How to Invest in a Holiday Home in Spain

If you're looking to buy a holiday home, Spain is an excellent choice for offshore property investment. Its advantages include a superb climate, rich culture, easy access from other EU countries and easy financing with low interest rates. Spain has a thriving tourist industry, so you can rent your holiday home and derive a steady income when you are not using it.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Passport
• Copies of Passport
• Income verification documents
• NIE Number (Foreigner's Identity Number)

1. Spend some time researching Spain and the Spanish property market. Find out the prime locations in Spain for property investment and find out what the property prices are.
2. Decide if you want to buy a new property, a resale property or an off-plan property.
3. Consider factors like easy transport access from the airport and the available local amenities like medical facilities and shops. Consider too factors like future neighborhood development in case of an off-plan property, and the orientation of an existing property.
4. Go over your finances. You will have to budget between 10% and 12% of the purchase price to cover property taxes and other fees involved in the purchase. You can get a low-rate mortgage up to 70% from a Spanish bank.
5. Contact a qualified Estate Agent. Make sure he or she is a member of the "Agents de la Protruded Inmobiliara" (API) or "Gestores Inmobiliaries" (GIPES). Visit as many properties as possible.
6. Hire a good lawyer. Many Spanish lawyers speak English, so there is no question of anything important getting lost in translation.
7. Select the property you want to buy and have your lawyer undertake legal checks concerning ownership, planning permission, boundaries and legal description of the property.
8. Apply now for an NIE number, which all foreigners conducting financial transactions in Spain are required to have. Go to the local Police Station to make the application, taking along your passport and a photocopy of the passport.
9. You will need income verification documents to conclude a transaction. These documents may include your last 3 months of pay slips, tax returns, current bank account details, employment contract, accountant’s reference and pension slips.
10. Have your lawyer negotiate for you, once all checks are satisfactory, and draw up a sales contract. Sign the sales contract and make a 10% deposit payment. If you are making an off-plan purchase, pay only 30% deposit and the remaining 70% on completion of the development.
11. Make the final payment and sign the final sales document in the presence of a Public Notary. You are required to do this in person or give Power of Attorney to your lawyer to sign for you. Pay the Notary’s fees.
12. Pay the relevant Property Taxes next, IVA (VAT) tax on new property, Transfer Tax on a resale property and Stamp Duty. Also the Lawyer’s fees and the Estate Agent’s fees. Other costs include Bank Transfer charges, Land Registry fee, and Building Insurance. Be prepared to pay the required Community Taxes and Utility Bills once you gain possession of the property.
13. Wait for the Notary to send the Title Deed to the Land Registry. After the official registration of the transaction, you’re the official owner.

Tips & Warnings

• You’ll get lower mortgages from Spanish banks as compared to other European banks.
• If buying an off-plan, get bank guarantees from the developers that confirm they have the funds to finish the project.
• If you decide to back out after you've made the deposit, you will lose all the money you've paid.