WHAT TO EXPECT ABOUT LIVING IN SPAIN

Spain is truly the city of gold. IF you’re used to mist and peasoup weather, this delightfully warm country has over 300 days of sunshine a year. If you’re used to traffic jams and pollution, its streets are less congested and there are entire acres of farmland where you can drive for miles and be surrounded by peaceful villas and haciendas. And if you’re breaking your back just to cover rent and utilities, the cost of living is nearly 30% lower than in many European countries. All of this plus the pristine beaches and world-class golf courses means that Spanish property is still one of the safest investments you can make.

INVESTING IN SPANISH PROPERTY

Spanish authorities have gone to great lengths to attract foreigners and now Spain derives more of its foreign income from tourists than any other country in Europe. Years ago people were only able to buy commercial property, which was often too expensive. With the new laws, property can be purchased almost anywhere and “sold” to a person’s private pension fund. When the property is rented, it’s possible to receive tax deductions that are equal to your current income tax level.

Whatever your investment strategy there’s properties for you. There are several ways to invest in Spanish property and can generate either quick cash or slowly build a nest egg to fund retirement.

For the short-term investor an attractive deal is the buying of an “off plan” property where you buy into a property before it has been completely finished. It is sometimes called pre selling. .To attract money for the building project developers will offer the units at a very, very low price. Then once the project attracts more and more buyers the price goes up. By the time it’s finished the
investor can often turn around and sell the property for double digit profits and, since he never technically owned the home, avoid paying the capital gains taxes.

Most of these visitors gather towards the coastlines where the beaches are plentiful. Apartment complexes make good investments over the long haul if you choose the location wisely. Golf courses are another popular place for tourists so obtaining a property around these areas, while difficult, can be worthwhile in the long run.

However if all of this good news makes you want to rush out and grab the next available villa you should be aware that real estate laws in Spain are different than in the UK and navigating the twists and turns is best left to a professional real estate agent who is familiar with Spanish property.

Everybody’s talking about investing in Spain property. Some of them are tourists (one of the 8 million people visit Spain every year) who went there, stayed a few days, and fell in love with the country. Others have spent several vacations there and have realized that Spain is an ideal place to make into a permanent home. They rave about the 300 days of sunshine, the warm climate, the beautiful architecture and the rich culture, the amazing opportunities for outdoor sports, the general feeling of being in one of the most historical and the most culturally diverse places in the world.

Others take a more pragmatic approach. They see Spain as an investment opportunities. Some are after a long term investment where they see the great real estate prices as a way of earning up to 50% more of their money in a five year period. They buy into properties when they are very cheap and then sell when the prices go up. Others simply feel that because of the lower cost of living their pension money will stretch much farther there than in their own home.

But whatever the reason the point is that these people see Spain as the “golden” property. Spanish property, is still one of the safest investments you can make because currently, Spain’s property values are on the rise. Prices in the Costa del Sol region have gone up between 15% and 24% over ten years and many experts believe that this upward trend is going to continue with capital increases between 4 – 7% per year.

One of the most popular ways of investing in the country is to buy an “off plan” property. Off plan is a property that hasn’t yet been developed. These are popular forms of investment because the developers are looking for ways of getting money to fund the construction efforts. So they ask you to buy a unit before construction begins but at a really low price. As the project nears completion the prices increase, and after the property has become fully marketed as the next “luxury villa” you’ll see how it suddenly becomes very, very expensive.

Apartment complexes make good investments over the long haul if you choose the location wisely. They have good security are easy to maintain and have a lot of built in amenities for residents like pools and gyms. But if you want a larger place in a quieter area, hopefully one where you can have a big garden or serene countryside then you can go inland.

When buying property abroad you have to be careful. Each country has its own unspoken rules and “irregular’ regulations, as well as local traditions and possible scams to learn, understand and watch out for. This article examines three areas that a potential property purchaser must understand before handing over any money for a dream home.

Firstly there’s a ‘tradition’ in Spain for purchasers to actively but illegally assist the vendor in reducing his overall capital gains tax liability. This is considered “natural” and “normal” and in theory it doesn’t affect the buyer, it certainly doesn’t affect the vendor and what the tax authorities don’t know can’t hurt them. And it sounds so simple. First the vendor will ask for a far reduced purchase price to be written into the purchase contract. You then pay the undeclared amount in cash. Who would care, or even know about it?

Well, the government cares, and they are trying their best to find out who does it.
The recently elected new socialist government has begun a complete crackdown on money laundering and tax evasion which will directly target the property market in Spain. So if caught, you could be caught in an investigation, fines, even a lengthy prison term. Not exactly the way you envisioned your holiday home in Spain.

But you may be tempted to play along. After all if you refuse to act in accordance with the vendor’s wishes often find that he then backs out of the sale and you could lose your dream property in Spain and possibly their deposit as well. So why should you risk that?

Because the price entered into the contract will be the figure that any resale of the property will be compared with. So if you want to resell, and you don’t want to be burdened with those capital gains taxes, you’ll have to convince your buyer to having a reduced sum entered into the contract as well. Now you’re the one breaking the law! Think very long and very hard about what you’re being asked to do and the potential legal and long term financial consequences rather than your short term thrill at securing a home in the sun.

Even if you have your heart set on a particular home in Spain we would strongly recommend that you do not go ahead and act illegally even if that means you risk losing the property.