What kind of income can I expect from renting a home in Spain?

Do you dream of living on the Mediterranean coast? Or are you planning to make Spain your second home? More and more Russians are turning to property in Spain as a real alternative for living and investment. Thanks to a stable economy, low interest rates on mortgage loans and unique conditions for foreign buyers, buying a flat in Spain has become possible.

Why buying property in Spain is a good investment?

Wondering whether to buy a flat in Spain? The answer is unequivocal: yes! Since the financial crisis in 2008, house prices in the country have fallen significantly, but since 2015 the market has started to recover. In 2024, property in Spain is showing steady growth, especially in popular resort and urban areas. The average price per square metre in major cities, such as Barcelona and Madrid, is around 3,000 euros, and in coastal areas – from 1,500 to 2,500 euros.

For Russians buying property in Spain not only opens up prospects for personal residence, but also allows you to get rental income. It is particularly profitable to rent out accommodation in popular tourist destinations such as Mallorca, the Canary Islands and the Costa Brava. In some areas, rental income can be up to 6-8% per annum.

Which region of Spain is worth buying a flat in?

If you want to live in a cultural and dynamic atmosphere, Barcelona is the perfect choice. The cost of housing here will be higher, but you will have access to unique cultural events, a stunning climate and a well-developed infrastructure. The price per square metre in Barcelona varies from 3500 to 6000 euros in the centre.

If you are looking for a place with more affordable prices, but no less picturesque and with good rental prospects, look at Valencia and Alicante. In these cities, the cost of housing is much lower than in the capital, while the climate and quality of life are not inferior. Valencia, for example, can offer flats at prices starting from 1500 euros per square metre, and the cost of rent reaches 7-10% per annum.

In turn, if you are attracted to a more relaxed and cosy atmosphere, then you can consider places such as Costa Brava, where housing prices start from 1200 euros per square metre. In addition, you can have a holiday here all year round – thanks to the warm climate.

Important steps when buying a property in Spain

Buying a flat in Spain is not just about signing contracts. To make everything go smoothly, you need to follow all the steps carefully:

1. Choose a property: start by looking for accommodation through agencies or specialised websites such as Idealista or Fotocasa. Make sure that the property you choose is in good condition and corresponds to the advertised price.
2. Draw up a contract: Once you have found a suitable home, you need to sign a preliminary sales contract. It fixes the price and terms of the transactions. At this stage, as a rule, a deposit is paid (from 1 to 10% of the flat’s value).
3. Obtain a NIE: A Spanish tax number (NIE) will be required to complete the transaction. It is compulsory for all foreign nationals and is used for paying taxes and legal transactions.
4. Work with a notary: when all the documents are ready, the deal is signed at the notary’s office. This is a mandatory step, as in Spain property transactions are only considered legal after notarisation.
5. Register the property in the registry: the last step is to register the purchase in the property registry.

Don’t forget that if you plan to take out a mortgage to buy a flat in Spain, it will take extra time to get approval.

How to correctly estimate the value of a flat in Spain

Valuation is an important consideration that directly affects the purchase. To avoid overpayment, there are several factors to consider:

1. Property type: new buildings are more expensive than secondary housing. The average price per square metre in new buildings is about 3000 euros, while for flats on the secondary market you can find offers from 1500 euros per square metre.
2. Location: the city centre is always more expensive. For example, a flat in the heart of Barcelona will cost twice as much as a similar property on the outskirts.
3. The condition of the property: if the flat requires repair, its price will be lower. However, do not forget that repair costs may amount to 20-30% of the value of the property.
4. Additional costs: in addition to the cost of the home itself, it is worth considering taxes, registration fees, and the costs of a notary and lawyer. On average, these costs amount to about 10-15% of the cost of housing.

Advantages and risks of buying property in Spain

Like any investment decision, buying a flat in Spain has its pros and cons:

Benefits:

1. High liquidity: Spain is a popular tourist country, so flats located in tourist areas are always easy to rent.
2. Accessibility for foreign citizens: Spain provides easy conditions for foreigners to buy property. The purchase process is quite transparent and does not require any special complications.
3. Low interest rates: Mortgage rates for property purchases range from 2 to 4%, which is much lower than in some other countries.

Risks:

1. Legal complexities: sometimes there are cases with legal disputes over real estate. It is therefore worth choosing agencies and notaries with a good reputation.
2. Taxes and fees: don’t forget about mandatory taxes. For example, when buying a home, pay property transfer tax (6 to 10 per cent of the value of the home) and annual tax obligations.

How to apply for a mortgage on a flat in Spain

Consider a few important factors:

1. Who can get a mortgage: foreign buyers can qualify for a mortgage in Spain, but they will need an NIE, a stable income and proof of financial solvency.
2. Mortgage terms: banks usually lend for up to 30 years. The maximum loan amount is up to 70-80% of the value of the flat for non-residents.
3. Interest rates: from 2.5 per cent to 3.5 per cent. It is important to carefully review the terms and conditions as this is a long-term commitment.
4. Documents: you will need proof of income, a tax return, and copies of your passport and NIE.

Conclusion

Buying a flat in Spain is easy if you do it responsibly. Take into account all the steps, from choosing a region to arranging a mortgage, and do not forget about the legal aspects. Following the step-by-step plan, you will not only be able to choose a suitable home, but also to make a profitable purchase, which will bring pleasure and financial stability.

Buying property in the Kingdom is a serious investment, but the costs do not end there. Many people face an unexpected financial burden, because the taxation system depends on many factors: region, type of property, status of the owner. Taxes for property owners in Spain include one-time payments at purchase, annual fees and special charges, which can vary greatly even in neighbouring provinces.

In Spain, there are fees that owners learn about after the transaction. For example, the luxury tax applied to expensive property, or increased rates for non-residents. Ignorance of the intricacies of the fiscal system can lead to overpayments or even fines for late filing of declarations. Let’s find out what contributions property owners have to pay in the Kingdom, how they are calculated and whether they can be optimised.

Tax for future owners – on the purchase of property in Spain

Buying a property is not only a major investment, but also a compulsory fiscal contribution that depends directly on the region, the type of housing and the legal status of the buyer. In Spain, the tax system is organised in such a way that the purchase of a home is accompanied by different types of fees. Therefore, understanding the obligations in advance helps to avoid unexpected costs.

Varieties of purchase taxes:

• new build (purchase from a property developer) – subject to VAT (IVA), the rate of which is 10% of the value of the property. This is a fixed fee that applies throughout Spain.
• Secondary property – subject to ITP tax (Impuesto sobre Transmisiones Patrimoniales), the rate of which depends on the region and varies between 6-10%.

How tax is calculated

The amount of tax payments depends on the region. For example:

1. In Catalonia, the ITP rate is 10%, which means that if you buy a flat worth €400,000 the fee will be €40,000.
2. In Madrid it is lower at 6%, the tax for the same value of the property would be 24,000 €.
3. In Andalusia, the fiscal multiplier can be as high as 8 per cent, in Valencia 10 per cent.

The regional distinction makes the choice of purchase location a strategic point: buying a home in one region can result in significant tax savings. It is important to take into account: if the purchase is made through a legal entity, the rate may differ.

What else is important to know about property purchase tax in Spain

1. The tax is payable in a single instalment at the time of the transaction. After the tax is paid, the buyer is able to register the property.
2. Late payment can result in penalties and additional interest.
3. Documents confirming the payment of the fee should be kept, as the fiscal authorities may request them in the event of an audit.
4. The tax is the same for residents and non-residents: it does not matter whether the buyer is a Spanish citizen.

Consequently, the purchase levy is an unavoidable expense that must be considered when planning your budget. Ignorance of the nuances can lead to unexpected expenses, so it is important to clarify in advance the rates in the desired region.

Property taxes for non-residents in Spain

Non-local property owners face additional taxation. The main one is IRNR, levied on income derived from property (from renting out).

Tax difference:

• residents pay income tax (IRPF) on a progressive scale (from 19% to 45%);
• non-residents from the EU pay a fixed IRNR tax Spain – 19%;
• non-residents from other countries pay 24%.

Example: if a flat is rented for 1000 € per month, the tax will be 190 € for EU residents and 240 € for others.

Ignoring taxation risks penalties. Spanish fiscal authorities actively monitor property owners through bank transactions and rental contracts.

How much to pay when buying a second-hand car

The purchase of secondary property in Spain is accompanied by the mandatory payment of ITP tax by the future owner. This is a charge levied on the buyer who purchases a home from a private individual rather than a property developer. Unlike a new flat or villa, where VAT of 10% is applied, secondary market apartments are subject to a duty, the percentage of which varies from region to region.

Average ITP rates by region:

1. Catalonia, Valencia – 10%.
2. Madrid – 6%.
3. Andalusia – 8%.
4. Galicia – 9%.
5. Balearic Islands – 8 per cent.

How tax is calculated for property owners in Spain

Let’s say a buyer buys a flat for 300,000 € in Catalonia. At a rate of 10%, the fee would be 30,000 €. In Madrid, with a fiscal rate of 6%, the fee would be €18,000. The difference in tax burden between regions can reach tens of thousands of euros, so when buying it is important to consider not only the value of the property, but also the tax liability.

What you need to know about ITP payment

Four factors:

1. The tax is payable within 30 days of signing the sales contract.
2. Delinquency threatens fines and penalties that increase over time.
3. The contribution is calculated not only from the value in the contract, but also from the cadastral valuation, if it is higher. The fiscal authorities may carry out an audit and assess the difference.
4. The ITP in Spain is paid to the regional tax office where the property is located.

The amount of taxation can have a significant impact on the final value of a property. Buyers who plan to purchase a home in different regions should consider the fiscal rate and the possibility of additional costs when making calculations.

Conclusion

Taxes for property owners in Spain are a complex system involving one-off and regular payments. Understanding your tax obligations can help you avoid penalties and unnecessary expenses.

Key Findings:

• When buying a home, you need to consider not only the price, but also the tax burden;
• for non-residents the coefficient is higher, especially for renting;
• it is important to ensure that the fee is paid on time to avoid penalties.

Spain is a country with a developed tax system, its nuances should be taken into account at the stage of buying a property. Awareness is the main tool for minimising costs and avoiding unpleasant surprises.