01 Apr How to buy a home in Spain as a foreigner

In recent decades, tourism has become the economic engine of our country, as our privileged climate and exceptional cuisine make Spain a highly attractive country.

It is precisely for this reason, along with the great opportunities presented by our real estate market, that thousands of foreigners consider purchasing a home in Spain each year.

Although purchasing a home offers a wide range of opportunities for the buyer (from considering it as a real estate investment to a vacation destination), the process can sometimes be fraught with complexity.

At Navarro Llima Abogados, we have summarized all the steps to follow to make the purchase process as smooth, secure, and simple as possible.

Can a foreigner buy a home in Spain?

First of all, it’s important to clarify that in Spain, any foreigner, whether EU or non-EU, can own a home.

To do this, the first step is to obtain the NIE (National Identification Number), the identification number assigned to foreigners in our country, which enables them to carry out any type of legal procedure (e.g., signing the notarized deed of sale of the home or forming a company).

It’s important to note that this NIE can be obtained even if the foreigner is not in Spain, by granting a power of attorney to a law firm so they can carry out the procedure on their behalf.

Once you have obtained the NIE, we recommend opening a Spanish bank account. Although it is not a requirement as such, it speeds up the process regarding the presentation of proof of financial means or the payment of taxes arising from the sale.

Procedures prior to the sale.

Once you have obtained the NIE (National Identity Number), the next step is to find a home and then perform due diligence, i.e., the formalities required prior to signing the purchase agreement.

This involves an exhaustive review of all the property’s documentation to identify any potential liens or encumbrances.

It’s worth mentioning that in Spain, this step can be carried out with great guarantees. By requesting an “information note” from the Property Registry, the professional in charge of performing the due diligence can determine the property’s identification, the identity of the owner(s) of the rights (mortgage, usufruct) registered thereon, and their extent, nature, limitations, etc.

Once due diligence has been successfully completed, meaning there are no issues related to the chosen property, the next step—which is not mandatory, but is very common to block the property and take it off the market—is the signing of an Arras Contract, whereby the buyer must make an initial payment ranging from 5% to 15% of the purchase price.

Depending on the type of Arras contract (penitential, penal, or confirmatory), the seller will be obligated to sell the property to us; otherwise, they will have to pay the buyer double the amount deposited. The buyer, on the other hand, will lose the deposited amount if they do not complete the purchase.

The next step, if financing is not required, is to go to the notary to sign the purchase contract (to have it certified). Once signed, this will allow the property to be registered in the Property Registry in the name of the new owner.

Procedures after the sale

Once all of the above has been completed, we are almost finished with the purchase and sale process, as the home is now owned by the new buyer. All that remains is to pay the taxes inherent to the transfer of ownership, which are:

• The Property Transfer Tax (ITP)
• The Stamp Duty (AJD), which varies depending on the Autonomous Community where the purchase is made.

In the case of a new-build home, we will also have to pay Value Added Tax (VAT).

This concludes this summary of the steps required for purchasing a home in Spain.

This process, as we indicated at the beginning of the post, can become complicated if the deadlines and documents required are not fully understood. That is why at Navarro Llima Abogados, we believe that sound advice is the best ally in this type of procedure, facilitating each and every step.

If you have any questions about this, please do not hesitate to contact us, we will be happy to assist you.