If you are a non resident in Spain who is looking for to purchase a residential property, you should be aware of the documents and taxes you will need for your purchase.
National Identification Number (NIE)
In order to acquire a property in Spain it is compulsory to have National Identification Number (NIE), which is a unique personal number. The most efficient way to apply for an NIE is through a Spanish Lawyer or “Gestoria”, via a Power of Attorney.
We can recommend a number of English speaking Spanish Lawyers who offer this service. A Power of Attorney is signed in front on a Notary and gives the lawyer the power to represent you in as many capacities as you require.
Alternatively, if you are not in Spain you can sign a Power of Attorney in a Notary office in your home country and have it ratified by the FCO or Embassy.
All taxes and expenses associated with the purchase of a home must be paid in Spain. These include ITP (Transmission Tax), and IVA (or VAT) on newly built properties.
The tax levied on the purchase of a second hand home or re sale is the Tax on Property Transfers (ITP) that change depending on Autonomous Community, in the autonomous community of Murcia the rate is 8%, however in the region of Valencia it is 10%. In addition a purchaser will pay for the Notary Fee, Land Registry fees and their Legal Fees.
Brand New Properties have a higher taxation of 12%, which is 10% Transmission Tax plus 2% Stamp Duty.
If you require a mortgage the purchaser must also pay additional fees. There are two banks that have reduced their fees to a minimum. La Caixa Bank are offering a “no fee” mortgage but have very strict criteria. Banco Sabadell however will only charge the buyer the valuation fee, and a mortgage arrangement fee. The other banks will still charge valuation fees, mortgage arrangement fees, a second Notary and Land Registry fees for the mortgage (in addition to the first notary and land registry fee).
For ease of calculation if you are looking to purchase a home here in Spain then we would suggest always adding an approximate 12-15% on top of the advertised sales price in order to include the taxes and charges levied on the purchase of a property.
Non-Resident Income Tax (IRNR)
In Spain, there is the Non-Resident Income Tax (IRNR), often called “Wealth tax”. This is a direct tax levied on the property owners who do not permanently reside in Spain, the property is used as a second or holiday home.
The Non Resident Tax declaration is made in December and is approximately the same amount as the IBI or Council tax charged, normally a few hundred euros each year.
Bank account in Spain
Having a bank account in Spain is essential for a property purchase. Opening is free and takes about 45 minutes. The bank will require a passport for each name on the account and proof of address. There are a number of different types of account available from the Banks. On line banking is simple and easy to use and we can recommend banks with English speaking staff in their branches.