Buying Property in Spain – Guide Step 1: Budget & Finan

Buying a Property in Spain – Complete Guide

Buying a home in Spain is an exciting process, but it is important to understand the steps and the additional costs involved. Here is a complete guide that takes you from the first idea to holding the keys in your hand – safe and simple with Red Palm Estate.

Step 1: Set your budget and financing

Down payment: Spanish banks usually lend 60–70% to foreign buyers. This means you need at least 30–40% of the purchase price in cash.
Additional costs: On top of the purchase price, expect 10–15% in taxes and fees (transfer tax/VAT, notary, registration, legal services). These costs cannot be financed and must be paid with your own funds.
Total capital required: Buyers using a mortgage should plan for 30–40% down payment + 10–15% additional costs.
Timing: If you need a mortgage, start the process as soon as possible after signing the purchase contract, since Spanish banks may take longer to process loans than you are used to.

🏦 Find the best mortgage in Spain
With Habeno, several banks are compared for you to secure:

The best conditions based on your profile
Free, no-obligation advice
Personal contact in your own language

👉 Click here to compare mortgages

Buying a Property in Spain – Complete Guide

Step 2: Search and select property

Define your key criteria: apartment, townhouse or villa; location near sea, golf or town; budget and size.
On our website, you can filter by location, property type, price and other features. Our database updates every night – sold properties are removed and new listings are added.
Always use a registered agent. In the Valencia region, agents must be listed in the RAICV register. Red Palm Estate is registered under RAICV 07942.
We arrange viewings and guide you through pros and cons so you can make an informed decision.

Step 3: Reservation and due diligence

Once you decide, you pay a reservation deposit (usually €5,000-10.000). The property is then taken off the market.
Your lawyer checks the property:
- Nota simple from the land registry (ownership, debts, easements, pre-emption rights)
- Habitation certificate (cédula de habitabilidad) and energy certificate
- Legal registration of the property
- Unpaid charges such as IBI or community fees
At Red Palm Estate, we work with trusted law firms who also:
- Transfer electricity and water contracts to your name
- Set up direct debit for bills (IBI, community fee, utilities)
Timeline: For resale properties, it usually takes 1–4 months from deposit to completion. For new builds, it may be a few weeks if already completed, or up to several years depending on the project.

Step 4: Financing and payments

4.1 Mortgage

If needed, we connect you with a company to compare several banks and secure the best loan.

4.2 Insurance

In Spain, properties are sold “como cuerpo cierto” – meaning as is. There is no hidden defects insurance. This is why your home insurance should start on the day you sign at the notary.

🛡️ Home insurance from day one
With the right policy in place you get:

Cover for building and contents from the first day
Peace of mind in case of unexpected events right after completion
Smooth transition without any gap in protection

👉 Click here to request a quote

4.3 Currency transfers – think about the exchange rate

If your home currency is not the euro, exchange rates can significantly affect the final cost. Even small differences can mean thousands saved or lost in your own currency.

We recommend Currencies Direct for:

Competitive exchange rates (often better than banks)
Secure, fast international transfers
Personal service in multiple languages
Options to lock a rate in advance or set a target rate order

👉 Click here to fill in the form

💡 Note: New tax law
Since January 2022, transfer tax (10% on resale properties in the Valencia region) is calculated based on the higher of the purchase price or the official valor de referencia set by the tax authority.

Step 5: Notary and completion

Buyer and seller (or their legal representatives with power of attorney) meet at the notary.
The purchase deed (escritura de compraventa) is read out.
Payment is made either by bank cheque or wire transfer (often confirmed by a bank officer).
The notary confirms the sale, and the property is registered in your name.

💡 If you have given us power of attorney, you do not need to attend personally. We can sign on your behalf and deliver the keys and documents when you arrive in Spain.

📌 Do not book your travel until the final signing date is confirmed. Even if a preliminary date is set in the contract, the exact notary appointment can sometimes change.

Step 6: After the purchase

Taxes: As a non-resident, you must file an annual tax return (impuesto sobre la renta de no residentes). If you rent out your property, rental income must be declared instead. Our recommended law firms also handle this, giving you a long-term legal contact.
Running costs: Owners in Spain pay IBI (local property tax), community fees, waste collection, utilities (electricity and water, fixed + consumption), internet/fibre, and insurance.
Practical setup: Your lawyer ensures your name is registered as owner, contracts are updated, and all recurring bills are linked to your Spanish bank account via direct debit.
Security from day one: Since properties are sold “as is”, your home insurance should cover you from the very first day.

What does it cost to buy and own a property in Spain?

Many buyers ask: “What extra costs are there when buying a property in Spain?” and “What are the annual fixed costs of owning a home in Spain?”

Here are two examples:

Example: Purchase costs

Cost item	Approx. amount
Purchase price	€250,000
Transfer tax / VAT (10%)	€25,000
Stamp duty AJD (1.5% – new builds only)	€3,750
Notary and registration	€3,500
Utility set-up fees	€500
Legal services at completion	€2,500
Total investment	€285,250

Example: Annual running costs (non-resident owner)

Cost item	Approx. annual
Community fees	€700
IBI – local property tax	€400
Tax representation (annual return)	€150
Fixed water fee	€200
Fixed electricity fee	€150
Home insurance	€300
Total annual fixed costs	€1,900