Make huge savings buying property in Spain

Hi Rixxy

Can I ask, are your thoughts based on the idea that you buying it and selling it through the UK company ?

As for people not wanting to own a UK company, surely they would simply transfer the ownership into their own names and pay the 7% transfer tax, which they would have done anyway if the vendor of the property sold it in their own name ?

Rixxy,

Either I am misunderstanding the title of this thread, or you have misunderstood the point I am trying to make.

I understand that if you own your property via a UK company, you can sell the company or leave it to your heirs and Spanish transfer tax is not payable (because the owner of the property will still be the same company. But the title is "Make huge savings buying property in Spain". I still don't see how you can buy a property from a private vendor, and NOT pay transfer tax - am I to understand that a UK ltd company is exempt from paying transfer tax when buying a property in Spain??

I’m glad to hear you agree that buying a Spanish property in a UK limited company is fine. I don’t understand your subsequent comment regarding a rental agreement. My comment would be that owning a Spanish property in a UK Limited company does not require the company to pay Spanish Tax, on the income, as a non UK domiciled person would pay.

I totally agree with paragraph three, by investing the Spanish property into a UK limited company avoids the issue of Inheritance Tax in Spain.

I know it is possible to raise finance on a property in Spain owned by a UK limited company. I have one, as do many of my friends and colleagues who have their properties financed by Spanish banks. It can be slightly more difficult to raise finance but it can be gained.

If you wish to sell the property from the company, everything is treated the same – the company pays the 3% withholding tax in the same way an individual would. If you sell the shares of the company there is no 3% tax to pay, and additionally the UK government have made it very beneficial by only charging 9% Capital Gains Tax on the first million of shares sold.

To give an example

€300,000 property owned by an individual.

Cost to the Purchaser                         Legal Fees                          €3,500

Land registry 1%           €3,000

Purchase tax – 7%         €21,000

Total                            €27,500

Costs to the Seller                              Withholding Tax 3%           €9,000

                                                                Plus Valia Tax                     €400

                                                                Total                                      €9,400

€300,000 property owned within a UK limited company

Costs to the purchaser                       Legal Fees                         €7,000

                                                                Land Registry 1%              €3,000

                                                                Total Purchase                 €10,000

Costs to the Seller                              Withholding Tax 3%          Nil

                                                                Plus Valia Tax                     Nil

                                                                Total                                      NIL

By selling the shares of a UK limited company the seller doesn’t incur any Spanish tax deductions. Agreed there small legal costs to cover the sales and purchase agreement, but these really would be nominal costs without the need to involve Spanish Notaries.

Hi PLH

If you were to create a UK limited company you would loan the property to the company without attracting the 7% transfer tax (this is because you currently own the property, and in the future you would own the company which would own the property - therefore in the eyes of the authorities the property has not transferred hands). Once this has been organised you would be able to take advantage of the tax breaks detailed in my previous post.

Each year it would be necessary to submit the Company Accounts to Companies House and to submit Corporation Tax forms. This is not a complicate task, although I use a professional who charges between £100 and £350 per annum and they submit all paperwork to the relevant bodies. In my situation the annual cost roughly equates to the annual Spanish Wealth Tax I would be liable for by owning the property as an individual.** EDITED - Please respect terms of posting **

"......you would loan the property to the company................................and in the future you would own the company which would own the property"

I'm afraid I must still be missing something here. At what point did the company stop "borrowing" the property and start "owning" it? 

Hi STalbot - I am sureiIt would not be against forum guidelines if you sent me the recommendation by Private Message and I should very much appreciate it. But surely, if I loan the property to the company, I am still the owner and hence liable to wealth tax in Spain?

Young - a loan would not attract CGT, Either would a sale in trhe current climate, but I am sure we all wish otherwise!

Hi PLH,

To answer your question, the company would own the property, and you would own the company. Uk Ltd companies are not liable for Spanish Wealth Tax, thus providing another saving. Regarding the company set up - I would recommend searching in Google. I searched '''Spanish inheritance tax free proposal'' and found a number of links to professional companies. From experience I know some of the companies who offer advice are also able to deal with the annual filing of reports to companies house. Hope this helps.

Cheers.

Aml400 when you started posting on EOS a couple of weeks ago in April you had a link in your signature to winchamiht.com which you deleted at a later date or were forced to delete for commercial reasons.

Now you post this: I searched '''Spanish inheritance tax free proposal'' and found a number of links to professional companies. From experience I know some of the companies who offer advice are also able to deal with the annual filing of reports to companies house. Hope this helps.

If you do a google search with '''Spanish inheritance tax free proposal'' only one company comes up in first place: winchamiht.com

Why don't you just stop posing as someone else and openly admit you are drumming up your business, nothing wrong with that and it's legitimate.

What annoys me is you and the other poster posing under the guise of posters who are totally unrelated to the above company when it's so obvious. Just say so and stop taking us for fools. You'll have more credit.

Well said, pacolopez! My thoughts exactly.

Plexx asked: "if the property is privately owned by the owner of the company and it is loaned to the company,  how can it also be owned by the company?"

Previously I asked pretty much the same question:

" "......you would loan the property to the company................................and in the future you would own the company which would own the property"

I'm afraid I must still be missing something here. At what point did the company stop "borrowing" the property and start "owning" it? "

Strangely, no reply to either.

guys,

yes its about getting a bargain and every property in Spain has a deal on it, so now you need to look at other things, ie how is the community run, how many properties are for sale, is my property likely to increase in value if its on a community that lacks wow factor as nobody pays their community fees, burgularies are rife and nobody can be bothered to organise things to make it a nice place to live or visit.....there are a lot of lemons out there in spain and not just on the trees!!!!

i'm not an agent, but if you want to take a look at what a well run and well kept community looks like take a look at our community website on www.golfgardensmiraflores.co.uk it will give you something to compare to and then think, is it really the deal of a lifetime.....

there are only two or three apts available on our community of 60 apartments, which i think says a lot and properties are selling as well. 3 sold since christmas, we feel that this is due to the community having a wow factor when you walk in

Good house hunting and remember its not just about how cheap it is, its what comes as the rest of the package if you are not there all the time.

Take care its dangerous out there