Buying Property in Spain as a Russian National: Legal Update on Residency through Investment
Buying property in Spain has long been an attractive option for foreign citizens, including Russian nationals, thanks to the country’s economic stability, appealing climate, and opportunities for residency through investment. However, recent changes in Spanish legislation have significantly altered the landscape, particularly regarding the Golden Visa, which was once available for property buyers.
Golden Visa: No longer available for property purchases
Previously, the Golden Visa program allowed foreign investors to gain residency in Spain by purchasing real estate worth at least €500,000. This made Spain a prime destination for Russian nationals seeking both a European residence and a secure investment. However, recent legal reforms have eliminated the option to obtain a Golden Visa through the purchase of residential properties.
Key points regarding the recent changes:
- The Golden Visa is no longer granted for residential property purchases, regardless of the investment amount.
- Other pathways to residency through investment still exist, but they now focus more on business creation, job generation, or strategic investments in specific sectors.
Steps to Buying Property in Spain
Despite the removal of the Golden Visa for property purchases, Russian nationals can still invest in Spanish real estate. Here’s what you need to know about the legal process:
- Hire a Local Lawyer: Navigating Spanish property laws can be complex, especially for foreigners. It’s highly recommended to work with a lawyer experienced in real estate and international transactions.
- NIE Number: Foreign citizens must obtain a Número de Identificación de Extranjeros (NIE), which is necessary for all legal and financial transactions in Spain.
- Property Due Diligence: Ensure that all property documentation is in order, including checking for debts, legal ownership, and any building permits.
- Contract and Purchase: Once due diligence is complete, a private purchase contract is signed, typically with a 10% deposit. The final purchase is completed in front of a notary.
- Taxes and Fees: Be prepared to pay additional costs such as VAT (if applicable), property transfer tax, notary fees, and legal fees.
Impact on russian buyers
While the removal of the Golden Visa option for property buyers may shift the focus of some Russian investors, Spain remains an attractive destination for real estate investment due to its economic advantages and high-quality lifestyle. Russian nationals interested in obtaining residency in Spain may now need to explore alternative investment routes, such as creating businesses or investing in innovation sectors that continue to qualify for the Golden Visa.
By understanding these recent legal changes and working with local legal experts, Russian nationals can still make informed and profitable property investments in Spain.
Legal steps for purchasing property in Spain
1. Obtaining a foreigners’ identification number (NIE)
Before starting the property purchasing process, russian citizens must obtain a foreigners’ identification number (Número de identificación de extranjero also NIE). This number is essential for any financial or legal transaction in Spain, including property purchases. The NIE can be obtained either through the spanish consulate in russia or directly in Spain by applying at a local police station or via an authorized legal representative. This step is critical, as no transactions or contracts can be completed without the NIE, making it the first and most important requirement for any foreign property buyer in Spain.
2. Open a spanish bank account
Once you have obtained the NIE (Número de Identificación de Extranjeros), the next crucial step is to open a Spanish bank account. This is essential for facilitating the various financial transactions involved in purchasing a property in Spain, such as transferring funds, paying taxes, notary fees, and managing ongoing property-related expenses.
Why you need a spanish bank account
Opening a local bank account simplifies the process of managing your property purchase. Some of the main reasons include:
- Payment of Property Fees and Taxes: You will need a Spanish bank account to pay for property-related taxes (such as the property transfer tax or VAT) and other legal fees.
- Handling Mortgage Payments: If you plan to finance the purchase with a Spanish mortgage, the bank will likely require a local account for payments.
- Utility Bills and Maintenance Costs: Ongoing expenses such as electricity, water, community fees, and maintenance are often paid through automatic deductions from a local bank account.
Choosing the right bank
When opening an account, it’s advisable to select a bank that is experienced in working with foreign buyers and familiar with handling international transfers. Here are some factors to consider:
- Foreign Client Services: Look for banks that offer specialized services in English or Russian, as they can assist you with cross-border financial management.
- International Transfers: Ensure the bank has low fees and competitive rates for international transfers, as you will likely need to transfer money from abroad to fund your purchase.
- Customer Support: A bank with good customer support for foreigners can help you navigate any challenges related to managing your property finances from abroad.
By having a Spanish bank account in place early in the process, you’ll be better equipped to handle the financial obligations involved in purchasing and managing property in Spain.
3. Hire a lawyer
Hiring a lawyer with expertise in real estate law is crucial for navigating the legal aspects of property purchases in Spain. The lawyer will carry out due diligence on the property, ensuring that it is free from debts, liens, or other encumbrances. They will also check the seller’s ownership and make sure that the property complies with local zoning laws.
4. Property reservation agreement
Once a suitable property is found, the next step is often signing a reservation agreement (Contrato de Reserva). This agreement temporarily removes the property from the market, giving both the buyer and seller time to complete the necessary paperwork and due diligence.
At this stage, the buyer typically pays a deposit of around 1% of the property’s price. However, it’s important to note that this deposit is not the final commitment. The more binding step comes when both parties sign a preliminary contract, known as the arras penitenciales.
Arras penitenciales: A critical step
The arras penitenciales is a preliminary purchase contract where the buyer commits to buying the property and the seller commits to selling it under agreed-upon terms. At this point, the buyer is required to pay a 10% deposit of the property’s purchase price.
It’s crucial to understand the legal implications of the arras penitenciales:
- Buyer’s Obligation: If the buyer decides not to go through with the purchase after signing the arras, they will lose the 10% deposit as a penalty.
- Seller’s Obligation: If the seller backs out of the deal, they must return double the deposit to the buyer as compensation.
Signing the arras penitenciales demonstrates a serious commitment from both sides, making it an essential step before the final purchase. It’s strongly advised to have a lawyer review the contract to ensure your interests are protected.
This deposit structure, combined with the reservation agreement and subsequent arras penitenciales, ensures that both parties are financially committed to the transaction and reduces the likelihood of unexpected changes or cancellations.
5. Signing the Purchase Contract
The next stage involves signing a more formal agreement, the Arras Agreement, where a deposit of typically 10% of the property price is paid. At this point, both the buyer and the seller are committed to completing the sale. If the buyer withdraws, they lose their deposit. If the seller pulls out, they must refund double the deposit to the buyer.
6. Notary and title deed
Once all checks are completed and both parties agree to the sale, the final step is to sign the Escritura Pública de Compraventa (public deed of sale) before a Spanish notary. The notary certifies the sale, and ownership is transferred officially. After signing, the property must be registered with the Land Registry, confirming the new ownership.
Legal differences for foreign Buyers
Foreign buyers, including Russian citizens, generally follow the same procedures as spanish nationals. However, some key differences include:
- Source of funds verification: Spanish banks and legal authorities may require detailed proof of the origin of funds, especially for foreign buyers from non-EU countries.
- Restrictions for Non-EU Buyers: Non-EU buyers may face additional scrutiny in certain regions or sectors (e.g., properties near military installations or coastlines), which might require special authorization.
Taxes and fees involved in property purchase
1. Transfer Tax or VAT
- Resale Properties: A transfer tax (Impuesto de Transmisiones Patrimoniales or ITP) of 6-10% (depending on the region) is levied on the purchase price of resale properties.
- New Properties: If you purchase a new property from a developer, you will pay Value Added Tax (VAT or IVA) at 10%, along with Stamp Duty (1.5% of the purchase price in most regions).
2. Notary and tegistry fees
- Notary Fees typically range between 0.5% and 1% of the property price.
- Property Registration fees also vary but are generally about 0.1% to 0.2% of the purchase price.
3. Legal fees
Lawyers usually charge around 1% of the property’s value for handling the legal aspects of the transaction.
4. Ongoing Taxes
Once the property is purchased, owners will be responsible for:
- Property Tax (IBI): This is an annual tax based on the cadastral value of the property, typically ranging from 0.4% to 1.1%.
- Non-Resident Income Tax: If you are a non-resident, you must pay tax on potential rental income or, if the property is not rented, a tax based on the property’s cadastral value (even if it’s not actually rented out).
Golden Visa: Residency Through Property Investment
Spain ofered the Golden Visa program, which granted residency to non-EU citizens who invested in real estate. For Russian citizens, this visa provides an opportunity to live in Spain and travel freely within the Schengen Zone. Key requirements for obtaining the Golden Visa include:
- Minimum Investment: You must invest at least €500,000 in Spanish real estate.
- Property Ownership: The €500,000 can be invested in one or more properties. The amount must be free of mortgages or loans.
- Residency Benefits: The visa allows you to live and work in Spain and grants you and your family the right to travel freely within the Schengen area.
- Application Process: Once you have completed the property purchase, you can apply for the Golden Visa. The application typically takes between 2-3 months to process.
Residency under the Golden Visa can be renewed every two years, and after five years, you can apply for permanent residency. After ten years, you may apply for Spanish citizenship, provided you meet the residency and legal requirements.
Golden Visa: Residency Through Property Investment in 2024
For many years, the Golden Visa program was one of the most attractive incentives for foreign investors, including Russian nationals, to purchase property in Spain. It allowed individuals to gain residency by making a substantial real estate investment, typically a minimum of €500,000. However, in 2024, Spain eliminated this program for residential property purchases, significantly impacting those who were seeking residency through real estate investments.
Before the change, foreign buyers could invest in Spanish residential properties and obtain the Golden Visa, which granted them the right to live and work in Spain. This was especially popular among Russian nationals looking for a European foothold. But, with the reforms introduced in 2024, residency through property investment is no longer available for residential real estate purchases.
What has changed in 2024?
As of 2024, the Golden Visa is no longer available for individuals purchasing residential properties. This legislative reform was introduced to address concerns about rising housing prices and the accessibility of property for locals. As a result, buying a home, villa, or apartment in Spain no longer qualifies investors for automatic residency.
Here’s what these changes mean:
- No Residency via Property Investment: Foreigners, including Russian nationals, who were once eligible for the Golden Visa by investing at least €500,000 in real estate can no longer use this route if the investment is solely in residential properties.
- Focus on Strategic Investments: The Spanish government now encourages alternative forms of investment, such as business creation, job generation, or investment in strategic sectors like renewable energy or innovation. These avenues still offer potential residency pathways under the revised Golden Visa scheme.
What options remain for russian Investors?
While property investment alone no longer grants residency, there are still ways to qualify for residency under the Golden Visa program through other types of investment:
- Commercial Real Estate: Investment in commercial properties (such as hotels, office buildings, or retail spaces) may still qualify for residency, depending on the specifics of the investment.
- Business Ventures: Creating a business in Spain, particularly one that generates employment or contributes to local economic growth, remains a valid option.
- Investment Funds: Investments in Spanish investment funds or government bonds may also open residency opportunities, under certain conditions.
The Impact on the Real Estate Market
With the elimination of the Golden Visa for residential property, the Spanish real estate market may see shifts, especially in areas popular with foreign investors. Russian buyers, in particular, will need to reassess their strategies if residency is a key goal of their property purchase.
Despite these changes, Spain continues to be an attractive destination for real estate investment due to its quality of life, stable economy, and high demand for rental properties. However, those seeking residency must now explore other investment routes or focus on alternative visa options, such as the non-lucrative visa, which allows residency without the need for employment but does not offer a path to permanent residency as quickly as the former Golden Visa.
Key Takeaways for Russian nationals
- Residential property investment no longer qualifies for the Golden Visa.
- Investors seeking residency should explore commercial real estate or business investments.
- Spain remains a strong market for real estate, but residency options are more limited.
It’s essential to stay informed of ongoing legislative changes and work with experienced legal advisors to navigate the complexities of Spain’s immigration and property laws.
Conclusion
The process of buying property in Spain for Russian citizens is straightforward but requires attention to legal details, tax obligations, and residency options. With careful planning and professional legal assistance, acquiring real estate in Spain can be a rewarding investment, offering not only financial benefits but also the opportunity to gain residency and enjoy the Mediterranean lifestyle.
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Disclaimer advise
The information provided on this blog is intended for general informational purposes only and does not constitute legal, financial, or investment advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations—especially those related to real estate investment, immigration, and taxation—may change over time and can vary significantly based on jurisdiction.
Before making any legal, financial, or investment decisions, it is strongly advised that you seek the guidance of a qualified legal, financial, or investment professional who can provide advice tailored to your specific circumstances. We do not accept any liability for losses or damages incurred as a result of the use or reliance on information provided on this blog.
Your use of this site and its content does not establish an attorney-client or advisor relationship between you and the blog owner or contributors. Always consult a professional for personalized advice.
Frequently Asked Questions (FAQs)
1. Can Russian citizens own property in Spain?
Yes, Russian citizens can purchase and fully own property in Spain. The process is the same for most foreign buyers, though non-EU citizens must adhere to certain regulations, such as obtaining an NIE.
2. Is there a limit on the value of property Russians can buy?
There is no maximum limit on property purchases for Russian citizens.
3. How long does the property buying process take?
The entire process, from property search to signing the final deed, can take anywhere from a few weeks to several months, depending on the complexity of the transaction and legal checks.
4. Are there financing options for Russian buyers in Spain?
Yes, many spanish banks offer mortgages to foreign buyers, including Russians. Typically, banks will finance up to 70% of the property’s value for non-residents, subject to financial checks and credit assessments.
5. Can I rent out my property in Spain as a non-resident?
Yes, you can rent out your property as a non-resident. However, you will need to pay income tax on rental earnings in Spain, and there may be additional local regulations depending on the region.
