Buying Property in Spain: The Complete Guide

What You Need to Know Before You Buy

Planning to buy property in Spain?

Whether it is a villa on the coast, a city apartment, or a rural retreat, buying property in a foreign country involves a distinct set of legal and tax considerations that are easy to underestimate.

This guide walks you through the essential steps — purchase costs, legal due diligence, tax obligations during ownership, and the practical considerations that matter most for international buyers in Spain.

1. Understanding the upfront costs

Before you begin your property search, it is important to understand what buying in Spain actually costs beyond the asking price. Total purchase taxes and fees typically add between 10% and 14% to the purchase price — a figure that surprises many first-time buyers.

New build properties:

• VAT (IVA): 10% of the purchase price
• Stamp Duty (AJD — Impuesto de Actos Jurídicos Documentados): typically around 1.5%, though this varies by region

Resale properties:

• Transfer Tax (ITP — Impuesto de Transmisiones Patrimoniales): the primary purchase tax for second-hand properties, ranging from 6% to 13% depending on the autonomous region. The rate for the Balearic Islands differs from that of Madrid or Valencia — always verify the specific rate for your chosen location before budgeting.

Professional fees:

• Notary fees: typically 0.5% to 1.0% of the purchase price
• Property Registry fees: usually between €600 and €1,500

All purchase taxes and fees are paid by the buyer at completion — at the point of signing the escritura (public deed of sale) before a notary. Budget for approximately €1,100 to €2,500 in notary and registry fees on top of the purchase price and main taxes.

2. Legal due diligence — what to check before you sign

Buying property in Spain as a foreigner means navigating a legal landscape that differs significantly from most other countries. Thorough due diligence is not optional — it is the difference between a sound investment and a costly problem.

2.1 Urban planning and the legality of the property

One of the most important — and least understood — aspects of buying in Spain is that a property being registered with the Property Registry (Registro de la Propiedad) or the Cadastre does not guarantee its legal status. A construction can be partially or entirely illegal even if it appears on both registers.

The Property Registry records ownership and charges. The Cadastre determines the property's value for tax purposes. Neither certifies urbanistic legality.

The consequences of buying an illegal construction can be severe: inability to obtain renovation licenses, and in some cases prohibition from contracting utility services such as electricity, gas, and water.

A municipal certificate confirming no open infraction files is not sufficient — it only confirms whether proceedings are currently active, not the overall legal status of the building. Even a habitation certificate (cédula de habitabilidad) does not guarantee legality.

Our recommendation: An urbanistic audit by a specialist is essential for any property purchase in Spain, particularly for rural properties and older constructions.

Rural land — a particular caution: Rural land in Spain is primarily designated for agricultural use. Before purchasing property on rural land, consult the relevant Town Hall (Ayuntamiento) and, in the Balearic Islands, the Island Council (Consell Insular) to confirm the necessary permits and licenses for residential use. This is one of the most common sources of serious legal problems for international buyers.

2.2 The seller's urbanistic obligations

Spanish law requires the seller to declare the urbanistic status of the land in the title deed — including whether there are illegal constructions, whether the land is unsuitable for private use or building, or whether it carries outstanding legal obligations.

If these obligations are not met, the buyer has the right to rescind the contract within four years and claim compensation. Even minor urbanistic irregularities can result in an entire dwelling being classified as fuera de ordenación — outside the planning framework — with significant implications for future use and sale.

Commissioning an urbanistic report from an architect before exchange is strongly advisable.

2.3 Property Registry certification

Always request a formal certification from the Property Registry — not merely an informational note (nota informativa). While cheaper and faster to obtain, a nota informativa provides only general information and can contain inaccuracies that are highly material to the purchase.

A full certification allows you to verify:

• The true legal owner or owners of the property
• Any existing charges — mortgages, easements, embargos, rights of way
• Whether any tenants are formally registered
• Whether the property is subject to official protection schemes, which carry significant obligations and limitations for the buyer

The Property Registry does not certify exact boundaries or square metres unless it has been formally coordinated with the Cadastre — and this coordination must be explicitly stated in the registry entry.

After completion, ensure the property is registered in your name as promptly as possible — typically within 30 to 60 days. Your notary can submit the public deed electronically immediately after signing.

2.4 The Cadastre

The Cadastre's primary function is tax valuation — for IBI (annual property tax), capital gains calculations, and Wealth Tax. It does not certify boundaries or precise square metres.

It is important to verify the assigned use of the property in the Cadastre. If the recorded use does not match the actual use — for example, a property listed as commercial premises but used as a dwelling — changing it can be complex and may require a licence for change of use. Be aware of recent regional regulations, including Decree Law 6/2023 in the Balearic Islands.

2.5 Coastal Law

If you are buying near the sea, you must obtain a certificate from the Demarcación de Costas confirming the property is not affected by the 1988 Coastal Law — in particular, that it does not fall within the maritime public domain (within 10 metres of the coastline). This is a non-negotiable step for coastal properties.

2.6 Military authorisation for non-EU buyers

If the buyer is not an EU or EEA citizen, prior authorisation from the Spanish Ministry of Defence may be required before the public deed of sale can be signed for rural or developable land in the Balearic Islands, or for constructions on such land.

This applies to foreign individuals and legal entities (including Spanish companies under foreign control) who are nationals of non-EU/EEA countries.

• Swiss citizens: generally exempt as individuals, though legal entities may still require authorisation
• UK citizens: those who were EU residents at Brexit (31 December 2020) and remain so are generally exempt; others will require authorisation
• Married couples: if a non-exempt buyer is married under a community property regime to an exempt spouse, authorisation may still be required even if the property is solely in the name of the exempt spouse

3. Documents to request from the seller

Before exchange, ensure you have obtained the following from the seller:

• Habitation certificate (cédula de habitabilidad)
• Energy efficiency certificate (certificado de eficiencia energética)
• For apartments within communities: a certificate confirming all community fees are up to date, and a separate certificate confirming no extraordinary levies (derramas extraordinarias) have been approved — even if payment falls due after completion
• The last four receipts for IBI (annual property tax) and the waste collection tax

4. Tax implications of ownership

The tax obligations of owning property in Spain depend significantly on how the property is used and whether you are a Spanish tax resident.

4.1 Main residence versus second home

If the property is your main residence — meaning you spend more than 183 days per calendar year in Spain and establish your centre of vital interests here — it is generally exempt from imputed income tax.

If the property is a second or holiday home — not your primary residence — you are liable for Non-Resident Imputed Income Tax, even if the property is empty for most of the year. This is calculated at 2.0% or 1.1% of the property's cadastral value (depending on whether the value has been recently revised) and is filed annually through Modelo 210.

4.2 Rental income

If you generate rental income from a Spanish property:

• Non-EU residents pay a flat 24% tax on gross rental income, with no deductions permitted for expenses such as mortgage interest, repairs, or management fees
• EU residents pay 19% on net rental income, with legitimate rental expenses deductible

Rental income is declared and paid through Modelo 210. The difference in treatment between EU and non-EU residents is a subject of ongoing legal debate, with some experts considering it potentially discriminatory — and worth challenging in certain circumstances.

5. Ongoing costs and taxes to plan for

Beyond the purchase itself, owning property in Spain involves recurring costs:

• IBI (Impuesto sobre Bienes Inmuebles): an annual municipal property tax calculated on the cadastral value of the property
• Garbage tax and community fees: local taxes and fees for shared services, particularly relevant for apartments and properties within urbanisations; community fees can range from €50 to €500 or more per month
• Wealth Tax (Impuesto sobre el Patrimonio): applies to the net value of worldwide assets above certain thresholds for Spanish tax residents. Rates and exemptions vary significantly by region — Madrid has largely abolished it, while the Balearic Islands apply it in full

6. Key considerations during the purchase process

6.1 Fiscal liens (afecciones fiscales)

Be alert to fiscal liens appearing in the Property Registry. These indicate that for up to four years after purchase, the property itself can be held liable for unpaid tax debts from previous transactions if the prior owner fails to settle following a tax audit.

6.2 Rural property right of first refusal

When buying rural property, neighbouring landowners may hold a right of first refusal (retracto). This should be investigated and addressed before exchange.

6.3 Tenant's right of first refusal

When buying a tenanted property, confirm that the tenant has explicitly waived their right of first refusal in the rental contract.

6.4 Commercial premises

If purchasing commercial premises, an engineer should confirm that the intended activity is permitted under local planning regulations and that any necessary adaptation works are feasible before an activity licence can be obtained.

6.5 Sale of a family home

Even if only one spouse is the legal owner and the couple operates under a separation of assets regime, the consent of the non-owning spouse is generally required for a valid sale — including under Article 4.3 of the Civil Law Compilation of the Balearic Islands.

6.6 Cadastral coordination with neighbouring properties

Verify whether adjacent properties are coordinated with the Cadastre and that their registered boundaries do not overlap with the property you intend to purchase.

Georeferenced boundaries in the registry-cadastre system take precedence over physical features such as walls or fences.

6.7 Tourist rental licences

If acquiring a property with an existing tourist rental licence, ensure the activity is properly registered with the relevant tourism authority and has been active for the past three years. The change of ownership of the activity must be formally processed by the seller to avoid future liability transferring to you.

6.8 Decennial liability insurance

New constructions must carry insurance covering structural defects for ten years. For properties built by self-promoters — individuals who built their own home — this insurance is not initially mandatory, but if the property is sold within ten years of completion, the buyer's express exemption and evidence that the seller lived there (such as an empadronamiento certificate) may be required.

6.9 Real estate agency contracts

An estate agent's contract is a mediation contract — it connects buyer and seller but does not provide legal advice, and agents typically exclude themselves from liability for issues arising from the purchase. Pay particular attention to exclusivity clauses and confirm when the agency's fees become due. Ideally, fees should only be payable on signing the public deed of sale, not on signing a private reservation contract.

6.10 Hidden defects

For second-hand property, the seller is liable for hidden defects for six months from completion. This period can be modified by agreement in the purchase contract.

6.11 Off-plan purchases

• Confirm the developer holds Decennial Liability Insurance
• Verify the developer has insurance or individual bank guarantees protecting your advance payments — collective guarantees are not sufficient
• Ensure partial payments go into a segregated bank account dedicated solely to your project
• Confirm the property has a final completion certificate (certificado final de obra) signed by the architect and registered in the Property Registry

6.12 Community of owners

If buying an apartment, review the community's statutes and internal regulations carefully. These govern matters such as pool use, terrace modifications, and — critically — whether tourist rentals are permitted within the building.

6.13 Arras contracts versus option contracts

The standard purchase process involves a private contract with an arras clause — a deposit of typically 10% of the price — followed two to three months later by signing the public deed of sale before a notary.

Be cautious of option to purchase contracts (contratos de opción de compraventa). These can be treated as two separate taxable transactions, resulting in Transfer Tax (ITP) being paid twice — once on the option premium and again on the full purchase price.

Even with an arras contract, avoid taking physical possession — such as receiving the keys — before the full purchase price is paid, as this can be interpreted legally as the sale having already completed, leaving the seller with only a contractual right to payment. This is a nuanced area that requires specific legal advice.

How SamirLaw can help

Buying property in Spain as an international client means navigating regional laws, tax implications, and legal due diligence requirements that differ significantly from other jurisdictions. The consequences of getting it wrong — illegal constructions, undisclosed charges, missed tax obligations — can be significant and long-lasting.

At SamirLaw we provide:

• Full legal due diligence — charges, planning status, urbanistic legality, and documentation review
• Purchase cost estimates — a clear breakdown of all taxes and fees before you commit
• Tax planning — minimising your tax exposure both at purchase and throughout ownership
• Power of attorney — if you are based abroad, we can act on your behalf throughout the process
• Residency and tax status advice — understanding whether the property will be your main residence or a second home has significant tax implications that are worth addressing before, not after, purchase
• Regional expertise — including the specific regulations applicable in the Balearic Islands
• Ongoing compliance — IBI, Modelo 210, rental income declarations, and Wealth Tax

Ready to discuss your purchase?

The information in this guide is provided for general informational purposes only and does not constitute legal or tax advice. While we have taken care to ensure the accuracy of the content at the time of publication, property law, tax rates, and regional regulations are subject to change and individual circumstances vary significantly. We strongly recommend seeking qualified legal advice before making any decisions in connection with a property purchase in Spain. For advice tailored to your individual circumstances, please contact us directly.

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