This page presents points of vigilance specific to a French purchaser, in addition to the general stages of property purchase in Spain detailed on the main page.
The NIE: first essential procedure before any purchase
The foreigner identification number (NIE) is the document without which no property transaction in Spain can be completed. It is required to sign the sale deed at the notary, pay transfer duties and register the property in the land registry.
For a French national residing in France, the NIE is obtained from the competent Spanish Consulate or directly in Spain from an authorised police station. The acquisition period varies according to periods and filing points, and must be anticipated from the start of the project.
The NIE does not imply residence in Spain. It is a tax identifier, not a residence permit. Its simple acquisition does not modify the applicant's tax residence.
For details of procedures, see: NIE and procedures in Spain.
Transfer duties: ITP or VAT according to the nature of the property
Transfer duties constitute the main tax due upon a property purchase in Spain. Their nature and rate vary according to whether the property is new or old.
Old property: the Impuesto de Transmisiones Patrimoniales (ITP)
For purchase of old property between private individuals, the purchaser is liable for the Impuesto de Transmisiones Patrimoniales (ITP). This duty is calculated on the sale price or on the cadastral reference value if this is higher.
The ITP rate is set by each autonomous community. It is generally between 6 and 13% according to the region. In the Valencian Community, which includes Alicante, Castellon and Valencia, the applicable rate is 9%, compared with 6% in Madrid, 7% in Andalusia and a range between 10 and 13% in Catalonia, depending on the purchase price.
New property: VAT and documented legal act (AJD)
For purchase of new property from a developer, the transaction is subject to VAT (IVA) at the rate of 10% for standard housing, or 4% for social housing. Added to this is the Impuesto sobre Actos Jurídicos Documentados (AJD), the rate of which varies according to autonomous communities: 1.4% in the Community of Valencia, 0.75% in Madrid, 1.2% in Andalusia and 1.5% in Catalonia.
The distinction between new property and old property is determinative for calculating the total cost of acquisition. It must be verified before any purchase offer.
The matrimonial regime: an often overlooked point
For a married French purchaser, the matrimonial regime applicable in France has direct consequences on how the property will be registered in the Spanish land registry and on its transfer in case of death.
French legal community and Spanish law
In France, the legal regime is community reduced to acquisitions. Property bought during marriage with common funds is property common to both spouses. In Spain, the legal regime varies according to the autonomous community. The matrimonial regime must be expressly mentioned in the notarial deed to be enforceable against the Spanish land registry.
Omission of this mention may result in complications during inheritance or separation, particularly when the surviving spouse or ex-spouse must assert their rights over property registered in the purchaser's name alone.
Separation of property and purchase in joint ownership
In case of separation of property regime, or when two unmarried persons buy together, the property is acquired in joint ownership. The respective shares of each purchaser must be precisely defined in the notarial deed. A share not in conformity with the reality of contributions may have tax and inheritance consequences.
The firm systematically verifies coherence between the matrimonial regime or personal situation of the purchaser and the drafting of the sale deed.
Financing: loan in France or loan in Spain
A French national may finance purchase of property in Spain by a mortgage loan contracted with a French bank or a Spanish bank. Both options present distinct characteristics.
Loan with a Spanish bank
Spanish banks agree to finance purchases by non-residents, generally up to 60% to 70% of the value of the property. The rate offered and conditions vary according to establishments and the borrower's profile.
Opening a current account in the lending bank is generally required to direct debit repayments. The NIE is essential for any banking relationship in Spain.
Mortgage guarantee on Spanish property with French loan
Usually French banks do not create mortgages on property located in Spain. They prefer to create it on property located in France. Intervention of a legal professional is necessary for calling funds from the French bank.
The French purchaser's tax obligations after purchase
Once owner of property in Spain, a French tax resident is subject to annual tax obligations in Spain and in France, whether they use the property personally or put it for rent.
In Spain
Spanish property tax (IBI) is due each year to the municipality. If the property is not put for rent, an annual tax on imputed income (IRNR) is also due to the Spanish state. These obligations are detailed on the page: Property taxation France-Spain.
In France
The Spanish property must be declared in France via form 3916-bis. If the taxpayer's worldwide property assets exceed the property wealth tax (IFI) liability threshold, the property enters into the calculation base. In case of rental, Spanish rental income must also be declared in France, with application of tax treaty mechanisms to avoid double taxation.
Anticipating transfer of the property
Purchase of property in Spain is part of an asset logic which goes beyond the simple transaction. Its transfer, by inheritance or by gift, follows specific rules.
A will established in Spain, or a choice of law clause in a French will, can simplify inheritance management and reduce time and costs for heirs. This question deserves to be anticipated from acquisition, particularly for significant estates or blended families.
To explore this subject further, see: Inheritance in Spain and Will in Spain.
What the firm handles for purchase
In addition to general purchase assistance detailed on the main page, the firm ensures for French purchasers:
- Verification of coherence between matrimonial regime and drafting of notarial deed
- Assistance for NIE and opening of non-resident bank account if necessary
- Precise calculation of transfer duties according to autonomous community and nature of property
- Drafting of preliminary sale agreement and calling of funds from French banks
- Coordination with Spanish banking establishment for financing if needed
- Setting up post-purchase tax obligations (IBI, IRNR, French declarations)
- Anticipation of property transfer (advice on advisability of a will in Spain)
