Buying for the first time in Spain

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28 Apr 2013 12:22 by englishjef1 Star rating. 3 posts Send private message

We're hoping to buy a modest holiday home in the south of Spain this summer. The idea is to let it for income as well as having a place the family can enjoy.  Can anyone suggest websites or a book for good information on the subject please?





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28 Apr 2013 12:30 by johnzx Star rating in Spain. 5241 posts Send private message

 

I would not rely on letting.
 
It is virtually impossible to do it legally, and they are just on the point of introducing more laws to make it even more difficult, to support hotelier who are complaining that illegal lets are stealing their customers.
 
I would suggest you only buy if you can finance it without hoping to letting income.
 
If you search you will find a lot of info, but not believe agents.  They will tell you anything to get a sale.
 

 





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28 Apr 2013 12:42 by competa Star rating in Scotland. 92 posts Send private message

I'd agree with johnzx.  There are already a lot of holiday lets in Spain, especially in the South.  The chances of letting are slim.





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28 Apr 2013 15:55 by Roly2 Star rating in Almeria. 651 posts Send private message

 Argee - and I would add the morality issue.  If you let you should be absolutely legal and pay all taxes and costs owed.   Very few people who let do this, and it is more and more likely that they will get caught out.    If you want to do it properly, you will find that you can charge high rents over two months in the summer and the rest of the time the rents are pretty low, except in city centres.  

I would agree it is a no no.     Start by looking at something like Kyero property to let and you will see how little rent you are likely to get.   

Certainly do not believe agents - a lot of property agents are managing ilegal lets themselves.





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28 Apr 2013 17:35 by mariadecastro Star rating in Algeciras (Cadiz). 9294 posts Send private message


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28 Apr 2013 20:47 by chrisinspain Star rating in Los Alcazares. 195 posts Send private message

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I've got to say that on some points I agree but in other ways, this is about the best time there will ever be to buy in Spain If you have found a property to buy through an agents website, then I would be a little sceptical. It depends on where you want to buy. There are some real bargains about that will never get to the open market, it's a case of who you know, not what you know. I work for a lot of estate agents and various companies who deal with distressed sales. The bargains never reach the open market, they are never advertised. There really are some good buys around. If you give more details about where you are looking and what you are looking for, I will try to point you in the right direction



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28 Apr 2013 20:56 by tamaraessex Star rating in Colmenar, Malaga. 508 posts Send private message

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There are also bargains that DO reach the market! A friend of mine got a nice 3-bedroomed house for €38k this year. Beautiful little street in a friendly village, no work needed immediately (though of course he has plans for some improvements).

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28 Apr 2013 21:03 by chrisinspain Star rating in Los Alcazares. 195 posts Send private message

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If you want to buy inland then you can get properties for no money at all, if you are looking on some of the golf resorts you can still get a bargain. Wherever you buy don't rely on paying a mortgage with rental income, it won't work. If you are looking to buy a bargain as a long term investment and want to earn a bit of money from  it's rentals in the mean time, then go for it.



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28 Apr 2013 21:09 by Roly2 Star rating in Almeria. 651 posts Send private message

 Certainly fantastic bargains.   And I don't know how many times I have said this but if you love Spain and want a place for yourself and family for the long term - go for it.   But don't expect to make a quick buck - either in rentals or in appreciation.





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28 Apr 2013 21:21 by chrisinspain Star rating in Los Alcazares. 195 posts Send private message

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Good advice Roly2. Don't look at making a fast buck, those times are all but gone Buy it to use it, and if you make a little money along thr ways then count it as a bonus



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28 Apr 2013 21:44 by davmunster Star rating in Carvajal\Belfast. 843 posts Send private message

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A lot of good advice here but Roly2 I don't agree about the morality issue. Many of us don't rent out our properties through choice but the Spanish government insists on charging income tax on the asumption that we do. Now they are trying to make it difficult \ illegal for people to rent out but they still tax all foreign owners on the assumption they rent out their properties. That is morality Spanish style.

The Spanish don't pay tax if they can get away without doing so. Very few business would survive if they declared all their income. I don't know any that do! If you go down the  "moral" route you'll need deep pockets as the system assumes you will be cheating just like everyone else.

 



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29 Apr 2013 06:43 by englishjef1 Star rating. 3 posts Send private message

That's all interesting - thank you everyone. Chrisinspain seems to know the scene. I'm looking at places like Frigiliana and Mijas, lovely towns that are near to the coast., but I could be persuaded to look elsewhere. I won't be needing a mortgage, so whatever rental I get will simply help to pay the bills. One property I've been offered apparently already has bookings worth £3,000 for this summer which is certainly a good start!    





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29 Apr 2013 07:56 by competa Star rating in Scotland. 92 posts Send private message

Davmunster has a good point about the Spanish making it illegal for us to rent our houses but still taxing us as though we do.  It's something which needs bringing up with the EU.





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29 Apr 2013 08:07 by johnzx Star rating in Spain. 5241 posts Send private message

 

Jeff,
 
It is virtually impossible to do it legally, and they are just on the point of introducing more laws to make it even more difficult.
 
I would suggest you only buy if you can finance it without hoping to let.
 
 
Please note: I am not recommending that you buy or do not buy, just that the notion of letting, should not be put into the equation.
 
Renting legally is not just a matter of paying the income tax on the income. It involves licences and permissions,  which I believe, most people (including those who may think they are letting legally) are not aware of.
 
 In Andalucía for example, as you mention Mijas, that includes regular inspections and licencing by the Junta de Andalucía, and (according to an accountant in that area) gas and electrical safety checks between each letting.   If an agent is used then I understand that IVA must be added to the rental, and a tax return when each IVA sum is collected, That might mean every two weeks.
 

Incidentally. The municipality of Mijas includes the village in the hills  and a large section of coastline too, referred to as ‘Mijas Costa’.  And note: you need to reasonable fit just walk around - continually up and down-  the village.   I would recommend a place which is not all ups and downs,  maybe like Fuengirola for example.

And did I say,   I would suggest you only buy if you can finance it without expecting to let.

 

 





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29 Apr 2013 08:15 by bobaol Star rating. 2257 posts Send private message

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 You should really, really read other posts.  Despite the whispers and rumours put about, the non-res income tax has nothing to do with renting or non renting your property and is not based on that at all.  Look it up, it is a tax on the benefit you derive from your property, ie using it.  Still, far better to have a good moan about the Spanish having a go at expats than actually finding out about it.

You pay this version of income tax in Spain if the following conditions apply: 1) You do not reside in Spain, 2) You own property in Spain, 3) The property is exclusively for personal use and you do not rent it out, 4) You have no other source of taxable income in Spain. Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you still derive a benefit from owning a property in Spain and therefore have to pay an imputed income tax.

 





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29 Apr 2013 08:19 by johnzx Star rating in Spain. 5241 posts Send private message

Competa, 
                                The ‘understanding’ that the Foreign (and second property) Owners Property Tax is in relation to letting is wrong. If you let (or they suspect you do) there is a complete raft of other obligations including income tax, which you  become involved with.
 
Whilst I know it not an exact comparison, this is a simple comparison, which I believe helps with understanding the concept.
 In the UK a school-caretaker who lives in  a school house pays tax on that benefit.  Having a second home in Spain is a ‘similar’ such benefit.
 
PS just saw Bobaol posted as I was writing my post.





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29 Apr 2013 08:21 by competa Star rating in Scotland. 92 posts Send private message

Interesting, johnzx.  I don't have a home in the UK - I rent - so wonder how this affects me.





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29 Apr 2013 08:25 by johnzx Star rating in Spain. 5241 posts Send private message

Competa,  your main home is in UK.  Ownership in that case does not come into it.
 
See Bobaol’s post.





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29 Apr 2013 10:21 by Roly2 Star rating in Almeria. 651 posts Send private message

 Well explained everyone - I was just going to comment  that the reply to me was spoken like a true tax evader.   It is certainly not true that Spanish people do not pay taxes, though certainly true that if you do not pay directly at source (through PAYE for example) people and businesses will seek to minimise tax.

If you do get caught out - then yu have to say 'fair cop' rather than slagging off the Spanish system.





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29 Apr 2013 12:51 by davmunster Star rating in Carvajal\Belfast. 843 posts Send private message

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Fair enough Roly - the Spanish do pay tax but it is the norm to pay less than they should. In my experience evereyone from lawyers to builders will want to give you invoice for part of what you owe them and will want cash or a cheque made out to El Portador for the rest. It also seems routine to employee people through the books for 16 hours paying cash for the rest.

Far from being a tax evader I am someone who looked at starting a business in Spain but decided against as it was going to be impossible to make money if I paid all the taxes.

To get back to the thread topic as has already been said it is virtually impossible to rent out your property as a holiday home legally. Most people don't do it legally and it remains to be seen how long they can get away with it



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