Introduction
The popularity of Spain among foreigners from Northern Europe is beyond question. The desire to live in a warm climate by so many is indicated by the UK media, which carries increasing amounts of advertising for Spanish property.
For the majority of people, their introduction to Spain starts as a holiday. For some it continues and becomes an affair for life, with returns for holidays year after year. In a surprisingly large number of cases, the call is greater and whole families move to Spain and take up permanent residence.
However, the truth is that most who set off on this exciting journey arrive safely, soon settling in to their new surroundings and enjoying their new lifestyle. Nonetheless, together with many others, they set off in search of the Spanish sun.

Location
There are locations where the rental value of the property is high (Costa del Sol, Costa Brava, Costa Dourada...generally all touristic resorts). Rural areas have a lower demand for rentals. Others are in the process of growing. Generally speaking, Spain is growing from strength to strength in real estate investment and predictions are that sales will shoot up in the following years, resulting European families purchasing a second home only in Andalusia in the coming years.

Living Cost
Spain, with its 315 days per year of sunshine, large expatriate communities and low cost of living is the logical choice and high on most lists. If you have no need for work, read no further - the Spanish sun is waiting to welcome you.

Buying Real States
Buying a property or building land in Spain is different to buying in the UK and therefore it is essential you engage professional people to represent you. Unlike the UK where your solicitor will carry out all the searches necessary to discover any encumbrances there may be attached to the property, in Spain the lawyer in most cases will only check out the legal status.
When you buy a property in Spain you will require a Fiscal number. This number will be needed to open bank accounts and on many other occasions.
First, the buyer should make sure that the vendor holds the Title Deeds (Escritura) of the property for sale. All property in Spain is registered in the Registro de Propiedad where you will see who owns the property, the exact size of the property and if there are any mortgages etc on it. You must seek legal advice as the Spanish law system is complex.

Seller or developer of a new property should provide you with: Deed of declaration of new construction, Occupancy permit, Certificate of rate able value of the property. Normally, before the purchase of a property is made official, there is a prior agreement drawn up between the buyer and seller.

The property transfer must be certified by a notary. The deed of purchase will be given to the buyer after the notary reads it and the parties present agree to the contents of the deed. The following must then be presented: proof of identity (or power of attorney) of both the parties, the seller's title of property (a form that reports the investment to the Central Register), and the buyer's payment. The buyer and seller sign the contract; beneath their signature, the notary signs using his firma protocolizada and the deed is ready for taxes.

Lawyers
Generally, lawyers' fees are around 1% + of the purchase price but if unforeseen complications arise you'll be charged more so make sure you agree in writing at the outset exactly what's included in the basic fee.
Fees / Cost involved in buying property
The transfer tax is around 7%; the stamp tax is around 1% (these taxes vary from one region to another).
The notary fee for a house of 200,000 euros is around 650 euros.
The registration fee is around 450 euros, assuming the property is free of charges.
If you're getting a mortgage, note that besides the bank fees of around 1% of the cost of the property, you will also need to pay another transfer tax of 7%, because the ownership will transfer from the seller to the bank to you. You will also need to pay another round of notary and registration fees.

Tax
For the buyer: transfer tax and stamp tax (Impuesto de transmisiones patrimoniales y actos jurídicos documentados).
If the seller is an individual, the buyer pays a tax of 6% (7% in some regions) of the price specified in the deed. If the seller is a real estate developer and the building or land to be built on represents a first-time transfer, then the buyer pays VAT tax instead, meaning 7% for housing, 16% otherwise. If for housing, you have to add a stamp tax, in this case reduced to 0.5%, depending on the region (for Madrid it's 1.5%). Some special conditions apply for the Canary Islands.

Mortgages
Many developers of new properties are now offering up to 80% over 20 years for non-residents. Local banks will offer anything up to 60% for European residents.
If you get a mortgage, you will become acquainted with an appraiser (tasador – by law is a licensed architect). The bank requires an appraiser to ensure that their loan to you is safe. You will need to pay for the appraiser's work, usually between 300-500 euros.
You can, of course get a mortgage from a UK Bank or Building Society but it is easier and quicker to use a Spanish source and or a Mortgage Broker. There are of course both advantages and disadvantages to obtaining a mortgage in Spain instead of the UK. With a mortgage in Spain, there may be high set-up costs, £1,000-£2,000 is not unusual. You may also have to pay taxes and fees to the country where the property is located. These can be around 2.5% of the value of the mortgage. One advantage is that you will pay local interest rates which are normally lower than those in the UK.
When the vendor is a foreign person the purchaser must withhold 5% of the purchase price and deliver this to the Spanish Tax Office, to ensure that the vendor pays his Capital Gains Tax.

Additional Info: If you are arranging a mortgage through a bank there will be an additional set up fee. The Notary fees will therefore increase as there will be a mortgage deed and separate registration fee.
Before the new Act, if a borrower wanted to change to a mortgage company which offered a lower interest rate, a great legal and tax expense was involved. This made the change unattractive. A recent Act of the Spanish Parliament (Ley 2/1994, of the 30th March) makes it easier and cheaper for mortgagors to improve their mortgage terms with their mortgage companies and also facilitate the redemption of the existing mortgage by a third party lender which offers the mortgage or a lower interest rate.
This Act established two ways of improving the existing mortgage terms:
A. Compulsory Substitution (Subrogacion Forzosa). In this case, the mortgage company which is offering more favourable interest rates takes over the existing mortgage.
B. Variation (Novacino modificativa). This is the variation of the interest rate between the original mortgagor and mortgagee. The repayment period can aslo be modified.
This can be enjoyed by both resident and non-resident Spanish Property owners and is applicable to all mortgage borrowers in Spain.
Mortgages Fees
The fee for the evaluation is approximately 275 euros but obviously varies according to the size of the property. In general, you can expect to pay approximately 10 percent of the property.
Paperwork

Any person who spends more than 183 days a year in Spain is considered a resident and is liable to pay Spanish taxes.

Anyone planning to live indefinitely, study, work in Spain must apply for a Spanish residence permit within 15 days of arriving in Spain. When you have approval for a Spanish residence card issued by the foreign nationals office, you're issued with a receipt as proof of your application. This is valid for two months and renewable until your residencia is ready. When your residencia is ready, you may carry this with you at all times as this is mandatory in Spain and which is usually valid for 5 years.

Your residence card will have a fiscal number which must be quoted when opening a bank account or paying Spanish taxes. All residents of Spain must have a NIE number.

Capital gains Tax
Non-resident vendors will pay tax at the rate of 35%. The taxable gain is the difference between the purchase price and the selling price (reduced by any qualifying expenses and taxes in connection with the purchase and/or sale) and reduced by a further 11.11% per year of ownership (to count after the second year of ownership). After the vendor has owned the property for 10 years or more, any gains will be tax-free.

Additional info: A nice feature is that residents over 65 years of age are exempt from capital gains on their residence. If you are under age 65 and re-invest in Spanish real estate within 3 years , you won't need to pay capital gains, as long as the investment is equal to, or larger than the sales amount.

Purchase Price in Associated Taxes and Fees.
Residents or Spanish buying their 1st home
Up to 80% of the taxation value of the property
Interest rate: Euribor + 1%
Opening Commission: 1%
Residents or Spanish buying a second home
Up to 80% of the taxation value of the property
Interest rate: Euribor + 1%
Opening Commission: 1% (Minimum €600)
Non-Residents who want to buy a second home
Under €100,000 no loans available
€100,001 - 650,000 Upto to 70% of the taxation value of the property
€650,001 - 1,600,000 Up to 50% of the taxation value of the property
Above 1,600,000 is to be studied on a case by case basis
Interest rate: 1st and subsequent years Euribor + 1%
Opening Commission: 1% (Minimum €600)
No cancellation fee on early redemption (minimum 10% of total mortgage)
The normal limit is 60% of the purchase price.

Snippets
To retire in Spain you simply need to prove that a pension is being received.
Residents enjoy an average of 315 days sunshine every year.
More that 1 million foreign residents live in expatriate communities
It attracts a total of 60 million tourists a year.
EU members with enough income to support themselves can become Spanish residents