Founded in 1997, Fuster & Associates has assisted over 10,000 international clients in purchasing properties in Spain. Renowned for our professionalism and diligence in the Spanish real estate sector, we are committed to making the property buying experience in Spain as smooth and straightforward as possible for our Canadian clients. Fuster & Associates offers services in conveyancing, taxes, immigration, and litigation, ensuring all legal and fiscal needs are met in your native language.
At Fuster & Associates, we understand that buying a home in Spain is an exciting but potentially stressful process. Recently, we organized a successful webinar with the Spanish Chamber of Commerce in Canada and Holabank titled “Buying a Property in Canada,” addressing crucial topics such as opening bank accounts, various visa types, and the steps required to purchase a property in Spain.
Legal Aspects and Requirements:
María José Sánchez, Business Developer Executive, explained that while it may seem complicated, buying a property in Spain is straightforward when you have an independent lawyer safeguarding your interests. At Fuster & Associates, our clients grant us Power of Attorney (PoA), which can be signed before a notary in Spain or Canada. This PoA allows us to obtain the NIE (Foreigner Identification Number), open bank accounts, and sign the purchase before a notary, eliminating the need for the client to be physically present in Spain.
Additionally, for new construction purchases, Spanish law requires that buyers receive a bank guarantee from the developer to protect their payments. At Fuster & Associates, we not only manage these guarantees but also offer our clients to transfer their payments through our Trust Client Bank Account rather than directly to the developer (as they never work with escrow accounts). In this way, we can ensure maximum transaction security.
Three Key Steps in Buying a Property in Spain:
1. Preparing Your Purchase:
- Private Purchase Contract: A contract signed between the seller and buyer before completion to formalize the purchase agreement. This contract sets out the terms and conditions of the purchase and protects both parties’ interests.
- Power of Attorney (PoA): This document allows your lawyer to act on your behalf during the purchase process. It is essential for handling tasks like obtaining the NIE and opening bank accounts. The PoA can be signed before a notary in Spain or Canada.
- NIE Number: The Foreigner Identification Number (NIE) is required for any financial transaction in Spain. We handle the application process on behalf of our clients.
- Opening a Bank Account: A Spanish bank account is necessary for paying utility bills and community fees. We take care of opening this account and provide information on Spanish banking practices.
- Due Diligence: We conduct thorough research on the property to ensure the purchase is entirely legal and safe, and that the property is free of debts and legal issues.
2. Completing Your Purchase:
- Completion of Purchase: This process takes place at the notary’s office, where the balance is transferred and keys are handed over. We verify and sign all necessary documents on behalf of the client.
- Taxes and Fees: We calculate and pay all taxes and fees associated with the property purchase, including notary fees, Transfer Tax (ITP) or VAT for new properties, and Stamp Duty (AJD).
- Registering the Deeds: We register the notarized deed at the local land registry to ensure the property is legally in the buyer’s name.
- Utilities and Services: We handle the transfer of utility services and community fees to the new owner’s name.
3. After Your Purchase:
- Tax Compliance: We assist clients in fulfilling all tax obligations in Spain, including paying annual property taxes. Non-residents must declare their property with a tax called the non-resident tax.
- Inheritance Planning: We advise on obtaining a Spanish will to protect the interests of the property owner and their heirs.
- Enjoying Spain: We provide continuous information and support to help clients fully enjoy their new life in Spain, taking advantage of the wonderful climate, beautiful beaches, and healthy lifestyle.
Immigration Options for Canadians:
For Canadians wishing to spend more time in Spain or establish permanent residency, several Visa options are available:
1. Non-Lucrative Visa:
Ideal for retirees or those not planning to work in Spain. Requires proof of funds of €28,800 per year for the main applicant, plus €7,200 per year for each dependent. This visa allows permanent residency and requires applicants to be tax residents in Spain.
2. Nomad Visa:
Perfect for remote workers and freelancers. Requires proof of funds of €25,000 per year for the main applicant, plus €9,500 per year for each dependent. Applicants must demonstrate a relationship with a company or provide proof of relevant experience or education. This visa offers significant tax benefits.
3. Golden Visa:
For those investing at least €500,000 in real estate in Spain. Allows a stay of up to six months and does not require tax residency in Spain. Requires proof of funds of €28,800 per year for the main applicant, plus €7,200 per year for each dependent.
General Requirements: All applicants must have health insurance in Spain and no criminal record for the last five years.
Taxes and Costs:
When purchasing a property in Spain, non-resident buyers should consider various additional taxes and costs, such as the Transfer Tax (ITP) for resale properties, VAT for new properties, and Stamp Duty (AJD). Additional costs include notary fees, land registry fees, and legal fees, which together can amount to 10-15% of the purchase price.
Potential Pitfalls:
Some risks non-resident buyers should avoid include not conducting thorough due diligence on the property, underestimating total purchase costs, not understanding the local real estate market, not comprehending mortgage terms and currency exchange risks, and not having a trusted local lawyer.
Renting Out Properties:
Non-residents can rent out their properties in Spain but must comply with certain legal requirements, such as obtaining a tourist license if required by local authorities, adhering to rental contract regulations, and declaring rental income in Spain.
For those who could not attend the webinar, we are pleased to offer personalized consultations to guide you through each step of the process. Our mission is to make the experience of buying a home in Spain as smooth and straightforward as possible. For more information, visit our website or contact us directly.
TO LEARN MORE: Access an interview with David Fuster, founder partner of Fuster & Associates, by Luxurious Magazine here
TO LEARN MORE: Access our recent webinar here “Buying a Property in Spain” (*) Only for members of the Chamber