Spanish Property Law & Taxes

At OLP Group, our mission is to make that process straightforward. Working alongside experienced lawyers, notaries, and financial advisors, we ensure your purchase is handled correctly from start to finish. This guide provides an overview of property law, taxes, and legal requirements for buyers and investors in Spain.

Legal Framework for Property Ownership

Spain follows a civil law system, where rules are codified rather than based on case precedent. The Spanish Civil Code outlines ownership rights, property transfers, and obligations. Additionally, each autonomous community (region) has its own regulations that can affect taxes and local procedures.

In Andalusia, for instance, property taxes and certain administrative processes are regionally managed, though the Civil Code itself applies nationally. Understanding both state and regional regulations is key to a successful property purchase.

Types of Property Ownership

Full Ownership (Pleno Dominio)

Gives complete rights to use, rent, sell, or modify a property within legal limits. It can be held individually or jointly.

Co-Ownership (Condominio)

Shared ownership between two or more parties. Each owner holds an equal or specified share and must jointly decide on management and expenses.

Community of Owners (Comunidad de Propietarios)

If you buy within a building or complex, you automatically become part of the community responsible for shared spaces like gardens, pools, and hallways. All owners contribute to maintenance fees and have voting rights.

Lawyers and Legal Requirements for Foreign Buyers

While not mandatory, hiring a local lawyer is strongly recommended. Your lawyer handles all due diligence, ensures the property is debt-free, reviews contracts, and manages essential paperwork such as:

• Obtaining an NIE (Número de Identificación de Extranjeros)
• Opening a Spanish bank account
• Coordinating utilities and taxes

Spain welcomes foreign buyers, and there are generally no restrictions on ownership. However, coastal and rural areas may have special planning or environmental rules.

The Role of the Notary

The notary (notario) ensures every transaction complies with Spanish law.

Their main duties include:

• Verifying the legality of contracts and identities
• Confirming tax compliance before signing
• Supervising the Escritura de Compraventa (Deed of Sale)
• Registering ownership with the Land Registry
• Checking for existing debts or liens on the property
• Ensuring building permits and planning approvals are valid

The Property Purchase Contract Process

1. Reservation Contract

• Holds the property while due diligence is completed (approximately 1 percent deposit)
• Usually valid for 14 days and not legally binding

2. Private Purchase Contract (Contrato de Arras)

• Legally binding agreement where the buyer pays 10 percent
• If the buyer withdraws, they lose the deposit
• If the seller withdraws, they return double the deposit

3. Deed of Sale (Escritura de Compraventa)

• Signed before a notary
• Officially registers the buyer as the new legal owner

Taxes and Fees When Buying Property

Taxes depend on whether the property is new or resale:

• Transfer Tax (ITP): 7 percent in Andalusia

Reduced rates from 6 percent to 3.5 percent for young buyers, large families, or persons with disabilities

2 percent for professional resellers

• VAT (IVA): 10 percent for new properties

• Stamp Duty (AJD): 1.2 percent in Andalusia

• Capital Gains Tax (Plusvalía Municipal): Paid by the seller on the increase in land value

• Notary and Registration Fees: Usually between 500 and 3,000 euros

Buyers should budget approximately 9 to 13 percent of the property price to cover taxes and fees.

Annual Property Taxes

IBI (Property Tax)

0.4 percent to 1.1 percent of cadastral value, paid annually.

Non-Resident Income Tax (IRNR)

• 24 percent for non-EU citizens
• 19 percent for EU, Norwegian, and Icelandic residents (deductible expenses allowed)

Resident Income Tax (IRPF)

19 to 47 percent on global income, with deductions for maintenance and mortgage interest.

Capital Gains Tax on Sale

• Residents: 19 to 26 percent (some exemptions apply)
• Non-residents: 19 to 24 percent, depending on nationality

Wealth Tax

Eliminated in Andalusia, though reporting is required above 2 million euros.

The national Solidarity Tax applies above 3.7 million euros.

Inheritance and Gift Tax

Reduced rates for close family members. Rates vary by region.

Regional Variations in Property Taxation

Each autonomous community sets its own tax rates.

• Andalusia: Reduced Wealth and Inheritance Taxes for families
• Catalonia: Generally higher property tax rates
• Madrid: Strong tax incentives for close relatives

Valuation and Cadastral Value

The cadastral value (valor catastral) is the government’s assessed property value used for tax purposes and is typically lower than market value. Owners can appeal this value if they believe it is too high.

Tax Compliance for Residents and Non-Residents

• Non-residents are taxed only on Spanish income (rental or imputed)
• Residents are taxed on worldwide income and assets

Most taxes can be paid online or through local banks. Timely payment is essential to avoid fines or legal complications.

Mortgages and Financing

Spanish banks offer financing to both residents and non-residents:

• Up to 70 percent of the property’s value for non-residents
• Up to 80 percent for residents

All mortgages must be registered with the Land Registry, securing the lender’s rights. Borrowers are legally protected under Spanish law and can challenge unfair contract terms.

Inheritance Law

Spanish succession law (Derecho de Sucesiones) governs property inheritance. Foreign owners are strongly advised to draft a Spanish will to simplify the process for heirs and avoid complications related to forced heirship rules.

Community of Property Owners

If your property forms part of a residential complex, you will join the Comunidad de Propietarios, which manages maintenance and shared facilities.

All owners must contribute to:

• Maintenance fees for common areas
• Community votes on budgets and improvements

Dispute Resolution

Property disputes in Spain may involve developers, neighbours, or owner communities.

Resolution options include:

• Mediation or arbitration, preferred for speed and cost
• Court proceedings, if necessary, though generally slower

An experienced real estate lawyer can advise on the most effective approach.

Final Thoughts

Spain’s property market offers excellent opportunities, but understanding the legal and tax framework is essential. With proper legal guidance, buying or investing in Spanish property can be both straightforward and highly rewarding.

At OLP Group, we work closely with leading lawyers, mortgage specialists, and notaries to guide you through every stage of the process, ensuring your investment in Spain is secure and successful.

Ready to begin your journey? Contact OLP Group today and make your Spanish property investment effortless.