You need a tourist license to rent your property to tourists
You need a tourist license to rent your property to tourists

Looking to buy to let in Spain? Here's what you need to know

If you decide it's best for you to buy a property in Spain to let, understanding the property market dynamics, mortgage options, and associated taxes and costs is crucial. Continue reading to learn everything you need to know before making an informed decision.

Delia Mihuț
Written by Delia Mihuț
Published at 2023-08-02T09:30:08Z
Last updated at 2024-01-03T12:46:52Z
Readtime 5 minutes

If you're thinking about buying a property in Spain to rent out, you're probably checking out the local real estate market to see what's available. Are you trying to decide between Barcelona and Costa del Sol for your apartment and wondering if it's a good investment? 

Keep reading to find all the information you need to make the right decision.

Is it easy to buy a property in Spain as a foreigner?

Buying a property in Spain as a foreigner is relatively easy. There are no restrictions on purchasing property, whether it's for commercial, residential, or land use. 

Spain actively encourages foreign investment from non-residents, making the process straightforward and welcoming for international buyers. 

An essential requirement is to obtain the NIE, the Foreigner's ID number issued by the Spanish Authorities. Fortunately, this tax identification number can also be obtained from the Spanish consulate in your country.

How much does it cost to buy a property in Spain?

You should know that the location will significantly influence the price you pay for a property.

Buying a property in Barcelona requires a generous budget, as the city is home to some of the most expensive properties in Spain. It’s somewhat expected given that it is a magnet for tourists from all over the world. 

On the other hand, if you're considering coastal regions, you'll find a more diverse range of prices.

Location Price m2
Barcelona 2,486 EUR
Malaga 2,889 EUR
Sevilla 1,427 EUR
Alicante 2,283 EUR
Valencia 1,271 EUR

Keep in mind that, in addition to the sale price, the property comes with several taxes that you must consider.

What taxes do you pay when buying a property in Spain?

Expect to pay taxes depending on the type of property you choose. 

If you buy a new property, you will pay two taxes: a 10% VAT and a 0.5 - 2% stamp duty. For a second-hand property, the taxes range between 8-12% of the property value.

To give you a clear idea, let's assume you have found a new property in Valencia worth 435,000 EUR. In addition to the sale price, you’ll need to pay another 52,530 EUR for taxes. 

Here's a breakdown of the taxes:

  • Value Added Tax (VAT): 43,500 EUR
  • Stamp duty (AJD): 6,525 EUR
  • Notary: 450 EUR
  • Property registration: 1,305 EUR
  • Agency: 350 EUR
  • Property appraisal: 400 EUR

A way to increase your property budget is with a mortgage. Luckily, Homevest can help you access a Spanish mortgage directly from abroad. This digital service allows you to request bank mortgage offers, compare them, and select the one that best suits your needs.

Is it worth buying property in Spain to let?

Buying a property in Spain for rental purposes can be profitable, but you should make a choice aligned with your financial objectives and risk tolerance. 

If you plan to rent out the apartment for the long term, it might provide a steady income, given the continuous demand in popular tourist cities among both expats and residents.

However, if you plan to turn it into an Airbnb, you should be aware that you could experience fluctuations in income depending on the season. Also, it can involve maintenance costs.

Regardless of the property's purpose, it's essential to know that there are taxes, legal considerations, and ongoing expenses you need to familiarize yourself with if you plan to buy a property in Spain to let.

Pitfalls of buying property in Spain to let

Buying property in Spain to let can be an attractive investment opportunity, but there are also potential pitfalls that you should be aware of before making a decision:

Legal and tax complexities 

Non-resident owners may face different tax rules, and being familiar with all the legal and tax implications is essential to avoid unexpected liabilities. Keep in mind that these taxes may vary for EU and non-EU citizens.

Rental regulations

Ensure you understand the rental laws and tenant rights to protect your interests as a landlord. For instance, starting from June 2023, landlords must pay all real estate agency fees. Tenants are not required to pay any part of the agency fee anymore.

Vacancy and seasonal fluctuations

Depending on the location and property type, you may experience fluctuations in rental demand. Some areas might be popular during peak tourist seasons but might face high vacancy rates during the off-season.

Property management challenges

If you don't reside in Spain, managing the property remotely can be challenging. Finding a reliable property management company might be necessary, but their fees can impact your rental income.

Property maintenance costs

Owning a rental property comes with ongoing maintenance and repair expenses. 

Competition

You might face considerable competition from other landlords who offer similar rental properties in specific locations. You may need to distinguish your property or offer competitive rental rates to attract tenants.

How to buy a property in Spain? 

#1. Calculate and plan your budget

#2. Find a real estate agent to help you find properties and negotiate deals

#3. Choose your location and start viewing properties

#4. Make an offer

#5. Consider a mortgage to maximize your property budget 

Homevest might be a fast solution to request and compare mortgage offers from top banks in Spain.

#6. Prepare your documents and apply for a mortgage

#7. Get financing and buy the property   

#8. Sign the official property deed (Escritura de Compraventa)

#9. Registrate your property to establish your ownership officially

#10. Get familiar with all the regulations in Spain and start renting 

Things to consider when you’re planning to let property in Spain as a foreigner

When planning to rent out a property in Spain as a foreigner, it's essential to meet all legal requirements, and obtain necessary permits and registrations. 

Other key factors to keep in mind include: 

  • tax implications for rental income
  • compliance with the relevant regulations
  • registration on the Property Registry
  • property self-management vs. property management company

Do you need a tourist license to rent a property in Spain as a foreigner?

You need a tourist license to rent your property to tourists independently or through Airbnb.  

In Spain, renting out a property for short-term stays without a tourist license is not legally permissible, which serves as proof of compliance with relevant housing regulations.

What is a tourist license, and how can I get one in Spain?

A tourist license or licencia de vivienda turística is a legal requirement for property owners who want to rent out their apartments to tourists for short stays.

Tourist license eligibility and acquisition process differ based on the 17 autonomous regions in Spain. 

To obtain a tourist license, visit your local town hall and complete the necessary paperwork. However, approval depends on meeting all regulations. Some cities, such as Barcelona, no longer issue tourist licenses, so buying a property with an existing license might be the only option for rental.

How much tax do non-residents pay on rental income in Spain?

Foreigners must pay a 24% tax on rental income with no allowance for expense deductions. However, EU residents have a reduced income tax rate of 19% and can potentially deduct expenses. 

Remember that if you rent out your apartment in Spain throughout the year, you must declare all the income you earn from the rent quarterly. 

When your property isn't rented for the whole year, you can apply the proportional amount of your expenses. For instance, if you rent it out for six months, you divide your expenses by 50%.

How much is Airbnb tax in Spain?

Tax implications for letting your property on Airbnb differ based on individual circumstances. Regardless of your situation, you must know you'll be liable to pay taxes on the rental income earned from your property. 

Remember that each autonomous Spanish region has its own rules for renting out property, through Airbnb or other platforms. The tax rates also depend on whether you are an EU-based non-resident (19%) or a non-EU based non-resident (24%).

Simplify your Spanish property mortgage from abroad with Homevest

If you decide it's best for you to buy a property in Spain to let, understanding the property market dynamics, mortgage options, and associated taxes is crucial.

Homevest, a digital mortgage service, streamlines the mortgage acquisition process in Spain, making it easier for you when applying from abroad. Offering premium services, Homevest provides priority banking and legal consultations to ensure your contract is properly handled. With a dedicated mortgage broker at your service, comparing mortgage options becomes much easier.

Whether a first-time buyer or an experienced investor, Homevest empowers you to make informed decisions and secure the best mortgage deal for your property investment in Spain.

Sources used and checked in August 2023:

  1. Property price data in Spain, June 2023
  2. Sales cost calculator
  3. New regulations on Spanish housing law
  4. Tourist license to rent out your Spanish property
  5. Taxes on rental properties in Spain
  6. Regulations and tax implication for Airbnb

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.

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