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AMERICANS IN SPAIN

Navigating Spain’s real estate market: A guide for American homebuyers

There are some key matters US nationals looking to buy a Spanish home should consider, from legal complexities, to tax, property inspections and the role of buyer's agents. This quick guide by an international lawyer in Spain has you covered.

Published: 26 July 2024 11:29 CEST
Navigating Spain's real estate market: A guide for American homebuyers
A riverside view of Seville's Triana neighbourhood. More and more Americans are buying property in Spain. Photo: Taisia Karaseva/Unsplash

Buying a residential property in Spain can be an exciting yet complex endeavour, especially for American buyers unfamiliar with the intricacies of the Spanish real estate system.

With varying regulations at the state, regional, and local levels, it is crucial to be well-informed and well-prepared.

In this article, Maryem Essadik, immigration lawyer and head of English-speaking international law firm Marfour, offers US nationals a breakdown of the key considerations when buying a Spanish property.

Legal Complexities

Spain’s legal framework for real estate transactions is multifaceted, involving regulations that differ significantly between the national, regional, and local levels. Therefore, engaging specialized real estate lawyers is highly advisable.

1. State, Regional, and Local Regulations: The Spanish legal system is characterized by its decentralized nature. Each autonomous community in Spain can have distinct laws affecting real estates and property transactions. For example, while some regions may establish restrictions for renting out properties (ie. Limitations or prohibitions on carrying out short-rental activities, limitations on long-term rental prices etc.), others might have significantly varying taxes and fees associated with property purchases, and others can also count with a singular regional Civil Code that regulates in a particular manner important aspects such as the initial down payment contract (“Arras” in Spanish) when buying a property. Municipal regulations can also considerably impact property use and renovations.

READ ALSO: Which cities in Spain have new restrictions on tourist rentals?

2. Legal Representation: A lawyer with expertise in Spanish real estate law can navigate these complexities, ensuring compliance with all applicable regulations. They can conduct due diligence, verify property titles, and check for any encumbrances or legal issues that could affect the purchase. Legal representation is not just a formality but a necessity in Spain to avoid potential pitfalls.

READ ALSO: What’s the difference between a gestor, a lawyer and a notary in Spain?

3. Immigration legal advice: In connection with the property you want to buy in Spain you should receive the proper immigration law advice. Nationality and Immigration regulations in Spain are a complex but at the same time exciting field to navigate to find the best solution that will be matching your concrete case and circumstances (i.e: Digital Nomad Visas, Non Lucrative visas etc.)

LISTED: The visa options Americans can apply for to live in Spain

Fiscal Considerations

Taxation is another critical area that requires careful attention. Spain’s tax system includes various taxes that can impact the overall cost and benefits of owning a property.

1. Tax Residency: Determining your tax residency status is essential as it influences the taxes you are liable to pay. If you spend more than 183 days in Spain in a calendar year, you are considered a tax resident. You can also qualify as tax resident in Spain if having in this country the centre of your economic interests. Tax residents are subject to Spanish income tax on their worldwide income, while non-residents are taxed only on income generated in Spain.

READ ALSO: Do I have to pay tax twice if I’m an American living in Spain?

2. Income Tax and Wealth Tax: Spain imposes income tax (IRPF) and wealth tax (Impuesto sobre el Patrimonio) differently across its autonomous communities. The rates and allowances can vary, so understanding the specific regulations in the region where you plan to buy is crucial. For instance, some regions might have higher exemptions for wealth tax, impacting the overall cost of owning high-value properties.

3. Rental Income: If you plan to rent out your property, you need to be aware of the taxation rules on rental income. US tax residents are currently taxed for their rental incomes in Spain at a 24 percent flat rate on rental income (not being allowed to deduct any expense), whereas Spanish tax residents include rental income in their general taxable income (with different expenses being tax deductible), which could be taxed at progressive rates. Counting with the appropriate assistance of tax lawyers specialized in American clients and with a full knowledge of the US-Spain Tax Treaty can considerably help you to improve your tax bill.

READ ALSO: What the new Spain-US social security deal means for Americans

4. Special Tax Expats Regime: Implemented at the time that David Beckham joined Real Madrid (and known because of that as “Beckham Regime”), that regime may allow you enjoying the pros of being a tax resident in Spain, by living in this country exceeding 183 days per year, but taking advantage of a 24% flat rate and only making taxable in Spain labour incomes together with other incomes generated in Spain but not being taxable in Spain those sourced abroad. This tax regime has a maximum total 6 years duration and those who are eligible for it they also avoid filing Wealth Tax in Spain for their worldwide wealth.

To properly apply for it, it is always recommendable carrying out a previous tax planning and analysis with specialized Tax Lawyers before buying your property and moving to Spain.

READ MORE: 

Property Inspections

A thorough technical inspection by a qualified architect is advisable to ensure the property meets all regulatory standards and is free from structural defects.

1. Construction Defects: Architects can identify potential issues such as structural integrity, water damage, and compliance with building codes. This is especially important for older properties or those that have undergone renovations.

2. Urban Planning Compliance: The inspection should also verify that the property complies with local urban planning regulations. Non-compliance can result in significant fines or even demolition orders.

READ ALSO: Do I need planning permission in Spain and how do I apply for it?

Buyer’s Agents

Unlike real estate agents who typically represent the seller and defend his interests, buyer’s agents work in the interest of the buyer, offering numerous advantages.

1. Local Market Knowledge: Buyer’s agents are well-versed in the local market conditions and can provide valuable insights into different neighbourhoods, school districts, community amenities etc. This knowledge helps in identifying properties that best match your preferences and needs.

2. Fair Pricing: Buyer’s agents can help negotiate better prices. They are familiar with the local market rates and can prevent the common practice of overpricing properties for foreign buyers.

3. Due Diligence: By conducting thorough market analyses and property evaluations, buyer’s agents can ensure that you make an informed decision. They also handle the negotiation process, striving to secure the best possible deal on your behalf.

READ ALSO:

Financial Advice

Securing favourable financial terms can result in substantial savings, making it essential to seek expert financial advice.

1. Currency Exchange: For American buyers, currency exchange rates can significantly impact the cost of purchasing a property. Working with a reputable currency exchange provider can help you get the best rates, reducing overall expenses.

2. Mortgage Conditions: Comparing mortgage conditions from different lenders is crucial. Spanish banks offer various mortgage products, and an independent financial advisor can help you find the most favourable terms, considering interest rates, repayment periods, and other conditions.

READ ALSO: What non-residents should now about getting a mortgage in Spain

Conclusion

Buying a residential property in Spain involves navigating a complex legal and fiscal landscape.

By engaging specialized lawyers, conducting thorough property inspections, utilizing the services of buyer’s agents, and counting with expert financial advice, American buyers can mitigate risks and make informed decisions.

With careful planning and the right support, purchasing a home in Spain can be a rewarding investment and a gateway to enjoying the country’s rich culture and beautiful landscapes.

This article was written by Maryem Essadik, immigration lawyer and head of English-speaking international law firm in Madrid Marfour (Contact: +34 698 917 840, info@marfourlaw.com).

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RESIDENCY PERMITS

Toma de Huellas: What to know about Spain’s fingerprinting for residency

For certain types of residency permits in Spain you will need to have your fingerprints taken in order to be officially registered. Here's what you need to know about what this process involves and how to go about it.

Published: 16 September 2024 11:16 CEST
Toma de Huellas: What to know about Spain’s fingerprinting for residency

There are many different processes you’ll have to go through as part of your move to Spain, from applying for visas to getting residency permits and maybe registering with social security. The process of toma de huellas is just another of these you’ll have to go through in order to legally reside here. 

What is toma de huellas?

Toma de huellas  means fingerprint taking in Spanish. The process is carried out by the National Police or officials from the Immigration Office and involves taking a person’s fingerprints so that they are legally registered in the national database.

Non-EU foreign residents will be asked to give their fingerprints when they apply for residency permits such as the Tarjeta de Identidad de Extranjero or TIE, which translates as Foreign Identity Card. Those who have gained residency as family members of EU citizens will also need to go through this process.

You may also need to give your fingerprints again when you go to renew your residency card or if your card is lost or stolen and you need to apply for a new one.

How is it done?

The fingerprinting is done as part of the processing of your residency card. You will need to book a prior appointment or cita previa to get it done, you can’t just turn up at your local police station or immigration office and ask for the process to be carried out.

To get your appointment, you will need to go to the special government web page and click on your province and location to book one near you. 

The TIE and other residency cards typically should be applied for within one month of arriving in Spain, after you have your initial authorisation, such as your visa.

Fingerprinting will be done at the same time as processing all your documentation and preparing your card, so you need to make sure you have everything in order beforehand.

READ ALSO – GUIDE: How foreigners can apply for their TIE residency card in Spain

What documents do I need?

The documents you need may differ depending on what type of residency document you get, but the most common are the documents you need for the TIE.

In this case you will need:

  • Modelo EX17 – The application form in order to apply for your TIE. This must be filled out and signed.
  • A valid passport or other travel document showing your date of entry into Spain. If you didn’t enter through passport control at an airport you must have declared your arrival in person at any Police Station or Foreign Office within a maximum period of 72 hours from the moment of entry into Spain.  
  • A recent colour passport-sized photograph on a white background, passport size.
  • Your visa, if applicable.
  • The resolution granting you authorisation to live in Spain in the following cases: SME visas (displaced minors), authorisation for cross-border workers, law 14/2013 of Support for Entrepreneurs and their Internationalisation, resolutions of residence or stay granted under a Judicial Appeal. 
  • Proof of payment of the corresponding fees. 
  • Proof that you have registered with Social Security, if applicable. You will do this if you’re planning on working in Spain.

You may also need a recent padrón certificate to show your current address.

Remember you will need official translations (if not originally in Spanish) and copies of all these documents. 

At your appointment

When it’s time for your appointment, you will be called up to hand in all your documents.

At the same time, they will take a digital copy of your fingerprints on a small machine they have for the process. You may have to hold your fingers on for a certain length of time and put different parts on the screen in order for it to be fully completed. 

Once this is all done, you will typically have to make another appointment to go and pick up your TIE card or other when it’s ready.

The processing time can vary between regions, but they will usually inform you how long it will take. It will usually be one month or more.

READ ALSO: Can you move to Spain if you have a criminal record?

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