10 Things to Know Before Buying a Property in Spain
October 3, 2023
Spain's sunny shores, vibrant culture, and rich history have made it a dream destination for property buyers around the world. However, before you embark on your journey to own a property in this Mediterranean paradise, there are crucial considerations to keep in mind.
Whether you’re looking for property on the Costa del Sol, Costa Blanca, the Balearic Islands or Canaries, there are a number of things that you should consider before you commit to a new home in the sun.
In this guide, we'll explore ten essential things you should know before buying property in Spain.
1. Location, Location, Location
Choosing the right location is crucial. Consider your lifestyle and priorities when selecting the region and neighbourhood for your property. Proximity to amenities, schools, healthcare, and transportation can significantly impact your daily life, so it’s important to consider these when searching. Many people also recommend renting a property within the area you’re looking to buy before you commit to buying. This way, you’ll get a good understanding of the area to make sure it’s right for you.
2. Property Market Research
The property market in Spain varies greatly by region. Conduct thorough research on your chosen area to understand market trends, prices, and demand. This information will help you make informed decisions and negotiate effectively. Many prospective buyers forget, or just simply aren’t aware that the market has changed drastically in recent years, so it’s essential to start your search with realistic expectations. We recommend looking at online real estate websites such as Idealista to get an idea of property prices in your chosen area.
3. Property Type: New Build, Resale or Off-Plan Properties
Decide whether you prefer a new build, resale or even off-plan property. New builds offer modern amenities, while resales might have character but could require renovations. Off-plan properties are also a popular choice when buying a home in Spain, but they do require some research before committing. Your choice should align with your preferences and budget. Speak with a real estate expert in your area or join local groups to seek out advice from others.
4. Setting a Realistic Budget
Your budget should encompass not only the property price but also additional expenses. Factor in property taxes, legal fees, ongoing maintenance costs, and even potential renovations further down the line.
5. Verification of Property Details
Before sealing the deal on your Spanish property, it's vital to conduct a thorough examination to guarantee a seamless transaction. Here are the key aspects to consider:
- Check for Encumbrances: Assess the property's financial status by checking for mortgages, outstanding charges, and liens through a "nota simple" from the Property Registry.
- Community Bylaws and Levies: Review community rules, approved levies, and payment methods to understand your obligations within the community.
- Latest IBI Payment Receipt: Confirm the seller's up-to-date property tax (IBI) payments, adjusting the share based on the months of ownership if purchased mid-year.
- Energy Certificate: Ensure possession of the energy efficiency certificate, a mandatory requirement for selling a property.
- Habitation Certificate: Verify compliance with minimum habitability standards by obtaining this certificate, especially in specific Spanish communities.
- ITE Certificate: If the property is over 45 years old, acquire the Technical Building Inspection (ITE) certificate, although it's possible to sell without it, subject to buyer exemption.
- Certificate of Being Up-to-Date with Community Expenses: Request a certificate confirming no outstanding community debts from the seller.
- Latest Paid Utility Bills: Verify the owner's current payments for electricity, water, and gas bills associated with the property.
- Reservation Agreement (Contrato de Arras): Examine the reservation agreement detailing property and transaction specifics, along with the public deed of sale.
6. Tax Implications
Understanding the tax implications of property ownership in Spain is vital. Even if you don’t plan to live in or rent out your Spanish property on a full-time basis, you’re still subject to non-resident property taxes. But don’t worry, this is where IberianTax can be a valuable partner! Our online tax filing service simplifies the process, guiding you through tax return submission, ensuring compliance, and safety at all times.
7. Financing Considerations
If you require a mortgage, it’s a good idea to explore the options available to you in Spain. Interest rates and lending criteria may differ from your home country, so research thoroughly and consult with local banks or mortgage brokers to get as much information as possible.
8. Residency Status
Your residency status in Spain affects your tax obligations. Non-residents and residents have distinct tax responsibilities, and it’s your responsibility to ensure that you’re aware of your obligations in Spain. At IberianTax, we can help you with a range of non-resident taxes quickly and easily, all from the comfort of your home.
9. Property Inspection and Survey
For older properties, consider hiring a professional inspector or surveyor to assess the property's condition thoroughly. Identifying potential issues before purchase can save you money and headaches in the long run.
10. Negotiating the Price
In Spain, negotiation is common in property transactions. Sellers often set higher prices than they expect to receive, leaving room for negotiation. Be prepared to haggle and potentially secure a better deal!
Filing Spanish Non-Resident Taxes with IberianTax online
Owning a property in Spain is a dream come true for many, and with careful planning and professional guidance, it can be a seamless and rewarding experience.
IberianTax is here to support you on your journey. Our online tax filing service is tailored to non-resident property owners, making the complex task of managing non-resident property taxes simple, accurate, and secure. We’re able to help you submit a range of non-resident taxes in Spain, including Imputed Income, Rental Income and Capital Gains Tax returns using the Modelo 210 (Form 210).
With IberianTax, you can file your tax return within minutes, even if you have no previous knowledge of Spanish tax laws. Our team also provides free support to ensure that your tax return is submitted correctly and to give you peace of mind.
When it comes to non-resident property taxes, let IberianTax be your trusted partner in simplifying the tax-filing process, so you can fully enjoy your Spanish property with peace of mind.
Sign up for your FREE IberianTax account today, and start paying your Spanish non-resident taxes with ease.