Are you a foreigner interested in purchasing a property in Spain? Unsure where to start? At A&O Abogados, real estate law experts, we will guide you through some of the steps involved in this exciting experience.
Buying a property in Spain can be a great investment for foreigners seeking to acquire a property in a country with a pleasant climate and rich culture. However, the process of purchasing a property in Spain may differ from what is customary in other countries, so it is important to understand the necessary steps to carry out the transaction effectively and safely. In this blog, we will discuss some important aspects to consider when purchasing a property in Spain as a foreigner.
It is important to seek the advice of an expert lawyer who can help you understand the process of purchasing a property in Spain. This expert can assist you in navigating the real estate market, negotiating prices and terms, and guiding you through the legal and financial process.
Obtaining a Foreign Identification Number (NIE)
Before purchasing a property in Spain, it is necessary to obtain an NIE. This number is essential for any financial transaction that is carried out in Spain. To obtain an NIE, you must present your passport and an application at a foreigner’s office in Spain.
Obtaining a digital signature
This involves acquiring a trusted certificate provider for the subscription of digital documents, for the purposes of relating to different public administrations and the submission of taxes.
Conducting thorough research
Before deciding to purchase a property in Spain, it is important to conduct thorough research on the location, regulations, and documentation required for the transaction. This may include verifying the legal status of the property, checking for any outstanding debts or mortgages, and understanding the costs associated with the purchase, such as taxes.
Signing a contract of deposit
Once a property has been selected, a deposit contract must be signed, which is an agreement between the buyer and the seller to commit to the transaction. This contract will include the terms and conditions of the sale, as well as an initial deposit that is generally 10% of the total price of the property.
Executing a deed of sale
The deed of sale is the legal document that transfers the property from the seller to the buyer. It must be signed by both parties and a public notary. Additionally, the buyer must pay the Property Transfer Tax (ITP) or the Value Added Tax (IVA), depending on the property and the seller’s situation.
Registering the property
Once the transaction has been completed, it is important to register the property in the Property Registry. This ensures that the buyer is the legitimate owner of the property and that any mortgage or encumbrance on the property is removed.
Presentation of Non-Resident Income Tax
The Non-Resident Income Tax (NRIT) is an obligation for non-residents who acquire property in Spain. This tax applies in Spain to individuals and companies who are not residents in the country but generate income in Spain. It is applied to income earned by non-residents in Spain, whether from work, investment, rental of properties, sales, among others.
The NRIT is calculated on the basis of the gross income that the non-resident has obtained in Spain. The tax rate varies depending on the nature of the income and may be 19% or 24%, depending on whether it is residents of the European Union or other countries.
It is important to note that this tax does not apply to tax residents in Spain, who are subject to the Personal Income Tax (IRPF). In addition, there are international agreements that regulate double taxation and prevent non-residents in Spain from having to pay taxes both in their country of origin and in Spain.
It is necessary to file a tax declaration for non-resident income in Spain before December 31st of the year following the year in which the income was generated. If the non-resident does not file this declaration, they may face fines and penalties from the tax authorities.
In summary, the Non-Resident Income Tax (NRIT) is a tax that applies to individuals and companies who are not residents in Spain but generate income in the country. This tax is calculated on the basis of gross income and is filed in a tax declaration before December 31st of the year following the year in which the income was generated. It is important to comply with the corresponding tax obligations to avoid fines and penalties.
All these requirements and procedures are mandatory to acquire property in Spain. When thinking about buying a home, one usually thinks about obtaining the necessary funds through savings, mortgage, or personal loans. It is already complicated for a native to understand the different procedures for acquiring a home, which can make the moment of purchase complicated and can turn into an unpleasant experience. Without realizing it, we incur expenses for property valuation, notary fees… in addition to expenses, it is possible that unknowingly we are opting for a property that is not suitable for us, that has some type of hidden defect, or that is in a complicated urban situation. Hiring a lawyer can facilitate this process.
In summary, buying a property in Spain as a foreigner can be an excellent investment, but it is important to understand the necessary steps to carry out the transaction safely and effectively. By following these tips and working with an experienced lawyer or real estate advisor, you can acquire your property in Spain without problems and enjoy everything that this beautiful country has to offer.
If you want to continue learning about this professional area, A&O Lawyers, experts in real rights, invite you to visit the following link:
Are you interested in acquiring a property in Spain but bureaucracy scares you? Do you think that being a foreigner you may encounter problems for which you are not prepared? At A&O Lawyers, we will manage the purchase of your future home. Call us.