Buying property in Spain as a foreigner: stages, taxes and risks

The essentials in brief

Spain is one of the most open European jurisdictions for foreign buyers. A citizen of any country can purchase a flat, a house or a commercial property without a residence permit and without Spanish citizenship. There are no quotas for non-residents and no bans by nationality.

But behind the apparent simplicity stands a formalised procedure: a mandatory NIE, a preliminary contract with a deposit (arras), a registry check of the property (nota simple), completion before a notary (escritura pública) and the final registration of title in the Registro de la Propiedad. Every stage carries its own taxes, costs and risks. Below is a detailed breakdown to help you get through the process without the typical mistakes.

NIE and a bank account: where to start

Before any purchase a foreigner needs two basic tools.

NIE - the foreigner identification number

The NIE (Número de Identificación de Extranjero) is your tax and legal identifier in Spain. Without it the notary will not execute the deed and the tax office will not accept your payments. You can obtain the NIE in Spain or through the consulate where you live. The timeline is roughly from a few days to a few weeks - it depends on the region, the appointment slots and the workload of the authorities.

An account with a Spanish bank

Technically the law does not forbid settling another way, but in practice an account with a local bank is needed almost always: the payment for the property passes through it, the banker's drafts for the notary are issued from it, and utilities and taxes are set up on direct debit through it. Opening an account as a non-resident usually requires a passport, the NIE and proof of the origin of funds.

Tip: start the NIE application and the account opening in parallel with your property search - these are the slowest links, and they often become the reason deadlines slip.

Stages of the deal: from search to registration

A classic sale and purchase goes through several steps. The order looks like this:

1. Searching for and choosing the property. You define the budget, the region and the type of property (resale or new build - the taxes depend on it). At this stage it pays to check the legal cleanliness of the property right away, not just its condition and location.
2. Reservation and preliminary checks. A reservation document with a small sum is often signed to take the property off the market for the duration of due diligence.
3. The arras contract (contrato de arras). A preliminary contract with a deposit of roughly 10% of the price. It legally binds both sides: if the buyer pulls out, they lose the deposit; if the seller does, they usually return double the amount. This is not a formality but a fully fledged contract.
4. Preparing for completion. The lawyer checks the documents, the bank prepares the drafts or the mortgage, and the date at the notary is agreed.
5. The notary and the escritura pública. On the appointed day the parties sign the escritura pública de compraventa - the notarial deed of sale. The balance is paid and the keys are handed over.
6. Registration in the Registro de la Propiedad. The notarial deed is filed with the property registry. You become the fully fledged legal owner only after registration - until that moment your title is not fully protected.

After completion you need to transfer the utility contracts and register for the local taxes.

Checks and risks: nota simple and debts

The buyer's classic mistake is falling in love with a property and skipping the legal check. In Spain the risks do not lie on the surface, so due diligence is mandatory.

Nota simple - the registry extract

The nota simple is a short extract from the Registro de la Propiedad. It shows the real owner, the exact description of the property and, most importantly, the encumbrances: mortgages, seizures, easements, court restrictions. You should order and study it before signing the arras, not after.

Debts that transfer with the property

In Spain a number of debts attach to the property rather than to the previous owner. So you check:

• Debts to the community of owners - by requesting the certificado de deudas de comunidad;
• Arrears on the IBI tax (the annual municipal property tax);
• Any outstanding mortgage and other encumbrances in the nota simple;
• Whether the actual state of the property matches the documents (the legality of extensions, no cadastre violations).

If these checks are skipped, the risk is simple and expensive: buy a flat and you can inherit someone else's debts and lawsuits along with it. That is why a lawyer's support on a purchase is not a luxury but insurance.

Taxes and costs when buying

On top of the property price, budget for additional costs. The market benchmark is roughly 10-14% above the price. The structure depends on whether you are buying a resale home or a new build.

The resale market: the ITP tax

When you buy a resale home you pay ITP (Impuesto sobre Transmisiones Patrimoniales) - the property transfer tax. The rate is set by the region and is roughly 6-10%. Regional examples: Madrid - around 6%, Andalusia - about 7%, Catalonia and Valencia - in the region of 10%. Check the exact rate as of the transaction date.

New builds: IVA plus AJD

When buying from a developer, instead of ITP you pay:

• IVA (VAT) - roughly 10% on housing (for commercial properties the rate is higher, around 21%);
• AJD (Impuesto sobre Actos Jurídicos Documentados) - stamp duty, roughly 0.5-1.5% depending on the region.

Other transaction costs

Annual taxes after the purchase

Ownership carries costs too. Every year you pay IBI (the municipal property tax). For non-residents there is also IRNR (Impuesto sobre la Renta de No Residentes) - the non-resident income tax, charged on the imputed income from owning the property even without renting it out (roughly a fraction of a percent of the cadastral value per year). All the figures above are benchmarks; the final amounts are calculated for the specific property and region.

A mortgage for non-residents

Getting a mortgage from a Spanish bank as a non-resident is realistic, but the conditions are tougher than for residents.

• LTV (the share financed). Banks usually lend roughly 60-70% of the value (residents get up to 80-85%). So you will need roughly 30-40% of your own funds plus the transaction costs.
• Rates. They come as variable (pegged to Euribor plus a margin) and fixed. The specific figures move with the market, so check the banks' current offers at the time of the deal.
• Term. Typically a benchmark of 20-25 years, often with an age cap on the borrower at final repayment.
• Documents. Passport, NIE, account statements for 6-12 months, proof of income. Foreign documents usually require a sworn translation and an apostille.

The large banks (for example CaixaBank, Sabadell, BBVA, Bankinter) work actively with non-residents, but approval and the rate depend on your profile. It helps to obtain pre-approval before signing the arras.

Buying remotely by power of attorney

The good news: you do not have to be personally present at every stage to buy property in Spain. The deal can be completed remotely by power of attorney (poder).

The scheme usually looks like this:

1. You execute a notarial power of attorney for a trusted representative or a lawyer - before a notary in Spain, or at the consulate or a notary where you live, followed by an apostille and a sworn translation.
2. Under the power of attorney the representative obtains your NIE, opens the account, signs the arras and attends completion at the notary on your behalf.
3. Title is registered in the Registro de la Propiedad in your name.

This is a convenient format for those who are not yet in Spain or cannot fly in for every stage. The key safety condition: the power of attorney must be drafted correctly with a clear scope of powers, and the representative must act in your interests under a lawyer's supervision.

How Krepko runs the deal for you

Buying property in Spain is not one document but a chain of NIE, bank, checks, taxes, notary and registration, where every link affects the others. When different providers handle it, it is easy to lose deadlines and miss a risk.

Krepko runs the deal for you - one team. We help obtain the NIE and the account, check the nota simple and the debts, support the arras, coordinate the notary and the registration, calculate the taxes and costs in advance and, if needed, arrange a remote purchase by power of attorney. You get a transparent plan and a clear cost estimate rather than a pile of unrelated invoices.

You can hand us the entire deal: the legal check of the property, negotiations, the notary and the registration of title. See our Real estate in Spain service - or just leave a request, and we will tell you what your case needs.