Although the pandemic has hit the real estate sector very hard in the last 18 months, there have been more than clear signs for some time that the industry is seeing light at the end of the tunnel, and that it is slowly beginning to recover. An example of this is the growing interest of foreigners in buying a property in Spain, and in particular in Barcelona, where we will focus.
English, French, Germans, Russians, Italians, Latin Americans and a great growth of Chinese citizens are the ones who most come to these lands in search of a different experience, a new lifestyle or, why not, good investment opportunities. The problem is that the process of buying a property is not always intuitive for everyone, so it must be done well to avoid unnecessary headaches.
The first advice is to put together a small work team. Especially if you are not in Barcelona, it will be vital to have a trusted real estate agency, who will know the available properties based on your search criteria and the area in which they are located, saving time, money and avoiding any unpleasant surprises. It will also be important to have a lawyer, who can review contracts and watch over your interests from the legal point of view, as well as a tax specialist, who can help you with tax payments. At InversionesBCN, we can help you with all this, we have a team of multilingual agents specialized in the Barcelona market, as well as we work with trusted lawyers and tax experts, so that our clients can make their purchase with the greatest security and peace of mind.
The main requirement
Once you have made the decision to purchase a property in Barcelona, we recommend that you manage the essential requirement to buy: the NIE. The Foreigner Identification Number (NIE) is a personal, unique and exclusive number, essential to carry out any transaction in the country, from opening a business to buying a property. This procedure can be done at a police station if you are in Spanish territory, or at the Spanish embassy or consulate of the country where you are, using the formulario EX-15. It is important to mention that when the procedure is carried out by a company, they will require a NIF instead, and the way to proceed is different, it must be requested directly at the Spanish Tax Agency (AEAT).
Once you’ve found what you think is the perfect house or apartment, study it carefully. If you have chosen a professional real estate agency and a good lawyer, you will not have to worry too much about this, since they will be checking that the property is up to date with all the documents, that the seller can transfer the property without problems, that the home is free of charges, and a lot of other details that can only come out with a thorough analysis.
Spanish bank account
Although it is not mandatory, it is important to mention that having a bank account in Spain will facilitate all the procedures, since you will get payments made more quickly and perhaps even reduce bank charges.
Taxes and expenses to pay
This is an important issue that must be taken into account when evaluating the purchase of a property. While it is a complex subject, we have summarized it as follows:
- For the purchase of a new build, the Value Added Tax (IVA) is paid at 10%
- For the purchase of a second-hand home, you pay Patrimonial Transfer Tax (ITP), which in Catalonia is 10%
- Documented Legal Acts (AJD) will also have to be paid if a new home is purchased (VAT is applied) and if it is purchased through a mortgage.
- Other expenses include:
- Property Registry
- Mortgage expenses (if applicable)
Throughout the year you will face other taxes, such as the Real Estate Tax (IBI), the Wealth Tax if applicable, the Personal Income Tax (IRPF) or, if you do not live in Spanish territory permanently, the Non-Resident Income Tax.
While all of this may sound overwhelming to some, having a good real estate agency, a lawyer and a tax specialist with solid knowledge of these operations will be ideal for them to take care of these matters while you can focus on enjoying your new property.
Steps in the purchase process
Whether or not you are a resident of Spain, this process does not vary much. Once you have chosen the house you want to make yours, the next steps will be as follows:
- Reservation: this is a document that specifies the negotiated offer and conditions, and is used to confirm that the property will be withdrawn from commercialization by the seller and any agency involved. This contract is usually accompanied by a reserve of € 2,000- € 4,000
- “Arras” purchase agreement: This private contract between buyer and seller has the purpose of formalizing the operation between both parties. Here the price of the sale will be established and how it will be paid, as well as any other specific condition in the operation. The payment of the deposit is usually 10% of the total value of the property
- Public deed of sale: as its name indicates, this is already a public procedure in front of notary public. The purchase process ends with the signing of the public deed of sale by the buyer and seller. At that time, the seller grants the property title to the buyer and the buyer delivers the remainder of the agreed price. Before signing the deed, you will have to transfer either to your Spanish bank account or to your lawyer’s account in Spain the funds to cover the price, taxes and expenses that will require.
- Property Registry: once the sale is completed, you must register the property in the Property Registry, identifying ourselves as the new owner.
Spanish citizenship with the purchase of a property
As of 2013, the law that gives birth to the so-called Golden Visa (or Investor Visa) comes into force in Spain. This law allows foreign citizens who intend to invest (either in companies, talent or real estate) to obtain their visa in Spain easily and quickly.
We have explored this visa in detail in another of our articles, you can read it here.
Whether you live in Barcelona or not, and are attracted to the idea of buying in this fabulous city, we will be happy to help you do it! At InversionesBCN we specialize in the foreign investor market looking to invest in Barcelona and have a multilingual and professional team, who will be able to advise and accompany you throughout the process.