Foreign Buyers: What to Expect When Buying a Home in Spain

Spain is one of the favorite destinations for foreign property buyers, and the Costa Blanca stands out for its beauty, climate, and lifestyle. However, the buying process in Spain has certain peculiarities that are worth knowing before taking the step. In this guide, we cover everything you need to know as a foreign buyer so that your experience is smooth and safe.

1. Obtaining the Foreign Identification Number (NIE)

The NIE is a personal, unique, and exclusive number that will identify you in all your fiscal and legal dealings in Spain. Without this number, you cannot buy a property.

Application process: You can apply for the NIE at any police station in Spain or a Spanish consulate abroad. It is recommended to apply in advance, as the process can take time.
Required documentation: You will generally need your passport and, in some cases, a letter explaining the reason for your application (such as the intention to purchase a property).

2. The Purchase Process: Step by Step

Buying a property in Spain involves several steps, each of which must be completed correctly to ensure the security of your investment.

1. Reserving the property: Usually, a small amount is paid to "reserve" the property and take it off the market. This also gives you time to review all the documentation.
2. Down payment contract: After the reservation, a down payment contract is signed, a legal agreement between buyer and seller. In this contract, the buyer pays a deposit (usually 10% of the purchase price) as a commitment.
3. Public deed and signing before a notary: The final step is signing the deed before a notary, where the buyer pays the remaining price and officially acquires the property. At this time, the notary will verify that everything is in order and that there are no debts or encumbrances on the property.

3. Costs Associated with Buying a Home in Spain

It is essential to consider the additional costs to the property price. These costs typically represent between 10% and 15% of the purchase price.

Taxes: The main taxes are VAT (for new homes) or ITP (for second-hand homes). The ITP varies depending on the autonomous community, but in the Valencian Community, it is usually around 10%.
Notarial and registry fees: These fees cover the notary's fees and the cost of registering the property in your name in the Property Registry.
Real estate agency fees: In Spain, it is common for the seller to cover the real estate agency fees, but it is essential to confirm this in advance.
Mortgage costs: If you finance the purchase with a mortgage, you will have to bear additional costs, such as the property appraisal and the mortgage opening fee.

4. Financial Considerations: Mortgages for Non-Residents

If you need to finance your purchase, Spain offers mortgage options for non-residents. However, it is essential to understand the terms and limitations.

Financed percentage: Banks typically offer up to 70% of the property value for non-residents. This means you must have 30% of the purchase price, in addition to the additional costs.
Interest rates: Interest rates for non-residents may be slightly higher than for residents. It is advisable to compare offers from different banks to get the best conditions.
Required documentation: Banks generally request documentation proving your financial situation, such as income proof, bank statements, and a copy of your passport.

5. Tax Implications and Obligations for Foreign Property Owners

It is essential to know your tax obligations as a property owner in Spain, as you will be subject to certain annual taxes and must comply with Spanish tax regulations.

Non-Resident Income Tax (IRNR): If you are not a resident in Spain, you must pay the IRNR. This tax applies even if you do not rent out the property, based on a percentage of the cadastral value of the property.
Property Tax (IBI): All property owners in Spain must pay the IBI, a municipal tax based on the value of the property.
Property declaration: If you decide to rent out your property, you must declare the rental income and pay the corresponding tax.

6. Hiring a Specialized Legal Advisor

Hiring a lawyer specialized in real estate transactions is an investment that brings security to the purchase process. Your lawyer will assist you in reviewing all legal documents, ensuring that the property has no encumbrances or debts and complies with all local regulations.

Encumbrance verification: It is essential to confirm that the property is free of debts or mortgages before signing the purchase contract.
Document translation: If the language is a barrier, your lawyer can assist you with translating all legal documents, ensuring that you understand every detail of the transaction.

7. Cultural and Lifestyle Considerations on the Costa Blanca

The Costa Blanca is not only a beautiful place to live; it is also a vibrant region with a pleasant climate year-round and a rich Mediterranean culture. Some aspects you may consider are:

Relaxed lifestyle: Costa Blanca residents enjoy a relaxed lifestyle, with access to beaches, mountains, and exceptional cuisine.
International community: Costa Blanca has a large foreign community, especially in cities like Altea, Benidorm, and Calpe. Living here will allow you to enjoy a multicultural environment and make connections with people from around the world.
Investment opportunities: The real estate market in this region has shown consistent stability, with good demand for both buying and renting, making Costa Blanca an excellent long-term option.

Conclusion

Buying a property in Altea, Spain as a foreigner may seem like a complex process, but with the right preparation and support from professionals, it is a rewarding investment. The Costa Blanca offers not only property in a Mediterranean paradise but also an unmatched lifestyle. Make sure you have the right advice and get ready to enjoy your new home in Spain.