Spanish Property Law
Introduction to Spanish Property Law, Taxes & Legal Requirements for Buyers and Investors
Spain continues to be one of Europe’s leading destinations for real estate investment, offering everything from vibrant urban living in Madrid and Barcelona to the coastal charm of Marbella and the Costa Brava. Whether you’re seeking a lifestyle purchase or an investment opportunity, understanding Spanish property law and taxation is essential to ensure a smooth, secure transaction.
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.
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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.
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Lawyers & 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.
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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
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The Contract Process
1.Reservation Contract
•Holds the property while due diligence is completed (≈1% 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%.
•If the buyer withdraws, they lose the deposit; if the seller does, they return double.
3.Deed of Sale (Escritura de Compraventa)
•Signed before a notary and officially registers the buyer as the new owner.
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Taxes & Fees When Buying Property
Taxes depend on whether the property is new or resale:
•Transfer Tax (ITP): 7% in Andalusia (reduced rates from 6% to 3.5% for young buyers, large families, or persons with disabilities; 2% for professional resellers).
•VAT (IVA): 10% for new properties.
•Stamp Duty (AJD): 1.2% in Andalusia.
•Capital Gains Tax (Plusvalía Municipal): Paid by the seller on land value increase.
•Notary & Registration Fees: Usually €500–€3,000.
Buyers should budget around 9–13% of the property price to cover taxes and fees.
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Annual Property Taxes
IBI (Property Tax): 0.4%–1.1% of cadastral value, paid annually.
Non-Resident Income Tax (IRNR):
•24% for non-EU citizens.
•19% for EU, Norwegian, and Icelandic residents (deductible expenses allowed).
Resident Income Tax (IRPF): 19–47% on global income, with deductions for maintenance and mortgage interest.
Capital Gains Tax on Sale:
•Residents: 19–26% (some exemptions).
•Non-residents: 19–24%, depending on nationality.
Wealth Tax: Eliminated in Andalusia, though reporting is required above €2M. The national Solidarity Tax applies over €3.7M.
Inheritance & Gift Tax: Reduced rates for close family members; varies by region.
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Regional Variations
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.
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Valuation & Cadastral Value
The cadastral value (valor catastral) is the government’s assessed property value used for tax purposes and typically lower than market value. Owners can appeal it if they believe it’s too high.
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Tax Compliance: Residents vs. Non-Residents
•Non-residents: Taxed only on Spanish income (rental or imputed).
•Residents: 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.
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Mortgages & Financing
Spanish banks offer financing to both residents and non-residents:
•Up to 70% of the property’s value for non-residents.
•Up to 80% 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.
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Inheritance Law
Spanish succession law (Derecho de Sucesiones) regulates property inheritance. It’s advisable for foreign owners to draft a Spanish will, simplifying the process for heirs and avoiding complications with forced heirship rules.
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Community of Property Owners
If your property is part of a complex, you’ll join the Comunidad de Propietarios, which oversees maintenance and shared facilities. All owners must contribute to:
•Maintenance fees for common areas
•Community votes on budgets and improvements
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Dispute Resolution
Property disputes in Spain can involve developers, neighbours, or communities. Options include:
•Mediation or arbitration (preferred for speed and cost).
•Court proceedings (if necessary, though slower).
An experienced real estate lawyer can advise on the best course of action.
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Final Thoughts
Spain’s property market offers excellent opportunities, but understanding the legal and tax landscape is key. With proper legal support, investing or buying here is straightforward and rewarding.
At OLP Group, we work with top local lawyers, mortgage experts, and notaries to guide you through every stage—ensuring your investment in Spain is both secure and successful.
Ready to begin your journey? Contact OLP Group today and make your property investment in Spain effortless.
Already well-informed?
If you’re ready to dive deeper into the different areas of Marbella and the Costa del Sol, we invite you to explore our curated area guides. Discover what makes each location unique and find the perfect spot that matches your lifestyle.
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