licensing and tax reporting.