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How to buy a house in Spain


A guide a buying a house in Spain

A Guide On How To Buy A House In Spain


I write this while I'm actually in Spain on honeymoon, and I have to say that I can't think of a better place to live. I'm sitting in the garden of the house we are staying in with my laptop on a pretty glass table, surrounded by palm trees and beautifully maintained shrubbery, and as I look up from my keyboard, I can see my son playing in the swimming pool, with the sun shining down on us; it's such an idyllic setting, that has spurned several conversations with my wife, centred around how lovely it would be to buy a house here and either move here, or use the house as a holiday home, renting it out when we aren't here, and so I've looked into how buying a property in Spain works.


The real estate market in Spain has shown several changes in recent years. Despite rising prices, house purchases have not stopped, especially by the foreign population. It is estimated that last year closed with close to 600K homes sold, where foreigners accounted for 15% of total home purchases.


When it comes to buying a home, many people seek the help of a real estate lawyer so that the whole process is done correctly and there are no unforeseen events. If you are thinking of buying a property in Spain, in this post, you'll find everything you need to know to start a new life in the Mediterranean paradise.


Overview of the Spanish real estate market


The real estate market has been able to recover after the financial crisis of 2008. Nowadays, it is a real paradise to invest and buy a home. This has been reflected in the number of foreigners who have chosen Spain as their second country of residence.


Cities such as Madrid, Barcelona, Alicante and the Balearic Islands have seen an increase in property purchases by foreigners, especially British residents.


In Spain, you can find a wide range of property prices, depending on where you want to settle. In 2023, the property price for sale increased by 7% compared to the previous year.


Legal requirements for foreign buyers.


Estimating budget and additional costs


When buying a property in Spain, in addition to the price of the property, there are several additional costs to consider. These costs may vary depending on whether the property is new or second-hand:


- Notary fees: These vary between 0.2% and 0.5% of the price of the property.


- Land registry fees: These vary between 0.1% and 0.25% of the price of the property.


- Valuation of the property: This is necessary if you are applying for a mortgage and can vary between 300 and 600 euros.


- Estate agent's fees: Generally, these fees are 3% to 5% of the price of the property, although this can vary.



A beautiful Spanish house


Taxes for buying a house in Spain


Other expenses that you will have to face when buying a property are the following taxes:


Property Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP)

This tax is applied to the purchase of second-hand properties and varies between 6% and 10% of the purchase price, depending on the city and autonomous community where you buy it.


Value Added Tax (IVA)

Have you ever wondered what is IVA in Spain? VAT is charged on consumers, as they pay it when they purchase a product or service: it is levied on the net price of the product or service and varies in percentage.

In the case of the purchase of a new property, VAT is payable, which is 10% of the price of the property.

 

Stamp Duty (Actos Jurídicos Documentados - AJD)


This tax is levied on notarised documents and also varies by region, ranging from 0.5% to 1.5% of the purchase price.


Annual property taxes


Once the property is acquired, the owner must pay annual taxes, such as the Impuesto sobre Bienes Inmuebles (IBI), which varies depending on the cadastral value of the property and the location.


Navigating legalities


Buying a property in Spain involves complying with a series of legal requirements that ensure that the transaction is carried out correctly and securely.


Necessary legal documentation


The purchase of a property in Spain requires several legal documents, among them:

-       Contrato de compraventa

-       Energy efficiency certificate

-       Public deed of sale

-       Certificate of outstanding debt (if applicable)


Role of notaries in Spain


The role of the notary is fundamental when buying a property in Spain. These professionals are responsible for certifying that the transaction complies with the law and will prepare the public deed for the property. Amongst their other functions is the registration of the property in the Land Registry.


Closing the deal


The most awaited moment has arrived. Your house is about to become a reality. There is less time left to live within those four walls.


Finalising the purchase


Once all legal requirements have been fulfilled and the final price has been agreed, the buyer and seller sign the public deed before a notary. After this signature, the property must be officially registered in the Land Registry, and all the corresponding taxes must be paid.


Post-purchase considerations


After the purchase, it is essential to make sure to:

·      Register the utilities (water, electricity, etc.) in the name of the new owner.

·      Take out adequate home insurance.

·      Carry out any necessary renovations or improvements.

·      Find out about local maintenance and property regulations.


Although it seems that buying a house can be a hard and tedious process... If you do it right and comply with all the legalities, the result will be worth it. The prize is the keys to your future home. Those four walls you can call home.

 

 


Swimming pool in a Spanish house



Photos copyright of The Penny Pincher

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