F.A.Q.

It is not obligatory to contract the services of a solicitor or legal adviser, however we highly recommend it.  There are a lot of things that need to be sorted out and checked when you buy a property, and it is best to have a legal person looking out for your interests, who can check everything on the property and make sure that everything is done correctly so as to avoid any problems in the future.  They will also deal with all the paperwork, translate for you so that you fully understand everything and don’t sign something you shouldn’t, they will deal with the tax payments, help you get your NIE number, they can represent you with a power of attorney so that you don’t need to worry about anything, prepare the deeds for the notary, register the property at the Land Registry Office etc. At Futurcasa Real Estate we can put you in contact with well-reputed solicitors that speak your language, so that the purchase of your new home in Spain is completely worry free.

The NIE (Número de Identificación de Extranjeros) is an identification number for foreigners and is necessary to register yourself with the Spanish Tax Authorities and is obligatory for buying property in Spain.  The NIE is an identification number that must be applied for personally at the Foreigner’s Office or National Police Station.  Although the NIE requires a personal application, it can be acquired without you coming to Spain if your solicitor has power of attorney. Due to the high demand of NIEs, the procedure can sometimes be difficult and long, which is why we advise you to get your solicitor to deal with the NIE application on your behalf using a power of attorney, this will save you a lot of time and hassle.  You can also obtain your NIE outside of Spain in the Spanish Foreign Consulates abroad, however the process can be very long.

Purchase costs:

Purchasing a property does not only involve the cost of the house itself. As in your home country, there are a number of supplementary costs that you must budget for. We advise that you should add around 14% to the price of the property as a rough guide. This 14% is made up of:

External costs

The largest external costs are for the Spanish Notary and the Spanish Land Registry.

The scale of Notary charges is fixed by law and the actual amount to be paid will depend on the extent of the legal provisions of the Title Deed and the value of the property. As a guide, we would say that charges normally start at 800 Euros.

The Spanish Land Registry (Registro de la Propiedad) is an official registry that protects the rights of the owners of Spanish property. The title deed must be inscribed in the local land registry. The fee depends on the value of the property but normally starts at around 400 Euros.

There are other additional expenses that apply in some cases depending on individual circumstances. For example, if you have never had a fiscal interest in Spain before, you will need an NIE number before you can open a bank account or purchase your property.

You will also need a power of attorney if you are unable to be here in person and need to appoint an adviser you trust in Spain to act on your behalf.  This is usually your solicitor.

Taxes

In addition to the external expenses, there are also taxes to pay. The taxes are dependent on whether the property is new or resale.

If a resale property is sold by a non-resident it is usual practice for 3% of the purchase price to be retained by the lawyer acting on behalf of the buyer. This is a legal requirement and is paid to the Spanish tax authority on account of capital gains tax. If the seller has not made a profit, it can be claimed back.

Legal fees for the purchasing process

You will also need to account for the cost of the legal fees for the purchasing process. It is important that you ensure that your interests are represented. An independent solicitor will give you advice and the reassurance that legalities are checked on your behalf during the buying process. Make sure that whomever you entrust with this very important transaction places your needs first and does not have a conflict of interests with other parties. It is important to be able to communicate clearly with your solicitor who will ideally be a native language speaker. He/ she should be part of a respected and trusted firm, specialising in Spanish property law. You should be provided with a personalised quote with no obligation.

If you purchase a new build property, there will also be costs for activating water and electricity (and gas in some cases), the price of this depends on the location of the property.  For a secondhand property, you will need to pay to change the ownership of the water, electricity and gas.  The solicitors will deal with the changeovers for you. 

In addition, you need to allow for more if you need to furnish your home or wish to make any changes to the property.

Ibi/Suma (Ownership tax):

This is a council tax calculated based on the value which the Local Authority attributes to the property (rateable value) with each Local Authority being free to apply its own coefficient. This tax is payable by the person who was registered as the proprietor from 1st January of the relevant year.

Income tax for non-residents: 

Non-residents must pay this tax as owners of urban property located in the Spanish territory. The taxable income to be declared is the sum total after applying the property´s rateable value (indicated on the receipt of payment of the Property Ownership Tax), being a percentage that is set at a standard rate of 2%; In relation to properties for which the rateable values have been reviewed, modified or fixed by a collective valuation process in force during the relevant tax year or the previous ten tax years, this will be set at a rate of 1.1%.

It is understood that the taxable sum is payable within one calendar year, such that if the title of ownership to the property is not held throughout one year, it will be paid pro rata for the days in which you were the property owner. On the resulting sum payable, a tax rate of 19% will be applied to residents of EU member states, Island and Norway, and a rate of 24% in all other cases. The due date for payment is 31st December of each year and the Self-Assessment tax return (Form 210) must be filed in the calendar year from this date. The Self-Assessment tax return should be sent to the housing department of the Local Authority where the property is located.  Your tax representative or solicitor can help you with this.

EXAMPLE:

A property has a rateable value of € 54,000 assuming it had been reviewed in the previous 10 years. The property was bought by an EU resident on 30/09/2022. On 31st December 2022, the tax payable would be calculated as follows: Tax base: € 54,000 X 1.1% X (92/365 days) = € 149.72.

Amount payable: 19% X €149.72  = € 28.45 to be paid during the calendar year 2022.

Community fees:

To cover the costs of swimming pool maintenance, gardens, communal electricity and water bills, lifts etc.

Water, electricity, and gas

You can apply for a mortgage in Spain in much the same way as you would in most other countries. However, banks are no longer as keen to lend as they once were. You will be expected to be able to contribute a large deposit and they will want to see proof of income to ensure that you are in a position to pay your mortgage now and in the future.

A mortgage cannot be taken out for longer than 30 years and must be repaid by retirement age. New legislation protects the borrower and the lender. The conditions of the mortgage have to be explained to the borrower by a Notary a few days prior to signing the mortgage deed. The borrower signs a document confirming they accept the terms and conditions.

If you are considering taking out a mortgage you should:

• Decide how much to ask for – you must consider all the expenses involved in taking out the mortgage as well as how much you can afford monthly from your income for the interest

• Compare quotes from different mortgage providers

• Make sure you are familiar with all the terms and conditions of the mortgage provider you’ve chosen

• Ask for a firm offer that comes with all the details and the complete contract.

The next steps include:

• After you have accepted the mortgage conditions before the Notary the mortgage deed will be prepared

• The signing of the Mortgage Deed will take place at the same time as the signing of the Title Deed

• After the signing, the Notary will send an electronic version of the Title Deed and the Mortgage Deed to the Land Registry followed by the official hard copy documents.

If you do find at some point that you are able to pay off your mortgage, then just be aware that you will need to inform the Land Registry too. In order to make sure that the records are in order, a representative from your mortgage holding bank needs to sign the Mortgage Cancellation Deed at the Notary Office. This can then be sent to the Land Registry.

As well as the additional cost you will incur by paying your mortgage there will also be an administrative cost applied by the mortgage lender. Make sure you are clear about how much this will be as it can amount to around 2% of the mortgage itself.

Required documents to formalise a mortgage:

• Employment stability: which determines the possibility of going into debt for a long period of time.

• Annual income: payslips or the equivalent.

• Financial background: the client´s financial records are considered, which would reveal any previous outstanding payments, late payments, etc. Financial institutions will request a bank certificate from the client which provides information on the client´s financial background and level of debt accrued. This allows them to determine whether the client is capable of increasing his level of debt with respect to income.

• Wealth: Other properties owned in addition to that which is to be purchased.

• Guarantors: These are other people who guarantee the repayment of the mortgage.

• Additional guarantees: savings plans, pension plans, investment funds, etc.

Costs of taking out a mortgage:

• Assessment costs

• Commission fees for setting up the mortgage

• Commission fees for cancelling the mortgage

• Compulsory insurance: as prescribed by law, it is only compulsory to insure against the risk of fire, but in practice, it is also required to have household insurance, and in some cases, payment protection insurance.

• Other facilities: bank cards, standing order charges, etc.

At Futurcasa Real Estate, we work with well-reputed banks that can help you should you need a mortgage here in Spain.

You will need:

A valid passport or ID card

A foreigners Identification Number (NIE) which you can get from the Spanish Consulate / Embassy or with the help of a solicitor in Spain.

A Spanish bank account

You will also need to facilitate the bank account details of origin from where the payments will be made.

We advise you to appoint a solicitor to help you with the entire purchase process.

Please have a look at our "guide to buying a property in Spain" by clicking here