Here we provide answers to the most common questions about buying a house or apartment in Spain. We go through, among other things, what to consider before buying, what applies after buying (taxes, fees, etc.) and when renting out the home, as well as questions about bank loans in Spain. The page is continuously updated with new questions, and with new tax rates, etc.
For those of you who are interested in investing in property in Spain, the time has come when demand has increased significantly after the crisis, while prices have not yet reached peak levels. It is therefore a good time to buy. We at Spanish Real Estate specialize in finding the best investment, primarily on Costa del Sol.
Please note that we have Swedish speaking brokers, who work directly for us, on site on Costa del sol. In these areas we also have close cooperation with local banks and lawyers.
Unfortunately, many people believe that you should go to several brokers to make sure you find what you are looking for at the cheapest price possible. But it is enough to go to a broker who will make sure you find the home you are looking for, who will make sure everything goes right, that all the papers are in order, etc. This does not affect the price of the home at all (the commission is shared between the brokers if the homeowner has signed an exclusivity agreement with a third party) and it makes the whole purchase so much easier. However, never sign a contract with someone that you cannot buy through anyone other than them. There is nothing to be gained from this type of "exclusivity", whatever they claim.
Another growing problem (a practice that disappeared after the Financial Crisis but is now making a comeback) is seemingly reputable Swedish estate agents who collect as many clients as they can during foreign trade fairs, or other events in Sweden. Then, despite not having any agents on site in Spain, they register all the names they have collected with developers and foreign estate agents, which means that no one else can show this particular client the homes. All parties lose from this strange practice, so our advice is not to register your names with estate agents at trade fairs, or with your local estate agent unless they have their own staff on site in Spain (only a fraction of all Swedish estate agents who advertise online have de facto staff on site).
Read also everything you need to know about residential investment in Spain.
We help with the entire purchasing process – from start to finish.
We look for the best purchase according to your wishes, and our Spanish lawyer is involved in every stage of the purchase process and checks that all permits and papers are in order, that you do not "inherit" electricity bills, etc. We also collaborate with a rental company that handles the rental of the home for you, with a bank that ensures that taxes and fees are paid, etc. We have Swedish-speaking brokers who work directly for us, or for the nationwide bank we have a unique partnership with, in all Spanish provinces.
For more information about this, write to info@spanskafastigheter.se
Below are answers to frequently asked questions about purchasing a home in Spain (privately, as a holiday home, or by a company as an investment). Here you can see a quick, visual summary of the purchasing process in PDFformat.
Before purchase
- “What is your recommendation that I do to look at listing ?”
- "Should I go down for 1-2 weeks and look around, or follow what's happening on the internet and by phone?"
- “Time, is there any time of year that is better than any other to make a purchase? In terms of price , supply or some other reason?
Response: The most important thing is to go down and look at listing and area in person as photographs and words can never describe how you experience the home and the area. Most people find it sufficient to stay 3 days to a week to look at enough homes and areas to base a decision on. NEVER put a deposit on an unseen home. This practice is not even something we allow (unless you are an investment firm that has given us a mandate to find the best investment purchases).
As for the time of year, our advice is to avoid August as most people are on holiday and all properties are rented out every day (and therefore cannot be shown). Most prices are negotiable, regardless of the time of year. The supply is constantly changing and the market is only stagnant in August.
Note, When you first contact us, be as clear and specific as possible. Where do you want to live, what is your budget, number of bedrooms desired, proximity to airport, proximity to beach , new construction or used , etc.
“What needs to be done before I can complete the purchase?”
The application for an NIE number is normally done before the purchase. You need the NIE to sign the title deed , but you can make a deposit without the NIE to tie up the property (you do it at the same time). Before, a lawyer could do this with a power of attorney. But nowadays you have to do it in person. It is enough to apply in person, and the lawyer or broker can later collect it. Many people also apply for the NIE well in advance before they arrive, via the Spanish embassy. It takes about 3 weeks to get the NIE, and it lasts for 3 months. Read more at the Spanish Embassy.
"How big is deposit ? And does it guarantee that I will get the apartment?"
Deposit is 10 percent. Yes, deposit takes the home off the market, and then you normally have to pay the full purchase price 4-6 weeks later.
“Is there no chance of getting deposit back?”
Response: usually not, but we have, when it was in our power, ensured that clients who suffered from "buyer's remorse" received their down payment back when it had not yet been transferred to the owner's account. However, legal fees cannot be avoided.
“How can I be sure that I will get the property once I have decided”
You do this by placing a deposit and signing a purchase contract.
In most cases, the owner can agree to 3000 Euros in cash to remove a home from the market until the buyers come home and can put down the full 10% deposit . In the past, most people used to bring this money in cash as it is not possible to withdraw that much money from an ATM (however, you can go to your Swedish bank before departure and ask them to release the withdrawal limit.) Nowadays, however, it is usually possible to quickly resolve it with a bank transfer.
You can also give our lawyer power of attorney to sign the title deed if you absolutely cannot come down when the deal is completed.
Costs involved in the purchase
- " The Title Deed /administration/m.fl?"
- “Broker fee?”
- “Lawyer/legal fees?”
Response: the costs involved in buying a property depend on whether it is a purchase of second-hand homes or new construction. When buying a second-hand property, you can expect to spend about 11% more than the final purchase price . Of this 11%, 8% is VAT. The rest goes to registration of the property, Notary Public and lawyer.
When buying a new build, you can expect to add about 14% to the price . This consists of about 10% VAT, the rest goes to registration, Notary Public and lawyer.
Brokerage fees are paid by the homeowner.
The lawyer's fee is approximately 1.0 to 1.5% of purchase price .
The entire purchase price is paid on the day the title deed is signed.
Fees and taxes after purchasing a home in Spain
“What are community fees and how much do they cost?”
Response: how big community fee (also called community fee or urbanisation fee) will be depends on which urbanisation you buy in. It varies, anywhere from €500 per year to €2200 per year. The community fee covers the costs of electricity for common areas, maintenance of flowers and bushes and pool, etc. Apartments in the city often have no fee because there is no surrounding urbanisation that belongs to the home. The same applies of course to fincain the country. However, there are occasional cases where about 10 country housing together own a community pool, in which case you pay community fee for pool maintenance.
Electricity and water are not included in the above fees, and are paid monthly and of course cost differently depending on where you live and what type of home you have. However, these costs are often quite low. For those who live permanently in their home in Spain, it is expected that the total annual cost for association fees, taxes, water, electricity, sewage, waste collection etc. on average is around 2200-3000 Euros for a home with 3 to 4 bedrooms.
“What taxes do they have on homes in Spain”?
Response: taxes for no residentes personas físicas, that is, “individuals not permanently resident in Spain” are as follows:
1. “Impuesto sobre la renta de las personas fisicas non residentes”. This preferential tax for non-resident citizens is also called income tax because all homeowners have the option of renting out their home (regardless of whether they rent out their home or not, it must be included in the declaration). If you rent out the home, the tax is 19% (note, it was previously 24.75%, but has since been reduced to 20%, and then another percentage point) on rental income after deduction for expenses can be derived from the rental of your home (home insurance, interest on loans, brokerage fees, electricity, water, property maintenance, etc.). This minimum tax only applies to citizens within the EU or EEA.
2. “Impuestos sobre Bienes y Inmuebles”, abbreviated IBI, is the mandatory, annual property tax that you pay regardless of whether you are registered in Spain or not. The tax is 0.5% and is determined by the assessed value.
We collaborate with a bank that helps explain when and how you should pay taxes and can arrange it via direct debit if you open an account with them.
Note, after purchase we arrange for the transfer of electricity and water, from the previous owner's name to the new owner's name. The same goes for community fee , property taxes, electricity, water, etc.
Read more in our article about tax laws in Spain (updated annually),
Rental after purchase
- "Is it worth using an established agency to help with the brokerage of the property?" What is the general fee for this?"
- "Are electricity and water usage, as well as community fee , included in the fee you pay to the rental agency?"
- “Fees to service companies/booking companies for rental, maintenance?”
- “How much can you earn by renting out your home?”
- “What should you consider if you want to buy a home as an investment?”
- "What are the rules in Spain regarding ownership via a Swedish AB?"
- "Is it complicated/risk of high tax benefits if you invest in an AB? I want to buy so I can rent out most of the year but be there myself 4-5 weeks a year with my family. Are there agencies that can take care of everything and in this way prove that you are not there and receive tax benefits? Do you rent from yourself then?"
Response: We recommend that you use an established rental company, even though they take about 20% of the income, they look after the property when you are not there, cleaning, key service etc. They also handle the marketing. This makes the whole thing much easier, and in most cases more cost-effective.
Electricity, water, community fee are normally paid by the owner of the property. It depends a bit on the arrangement.
How much you earn depends on many factors. Read more here about renting out your home in Spain.
Choosing an attractive home in an attractive location, preferably with a documented rental history. This is the most important thing to consider when making this type of investment. These factors also affect property value growth in the long term. Also keep in mind that July and August are the months when you will make by far the most money on your apartment as prices rise when Europe goes on holiday.
There is no problem buying through a Swedish company, the buying process is more or less the same. For more specific answers about deductions and other things to do with tax returns, consult your accountant. Also see more information further down in this article about buying a home in Spain with the Swedish company.
If you want to avoid benefit taxation, you need to “waive the right of disposal”. The company that owns the property signs an agreement with a rental company with a clause where you waive the right of disposal and that you, your family and acquaintances can rent the property at the same price as any other guest. An agreement with this clause and advertisements where the property is clearly advertised for rental are sufficient evidence to point out that the business is not being used for private purposes.
The tax on a company is 20% on profits for the first 2 years and 25% thereafter.
Read also about Spanish housing cooperative, a project model that reduces prices by up to 35%!
Loans for the purchase of a home in Spain
- “As a foreigner, can I get a loan in Spain?”
- “What is most advantageous, taking out a loan in Spain or in Sweden?”
Yes, you can. Up to 70%, but keep in mind that the banks in Spain these days have just as high requirements for your income etc. as Swedish banks. The payment plan is normally 30-40 years, and you should have paid by the year you turn 67 (we also cooperate with banks now that have up to 75 years). Read more about borrowing from a Spanish bank, and how to apply for a loan promise [note this service is only offered to our buyers] through us. You are not allowed to borrow for taxes and fees , so in practice you need 40% equity.
During the worst years of the crisis, we did not recommend anyone to take out a loan from a Spanish bank due to the risk of interest rates skyrocketing. However, now the economy has stabilized and only the most serious banks have weathered the storm.
Important information about taking out a home loan in Spain
New from December 2018 is that a valuation of a home is now valid for 6 months. As for the bank we work with, they do not charge for the valuation either due to new banking laws in Spain (many banks still charge from €400 and up). The valuation of the home determines how much you can borrow.
If the home is valued at €100,000 but you buy it for €120,000, you will still only be able to borrow €100,000. If it is valued at €120,000 but you buy it for €100,000, you will still only be able to borrow €100,000. The lower amount always applies.
This is an aspect that is important if the budget is tight. If you buy a home for €120,000, but it is valued lower (which is becoming increasingly common as the market value of homes increases while the valuation only looks at square footage, number of rooms, etc. and does not take into account location or other unique aspects), then perhaps not everyone has enough equity capital to be able to make the purchase.
One of our recent sales was in a similar situation. The home cost 220,000, but the client needed the bank loan to be approved at a valuation of at least 180,000. We then wrote this into the contract, that the client will receive the reservation amount of €3,000 back if the valuation is lower than €180,000.
Another important aspect It is important to know in this context that homes that have been converted, for example from one bedroom to two, are valued according to the original the title deed . For example, a large apartment with 1 bedroom that has been converted to 2 bedrooms is valued according to the current template as a "one" and you get a smaller loan.
A reason for low valuation is that if buyers cannot pay for themselves, the bank must be able to sell the home easily, but the valuation rarely says anything about the home's actual value on the market.
Buy in the company
Important for those who want to buy a Swedish company. The purchasing process is the same but some important points differ. You normally get a maximum of 50% in loans from a Spanish bank when you buy your company and it should be repaid in a maximum of 15 years. You also need a registration certificate from the Swedish Companies Registration Office in English (the English version is often sufficient but sometimes it needs to be translated into Spanish by a certified translator and stamped by a Notary Public where you live in Sweden). With this certificate you apply for a NIF number (Número de Identificación Fiscal – Tax registration number) via Spanish lawyer (as well as personal NIE number which all buyers need).
Information about buying a Spanish home with a Swedish AB:
It is perfectly possible to acquire a home in Spain with a Swedish AB. It is also possible to open a subsidiary in Spain to own the home, but this is not something we usually recommend to our clients, unless they were planning to make several acquisitions and manage a portfolio that exceeds €100,000 - €200,000 in rental income , and were planning to finance the purchases via a Spanish bank and operate the business more like a distinct real estate company.
If your company is going to buy a vacation home and wants to use the company's money, we recommend that this is done directly with the Swedish AB.
How does this work and what should you consider?
– You must register your AB with the Spanish Companies Registry to conduct business here and purchase homes. This is a relatively simple procedure and is something we help with if you buy through us.
– To avoid preferential tax in Sweden, you must give up the right to dispose of the home and be able to prove to the tax authorities that it is an investment and not a private holiday home disguised in a company to avoid tax.
When it comes to matters related to the Swedish Tax Agency, the burden of proof always falls on the company and we recommend that you rent out the property with a manager (we have subsidiaries that offer these services) where you agree that you and everyone with connections to the company, relatives, etc. can only stay in the property if they pay a market price like any other guest (that you as a private individual then use your property as much as you want anyway, is another matter that you agree with the manager about how often this should be done. We have a smooth online system for this.)
– The company is taxed in Spain for rental income . Not in Sweden. Sweden and Spain have a tax treaty to avoid double taxation and the tax must be paid where the business is conducted.
– A Swedish AB can open a Spanish bank account.
– A Swedish AB must file a tax return in Spain to account for the income earned here. This can be arranged by an accountant and is not particularly expensive.
Some common questions from Swedish entrepreneurs:
–"Are the purchase & sale-related costs if you buy with your company the same as if you buy privately?" Answer: The same purchase costs apply as for any legal entity in Spain. However, when you sell, the Spanish tax authorities will take 3% of purchase price to ensure that you pay your profit tax because your company is a non-resident company. When you declare and it turns out that you have not made any profit, you will get this 3% back. Or vice versa, if you have made a profit, they will keep the equivalent of what you would have paid in tax.
– "Will you be subject to any extra unpleasant property tax or similar when you own through a company?" Answer: – No. Just the regular property tax you pay regardless of how you buy your property (IBI).
–"Do I need a NIE number if I want to register my Swedish AB in Spain?" Answer: Someone on your board who will represent and sign the purchase needs an NIE number. This is someone we also arrange if you buy through us.
In summary: It is possible to purchase a home in Spain with a Swedish AB as long as it is done correctly. For more specific accounting questions, tax issues, etc., we recommend that you contact a Swedish accountant who specializes in foreign purchases.
Summary and supplementary questions about home purchases
What types of homes are available for purchase in Spain?
Answer: There are a variety of housing types in Spain, including apartments, villas, townhouses, and land with building rights. It is important to note regarding building rights that certain plots can only be built on a certain type of housing. Size etc. are also regulated. It is basically impossible to change this afterwards.
What are the main steps in the process of buying a home in Spain?
Answer: The main steps include finding a home, making an offer, signing a purchase agreement (arras), paying a deposit, conducting due diligence, and finally signing the official purchase contract (escritura) with a notary public.
Do I need a Spanish lawyer when buying a property in Spain?
Answer: It is highly recommended to hire a Spanish lawyer who can help you understand the legal system and ensure that all necessary documents and permits are in order. Most Swedish real estate agents handle the communication between client and lawyer.
What is an NIE number and why do I need it?
Answer: A NIE number (Número de Identificación de Extranjero) is a unique identification number required for non-Spanish citizens to be able to carry out certain transactions in Spain, including purchasing real estate.
How do I pay for a home in Spain?
Answer: Usually you pay a deposit (usually 10% of purchase price ) when signing the purchase agreement (arras). The rest of the payment is made when signing the official purchase contract (escritura) with a notary public. As far as new development are concerned, the most common is to first pay a reservation fee , then a couple of payments early in the process, a total of around 30% plus VAT. The rest, 70%, is paid at move-in . In connection with move-in any loans are also usually activated (provided they are approved, and that process is therefore not done until move-in . The reason for this is that the buyer's finances may have deteriorated significantly during the construction process). This means that you are not left with interest during the construction process.
What are the most common costs when buying a home in Spain?
Answer: The most common costs include transfer tax (ITP) for used homes, VAT (IVA) for newly built properties , notary fees, registration fees and legal fees.
What is the usual time frame for buying a property in Spain?
Answer: The time frame for buying a property in Spain varies, but it usually takes between 1 and 6 months from the time you find a property to the time you sign the official purchase contract (escritura). It often takes longer than that if it involves an estate etc.
Can I get a home loan from a Spanish bank to finance my home purchase?
Answer: Yes, many Spanish banks offer home loans to foreign buyers, but the terms and interest rates may vary. Loan terms are more individual than in Sweden.
Do I need a Spanish bank account to buy a property in Spain?
Answer: Yes, you need a Spanish bank account to be able to pay costs and taxes related to your home purchase and to be able to obtain any loans from a Spanish bank.
Is it possible to buy a home in Spain remotely?
Answer: Yes, it is possible to buy a home remotely by giving a power of attorney (poder notarial) to a lawyer or a trusted person who can act on your behalf during the purchase process. This procedure became common during the pandemic and is still relatively common. However, we advise most people to visit the home on site before making a decision. Remember that reservation fee is non-refundable in most cases.
What is an Energy Certificate and why do I need it?
Answer: Energy Certificate is a document that shows how energy efficient a home is on a scale from A (very energy efficient) to G (least energy efficient). It is a legal requirement to have an energy certificate when selling or renting a home in Spain.
How can I be sure that the home I buy has no debts or legal problems?
Answer: Your lawyer should carry out due diligence and request a “nota simple” from the Land Registry (Registro de la Propiedad) to verify that there are no debts, mortgages or other legal problems associated with the property.
Can I rent out my home in Spain when I'm not using it?
Answer: Yes, it is possible to rent out your home in Spain, but it is important to be aware of the local laws and regulations for renting and to pay relevant taxes on rental income .
What are the most common taxes I have to pay as a homeowner in Spain?
Answer: The most common taxes for homeowners in Spain include property tax (IBI), tax on rental income and an annual tax for non-Spanish citizens who own property in Spain (Impuesto sobre la Renta de No Residentes).
What happens if I want to sell my property in Spain in the future?
Answer: When you sell your property in Spain, you will have to pay a capital gains tax (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) on the profit you make from the sale. In addition, there may be other costs, such as notary fees and legal fees, related to the sales process.
Brief history of the Spanish real estate market
Spain has long been an attractive destination for foreign buyers looking for a second home, an investment opportunity or a place in the sun to retire in. Below is a brief historical overview of the Spanish property market in relation to foreign buyers:
- 1960s and 1970st: Mass tourism began and the Spanish property market began to become popular with foreign buyers during the 1960s and 1970s as more and more people discovered the country's many advantages. Spain's beautiful coastline, warm climate and affordable cost of living attracted buyers from northern European countries, especially the UK, Germany and Scandinavia. Costa del Sol, Costa Blanca and the Balearic and Canary Islands emerged as popular destinations during this period.
- 1980s and 1990s: Market growth and maturity. During the 1980s and 1990s, Spain's property market continued to mature, and the country became a member of the European Union in 1986. This membership facilitated greater cross-border investment and made it easier for EU citizens to buy property in Spain. During this period, the Spanish property market experienced steady growth, driven by both domestic and foreign demand.
- Early 2000s: Market boom. The early 2000s saw a significant boom in Spain’s property market, with property prices soaring and new projects being built rapidly to meet the growing demand. During this period, foreign buyers flocked in, particularly from the UK and Ireland, who were attracted to Spain by the prospect of strong capital gains and rental income .
- 2008-2013: Market downturn and recovery The global financial crisis of 2008 had a serious impact on the Spanish property market, leading to a sharp decline in property prices and a dramatic increase in unsold properties. Many foreign buyers, especially those who had invested in off-plan developments, were negatively affected by the downturn. However, the market began to show signs of recovery around 2013, with property prices stabilising and in some cases increasing.
- 2014-present: Continued recovery and foreign investment Since 2014, the Spanish property market has experienced a gradual recovery, partly driven by the continued interest from foreign buyers. During the first part of the pandemic, there was a natural decline in property purchases, but the subsequent boom was strong (Warren Buffet, among others, invested in Costa del Sol during the pandemic). However, a slowdown began to be seen in late 2022 and 2023. However, most international analysts believe that this will be a temporary dip and that Spain has a bright future due to the weather, culture, infrastructure and climate. It is mainly Malagaarea that is expected to grow the strongest as it approaches the 30s.
Links to our newsletters:
- Newsletter Nerja (and Malaga and the rest of the eastern Costa del Sol)
- Newsletter Marbella and the rest of the western Costa del Sol (Mijas, Fuengirola, Estepona etc)