Buying property in Spain as a foreigner: legal guide, taxes and costs explained
Buying property in Spain as a foreigner can be a lucrative move, whether you're planning a personal getaway, a rental investment, or long-term portfolio growth. But understanding the legal framework is essential. Spanish property law offers strong protections, but only if the buyer follows the correct legal steps and complies with local regulations. At Homely Valencia, we specialise in helping international investors navigate every stage of the buying process, from initial paperwork to final registration.
What are the legal requirements to buy property in spain?
The first step in buying property in Spain is securing the legal documentation required to make the purchase. One of the most important documents is the NIE (Número de Identificación de Extranjero). This is a foreigner identification number that is mandatory for all financial and legal transactions in Spain.
Without an NIE, you cannot legally purchase property, pay taxes, or even open a local bank account. Fortunately, Homely helps clients obtain their NIE quickly—often in just one to two days during your visit to Valencia.
Another essential requirement is opening a Spanish bank account. This is necessary to pay the purchase price, taxes, utility bills, and future maintenance costs. While the process is relatively straightforward, especially for EU citizens, some banks offer services in English, French, or German, making it easier for international clients to manage their finances in Spain.
Perhaps the most crucial part of the process is working with a local property lawyer. Spanish property law can be complex, especially if you're unfamiliar with the language or legal customs. A qualified lawyer will protect your interests by reviewing the contract, confirming the seller's ownership, checking for any outstanding debts or encumbrances, and ensuring the property complies with local planning regulations. At Homely, we include legal support as part of our service—giving you peace of mind and removing unnecessary friction from the transaction.
What documents do you need when buying property in Spain?
Before signing anything, it's essential to understand the key legal documents involved in a Spanish property transaction. One of the most common is the Contrato de Arras, also known as the deposit contract. This is a legally binding agreement where the buyer typically pays 10% of the purchase price to reserve the property.
If the buyer withdraws from the deal, the deposit is forfeited. If the seller backs out, they are legally obligated to return double the deposit—providing strong protection for buyers.
Another critical document is the Nota Simple, an extract from the Spanish Land Registry. This report outlines the property’s legal status, including ownership, existing debts or mortgages, and any legal claims that might affect the transaction. It’s a vital piece of due diligence that confirms the seller has the legal right to sell the property and that there are no surprises post-sale.
You'll also need to check the Registro Catastral, or Cadastral Register. This document provides official data on the property’s physical characteristics, including its size, layout, and boundaries. It is important to ensure this register matches what is recorded in the Land Registry and to identify any irregularities such as unregistered extensions or planning violations. At Homely, our experts conduct a full review of these documents to guarantee that everything is in order before contracts are signed.
What taxes will you need to pay when buying a house in Spain?
When buying property in Spain, both residents and non-residents must pay a range of taxes. If you're buying a brand new property (for example, a new-build or off-plan development), you'll be required to pay 10% VAT (IVA) on the property value, along with a 1.5% Stamp Duty (AJD). These taxes are calculated based on the purchase price and must be paid upon completion of the sale.
If you’re buying a resale property meaning the property has already changed hands you won’t pay VAT, but you will need to pay the Property Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP). This tax is levied on a sliding scale, depending on the region and purchase price. In the Valencian Community, the standard ITP rate is typically 10% of the purchase value.
In addition to these one-time purchase taxes, all property owners in Spain are required to pay ongoing annual taxes. If you’re a resident, you’ll be subject to Income Tax (IRPF) and Property Tax (IBI). Non-residents are also required to pay Non-Resident Income Tax and a separate Non-Resident Property Tax, even if the property is not rented out. At Homely, we provide ongoing support to help investors stay compliant with Spanish tax regulations and avoid costly penalties.
Example: Taxes & expenses for a €250,000 property in Valencia (2025)
One-time purchase costs
Total one-time Costs (estimate): €29,000 – €31,500
This brings the total purchase to approximately €279,000 – €281,500.
Annual Property Ownership Costs
Total Annual Costs (estimate): €1,800 – €3,500 / year
Important Notes
If you're buying a new-build, replace ITP (10%) with VAT (10%) + AJD (1.5%), meaning €25,000 VAT + €3,750 Stamp duty = €28,750 in taxes.
Taxes may vary slightly by municipality within the Valencia region.
Homely provides ongoing tax filing assistance and helps you estimate these costs based on the specific property you’re buying.
How much extra should you budget beyond the purchase price?
As a general rule, foreign investors should budget an additional 15% on top of the agreed property price to cover all legal costs, taxes, notary and registry fees, and professional services. This ensures you're fully protected and compliant throughout the buying process.
For example, for a €250,000 property, you should expect to pay €280,000 – €285,500 total, all-in.
Is it safe to pay the down payment directly to the seller?
One of the most surprising aspects for foreign buyers is that, in Spain, it is customary to pay the down payment directly to the seller at the time of signing the deposit contract. In many other countries, this money would typically be held in escrow by a notary or lawyer. While this might raise concerns, this method is standard practice in Spain and can be secure, provided proper legal checks are in place.
To minimise risk, it’s important to ensure that the time between signing the deposit contract and completing the final deed is not excessively long. You should also confirm that the seller is not a company in financial difficulty or on the verge of bankruptcy. Another key check is whether the property is mortgaged—if the mortgage balance equals the purchase price, the full amount may need to be paid directly to the bank instead of the seller.
At Homely, we carry out detailed due diligence to ensure that the seller is financially sound, and that all conditions are favourable for a safe transaction. With these measures in place, paying the deposit directly to the seller is perfectly acceptable and widely practiced across Spain.
What does the buying process look like from start to finish?
The process of buying property in Spain can usually be completed within four to eight weeks. It begins with securing your NIE and opening a Spanish bank account, followed by identifying a suitable property and negotiating the terms. Once a price is agreed, you’ll sign the Contrato de Arras and pay the 10% deposit.
During the next stage, your lawyer will conduct legal due diligence—checking ownership, debts, planning permissions, and other key legal documents. Once everything is confirmed, the sale concludes with the signing of the Escritura Pública (final deed) before a Notary. The property is then registered in your name at the Land Registry, and taxes and fees are settled.
At every stage, Homely offers personalised guidance and legal representation, helping you complete your purchase efficiently and with total peace of mind.
Why Choose Homely Valencia for Your Spanish Property Investment?
Buying property in Spain can and should be incredibly rewarding with the right support. Homely Valencia provides a comprehensive, investor-friendly service that includes legal, financial, and administrative guidance, ensuring every box is ticked before, during, and after your purchase.
We specialise in working with international investors looking to enter the vibrant Valencia property market. From obtaining your NIE to ensuring legal compliance and managing taxes, we take care of everything—so you can focus on the exciting part: enjoying your property and watching your investment grow.
Ready to take the next step?