Buying property in Spain: Taxes and Costs
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Spain has no shortage of excellent property options for commercial and residential purposes. Spanish property prices are relatively lower than in many neighbouring countries and capital cities. Let’s explore the ins and outs of costs and fees for buying property in Spain.

Can foreigners buy property in Spain?

Having property in Spain is an alluring prospect for many foreigners, both EU nationals and Non-EU nationals. Foreigners can buy property in Spain and take out a Spanish mortgage, even if they are non-resident. That being said, varying tax implications may apply between resident and non-resident buyers in Spain.

Buying property as a foreigner might not be the most straightforward process, but Spain is very welcoming for foreign investors. Before the purchase, you must have a NIE number (financial number).

Golden visa program

Under the Spanish Golden Visa program, foreigners can get a residency visa after investing more than 500,000 EURO in Spanish properties. A Golden Visa is a viable option for investors from outside the EU.

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Costs you can expect when buying property in Spain

It’s essential to be aware of the Spanish housing market quirks, regulations and taxes in Spain before purchasing a commercial or residential property. As a buyer, it’s your responsibility to pay for all costs and taxes associated with buying a property.

Property transfer tax

When buying Spanish property, the property transfer tax is at 6–10% for existing properties or 10% for new properties VAT (or IVA) fees are only 10% for new properties.

Rental income tax

The applicable tax should be submitted and paid to the local Spanish tax office regarding rental income. The income tax rate is 19% as of 2021 for the EU. However, You can deduct the relevant expenses (including mortgage interest) from the gross rental income. In our article about rental income tax in Spain, you can find more information about the rates, deductibles and process.

Insurance costs

Property insurance isn’t mandatory in Spain. However, some mortgage companies may have it as a requirement. In such a case, you might be required to take some form of insurance coverage before signing the mortgage contract.

As much as insurance may not be a legal requirement, we highly recommend taking insurance for both building and contents as a reasonable consideration to protect your investment from various risks.

Capital gains tax

Capital gains realized on Spanish real estate are subject to a capital gains tax, and the tax rate varies per property and is typically progressive based on the income itself. After selling your property in Spain, you must pay applicable capital gains tax after considering all deductions and allowances.

When purchasing property in Spain, we highly recommend keeping digital and hard copies of all invoices concerning legal fees, notary fees, property register fees, among other expenses. Also, you should keep copies of all licenses and invoices in case of property renovations and other building work on an existing property. Consequently, you can offset such expenses against capital gains when you sell your property, thus reducing Spanish capital gains tax.

Our tax advisors can help you make more informed decisions concerning applicable deductions and allowances depending on specific autonomous regions in Spain. We advise on the best strategies to reduce your capital gains tax liability.

Other costs involved

Additionally, you have to pay notary costs, title deed tax, and land registration fees, usually set at 1–2.5%. There are no fixed fees for lawyers or real estate agents in Spain, but you can expect them to range from 1-7%, depending on the level of service needed.

Is buying real estate in Spain worth it?

As always, location is vital when it comes to real estate. Depending on the specific location, buying property in Spain is an excellent long-term investment for both locals and foreigners. Also, it’s a viable option for investors looking to get residency quickly in the beautiful European Union country.

Some buyers apply for a mortgage, while others purchase without obtaining finance when it comes to property financing. Many Spanish and international banks provide mortgages services, with some of them giving tailored deals for foreigners from specific nations.

Buying vs renting a property in Spain?

Buying or renting in Spain primarily depends on your specific circumstances. For example, most people have limited access to finance, thus opting to rent, which involves a far less financial outlay compared to buying.

If you’re moving to Spain long-term, buying may be more cost-effective. However, renting may be a more prudent choice for a short-term stay or those unsure how long they will stay in Spain.

As with many other nations, both have pros and cons to consider. Thus it would help if you tried to make informed decisions.

We recommend checking the Spanish property market forecasts for speculative buyers before investing or, even better, seeking advice from a professional.

Legal, business, and accounting solutions in Spain

As much as it’s not a legal requirement to purchase property in Spain assisted by a qualified expert, it’s highly recommended that you do. Buying a property is one of the biggest investments people make. So, why take the risk by not obtaining professional advice?

Spain has it all and with the proper due diligence and professional assistance, properties in Spain can provide to be beautiful homes and viable investments for years to come. We offer property buying guidance in Spain which is full-service and will make your purchase safe, secure and easier. We can take care of many processes for you utilizing the power of attorney. Contact us for more information and a quote.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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