Spain has a unique property market with many interesting features. It is useful to do your research and ensure you properly understand the market before making any investment in it. This is particularly true at present. Spain was hit hard by the credit crunch and property prices tumbled. The market is just starting to recover, and while many investors see this as a time of opportunity it is also a time when caution is especially advised.
Foreign Purchases of Spanish Property
Unlike some jurisdictions around the world, Spain places no real restriction on foreign buyers who want to purchase a property within the country. In fact, Spain is actively encouraging foreigners, whether resident or non-resident, to consider purchasing property. The only real requirement is that you obtain a financial number, which can be done by presenting your passport at a police station if you visit the country in person. If you are an EU citizen, you may well receive this on the same day, but otherwise the process might take some weeks.
Indeed, Spain is so keen to attract foreign funds through property investment that it offers a visa program for overseas investors. If you purchase Spanish property with a total value of 500,000 euros, you will usually be eligible to automatically receive a residency visa. This applies whether you buy a single, high-value property that meets the spending requirement or whether your investment is spread across multiple properties. Note that this is a residency visa and not a work permit – partly because it is aimed at retired owner-occupiers and buyers of holiday homes, whether for purely personal use or investment.
Buying Your Property
Finding Spanish properties is easy. There are a number of dedicated websites, targeting buyers from every market in a range of languages. Both existing properties and off-plan ones (which can offer better prices at the cost of greater risk levels) can be located in minutes if not seconds.
There is no legal requirement to use the services of a notary, and non-residents face few if any restrictions on purchasing. If you do use a notary, they may be able to register the property (it is your responsibility to ensure this is done) in return for a fee. The buyer is also responsible for ensuring taxes are properly paid.
The seller, meanwhile is responsible for any defects with the property, even those they may not be aware of. However, bear in mind that the process of gaining restitution for such defects may be difficult and time-consuming.
Things to Beware
Any debts associated with a property such as a mortgage or any due taxes, will transfer to the new owner. Make sure that the property has no such associated debts, or at least that the terms of the contract properly cover them.
Spain has a relatively high level of capital gains tax, and this can significantly impact your investment. Be aware also that the Spanish market has historically been particularly prone to fluctuations.
Spain has, in the past, had significant problems with illegal properties. Questionable developers prey on foreign buyers by seeking investment for properties that are being built without the proper permissions. Be very aware of this, especially if looking at off-plan properties.
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