Buying a second home: a complete guide to making the right decision

What is a second home and what characterises it?

A second home is a property that is not used as a primary residence. It is usually located in areas of high tourist or natural appeal and can serve different purposes: from a holiday home to a real estate investment or a weekend retreat.

Its main characteristics include:

• Non-permanent use: it is usually used during holidays, long weekends or weekends, although some people use it for extended stays during certain months of the year.

• Strategic location: many are located in coastal, rural or charming urban areas, where the surroundings and services increase their value.

• Holiday rental potential: a well-located second home can become a stable source of income if rented out on a temporary basis.

• Emotional and asset refuge: beyond the investment, it is an opportunity to create memories, build wealth and diversify the family portfolio.

That said, acquiring an additional property comes with responsibilities: from its maintenance to legal and tax procedures. This is why it is essential to assess whether it truly fits your lifestyle and goals.

Real estate market analysis for second homes

Spain is one of the most attractive countries for investing in second homes, especially in regions such as the Costa del Sol, the Balearic Islands or mountain areas. These locations combine good weather, quality of life and strong potential for appreciation.

At Engel & Völkers, we observe three major trends in this segment:

• Rise of holiday rentals: many owners choose to rent out their second home during high-demand months, generating income that helps cover the property’s expenses.

• Remote work and flexibility:the possibility of working remotely has boosted the purchase of second homes as hybrid spaces combining leisure and productivity.

• Long-term appreciation: in consolidated areas, the value of these properties tends to rise, making them a solid long-term bet in the real estate market.

In addition, there are external factors to consider: interest rates, local regulations on holiday rentals and administrative restrictions. For example, Spain’s new short-term rental register requires these properties to be properly registered in order to operate legally.

Financial aspects of buying a second home

Buying a second home not only requires a significant initial investment, but also smart financial planning. These are some of the key points to consider:

• Comprehensive budget: don’t focus only on the purchase price. Add taxes, notary fees, renovations, furniture, insurance and annual maintenance.

• Mortgage conditions: banks apply stricter conditions when financing second homes. They usually require a higher down payment (30%–40%) and apply slightly higher interest rates.

• Savings and financial cushion: having a reserve for unforeseen events is essential. From unexpected breakdowns to months without tenants, it is important to be prepared.

At Engel & Völkers, we always recommend relying on financial experts who can analyse your particular situation and help you find the most balanced solution for your finances.

Legal and administrative processes when buying a second property

Buying a second home in Spain not only requires choosing the right property, but also complying with a series of essential legal and administrative procedures to ensure a safe and debt-free purchase.

One of the first aspects to check is the legal documentation of the property:

• Review of the property deed: to verify that the seller is the legitimate owner.

• Certificate of zero debt with the homeowners’ association: ensures that there are no outstanding payments from the previous owner.

• Registration in the Cadastre and the Land Registry: a fundamental step to ensure the legality of the transaction.

It is also important to consider registration on the municipal census, especially if you intend to use the property as your main residence. Completing this procedure at the new address may have tax implications as well as affect access to certain public services.

Notarial intervention

Signing before a notary is a mandatory step. This professional not only guarantees the legality of the contract, but also ensures that all legal requirements are met.

During the notarial act, the deed of sale is signed and payment for the property is made. Afterwards, the registration in the Land Registry is processed, which gives the transaction full legal validity.

After the purchase, it is necessary to comply with the corresponding tax obligations: declaring the property for Property Tax (IBI) purposes and paying any other local taxes that may apply, depending on the regulations of each autonomous community.

At Engel & Völkers, we know that these procedures can seem complex. That is why our team of advisors accompanies you through every stage of the process.

Taxes and expenses associated with buying a second home

One of the most overlooked aspects when buying a second home is the additional costs involved.

Taxes

• VAT (10%): if you buy a new property.

• ITP (6%–10%): if it is a resale property. This varies depending on the autonomous community.

• Municipal capital gains tax (plusvalía municipal): applies if the property is sold with an increase in the value of the land.

Additional expenses

• Notary and registry fees: can amount to between 0.5% and 1% of the property price.

• Administrative agency (optional): if you prefer to outsource the paperwork.

• IBI and utilities: electricity, water, gas, internet — all these costs continue even if you do not live there.

Advantages and risks of investing in a second home

Like any investment, buying a second home has advantages and disadvantages:

Benefits

• Generation of extra income: by renting it out as a holiday home or for seasonal stays.

• Savings on holidays: you don’t need to book hotels — you can enjoy your own personal space.

• Asset growth: if the area increases in value, you can obtain an attractive capital gain in a future sale.

Risks

• Maintenance costs: an empty house also deteriorates and must be cared for.

• Rental management: it requires time, energy and compliance with regulations.

• Changes in regulations: such as the new mandatory register for short-term rentals, which may limit the use you intended to give the property.

Practical tips for making a successful purchase

These are the recommendations we give our clients to ensure they make the right decision when buying a second home:

• Study the area in depth: understand prices, rental demand and potential for appreciation.

• Set a clear budget: establish a budget that includes the cost of the property, taxes, notary fees and maintenance.

• Visit several properties: this allows you to compare features, prices and locations, making it easier to choose the right one.

• Evaluate access and nearby services: think about day-to-day life. Are there supermarkets nearby? What about road or train connections?

• Consult industry professionals: an experienced real estate agent can help you avoid costly mistakes.

• Define your main objective: family holidays? Tourist rentals? Future retirement? Knowing your “why” will help you make better decisions.

• Find out about local regulations: especially if you plan to rent it out, as many areas have tightened the requirements to operate legally.

Management and maintenance of the second home

Once you have the keys, another equally important stage begins: maintaining the property’s value and managing it properly:

• Regular maintenance plan: electricity, plumbing, air conditioning — everything must be checked regularly to avoid deterioration.

• Professional cleaning services: especially useful if you plan to rent the property to third parties.

• Tenant management: clear contracts, quick responses and effective communication are key to a positive experience.

• Property manager: if you live far away, having a professional manager can save you many headaches.

Frequently asked questions about buying a second home

Can I finance the purchase of a second home with a mortgage?Yes, but banks usually apply stricter conditions than for a first home. The financed percentage is lower (normally up to 60–70%) and interest rates are slightly higher.

What taxes will I have to pay when buying a second home?It depends on the type of property. If it is new, you will have to pay 10% VAT; if it is a resale property, you will pay the Property Transfer Tax (ITP), between 6% and 10%, depending on the autonomous community. You must also consider the municipal capital gains tax and notary, registry and administrative fees.

Can I rent out my second home as tourist accommodation?Yes, but you must comply with the regulations in your autonomous community and register the property on the Ministry of Housing’s digital platform if it is a short-term rental.

What fixed expenses does a second home involve?In addition to IBI, you will have to cover recurring expenses such as utilities, homeowners’ association fees (if applicable), maintenance, insurance and possible repairs.

Is it mandatory to register (empadronarse) in the second home?No, unless you want the property to be considered your primary residence. In that case, you must register at the new address.

What happens if the property has outstanding charges?If there are registered charges, they must be cancelled by the seller or assumed by the buyer — something that must be clearly stated in the deed.

If you are considering buying a second home, at Engel & Völkers we will be delighted to help you find a property that combines emotion, profitability and legal peace of mind.