In early 2021, the British continued to hold the lead among buyers of Spanish real estate. They are steadfast followed by the French and Germans – that’s those foreigners who bought the most houses in Spain last year. In total, in 2020, foreigners purchased 46.303 houses in the sunny kingdom.

Certainly, buying a property in Spain, like any serious deal, requires prior preparation: careful tax planning, as well as inspection of the property before purchasing, will avoid possible disappointments in the future.

The Advantages of Buying Property in Spain

Let’s start with the fact that real estate in Spain is a good investment target. Since the country recovered from the crisis, property prices have shown stable growth for many years now. There is also a growing demand for tourism property offered for short-term rent. Thus, for the buyer, there’s every chance not only to become the owner of a good house or apartment, but also to generate income by obtaining a tourist license and by renting out this housing, or by reselling it after beneficially, after a time.

But even if your property purchase in Spain doesn’t intend to make profit, it still bring its owner a lot of advantages:

• This is a good option for those who are not planning to move to Spain for permanent residency, but want to spend maximum time here, enjoying wonderful climate, tender warm sea, fresh vegetables and fruits, the opportunity to engage in active sports all year round, etc.
• There is an option to request the Spanish Non-lucrative Visa, without permission to work. Buying a property in Spain does not automatically give a person the right to obtain a residence permit, but its existence is a big plus if complemented by documents confirming that the applicant has a high and steady income. Foreigners who have remote sources of income and their own housing in Spain have every chance to receive a residence permit, which in turn, after 10 years of legal and uninterrupted period of stay in the country, will give the right to acquire citizenship of Spanish.
• There is an opportunity to request a Golden Visa when purchasing a property worth 500.000 euros or more, acquired without the use of mortgage funds. The Golden Visa is a specific instrument that gives its owner many freedoms, and also assumes a simplified system for acquire and extend residence permit in the future.
• Another plus point: It should also be noted the simplicity of the registration of such transactions. The law does not make a distinction with regard to the citizenship: it could be Spanish residents, EU citizens or third country nationals who buy real estate in Spain. By the banks granting mortgage loans, these three purchaser categories could be treated differently, but the transaction procedure itself, notarization of the bill of sale and registration of the ownership transfer are the same for all groups. There are no restrictions on foreign buyers: they have the right to buy both residential and commercial real estate, both at their own expense and with borrowed funds. The only condition is to confirm the legality of the origin of their income

The Advantages of Buying Spanish Property, which Prevail for the British after Brexit

• There is a visa-free entry into the territory of Spain for a period of less than 3 months. Despite the fact that residents of many countries outside the European Union must to obtain a visa even for a short-term tourist trip to Spain, UK residents can still plan visiting their vacation homes without requesting a visa, provided that staying in Spain doesn’t last more than 90 days.
• There is a possibility to access health services in Spain. Even after the events of Brexit, an agreement between the European Union and the United Kingdom is an force, according to which Britons can receive medical treatment in the territory of Spain by issuing the UK Global Health Insurance Card (UK GHIC) or la Tarjeta Sanitaria Europea britannica, la Tarjeta Sanitaria Global (GHIC) in their country.

The Disadvantages of Buying Property in Spain

The disadvantages of buying real estate in Spain, as noted earlier, can be minimized, if the buyer will carefully review check the real property and carry out for tax planning prior to the transaction. If you neglect these steps, you may faces the following challenges:

• Repair after purchase: before purchasing real estate, we recommend to conduct a technical inspection of the property. Engineering Technician can identify shortcomings requiring more extensive repairs and, consequently, significant costs that are not obvious to uninformed people. The purchase of impounded bank real estate requires a particularly serious approach. If transactions were made on the secondary market, it protects the buyer and oblige the seller to be responsible for latent defects, identified within a certain time frame after the purchase, while the bank property is sold the way it is, with all visible and invisible shortcomings and defects, and without the possibility of making claims to the bank after the deal.
• Current repairs: any property requires maintaining and regular redecorating. In Spain, it is very important not to violate the internal rules and regulations of the condominium. Before carrying out any repairs or work affecting the external part of the building (installation of satellite dishes, balustrades, glazing of balconies and terraces, etc.), it is necessary to be authorized by the management company or by the condominium of your house. Internal repair and construction works may also require requesting a municipal license.
• Associated transaction costs: as a rule, taxes and expenses accompanying the deal are about 11-13%. In the case of a mortgage loan, the percentage will be slightly higher. Additional expenses may also be required to pay for legal representation by the transaction, providing an independent assessment of the property market value, technical expertise, etc.
• Expenses and taxes for the maintenance of real estate: these expenses include utility bills, payment for condominium services (which can hit hard financially) mandatory taxes – Annual Property Tax and an annual or quarterly Tax on Income of Non-Residents. Not all sellers duly notify foreign buyers to pay IRNR, the Tax on Income of Non-Residents, which refers to imputed taxes, and must be paid without fail, even when the property does not bring its owner any profit. The tax is calculated from the cadastral value of real estate, so that won’t be a problem to calculate and plan all necessary expenses.

The disadvantages of Buying Property in Spain for Britons after Brexit

• The tax rate on income from renting out real estate will change. In Spain, the quarterly Tax on the Income of Non-Residents is 24%, and after Brexit, Britons will pay at this rate – not 19%, as they previously paid as EU residents. Other taxes, such as Purchase Tax, Property Registry fees, the Notary’s fee and other related costs remain unchanged and do not depend on whether the buyer of the property is a resident of the European Union or not.
• The need to obtain a visa if the British national wants to visit his property for a period of more than 90 days. It is issued quite simply and requires a minimum of documents, but it is still necessary to enter Spain. Owners of real estate worth more than 500.000 euros can get a Spanish residence permit for themselves and their family on the basis of the Golden Visa.

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