Spanish Property Investment: Taxes and Insurance..

Property:Real-Estate

Buying a property in Spain is much like buying a property elsewhere. You’ll need to scope out available properties, get financing and file for ownership. You also need to familiarize yourself with some added considerations to be aware of when buying a property oversees.

One primary consideration in Spain is registration. Many owners don’t register older villas, thus it is difficult to assert the actual square footage and ownership of a home before buying. With newer properties this is less of a problem, as most builders now recognize the benefits of registering a property.

Other considerations include shopping for insurance and paying taxes. Let’s talk a bit more about these categories.

Insurance

There are several mandatory forms of insurance you must buy when investing in Spain. The most notable is fire insurance. Government officials require you take out fire insurance when you get a mortgage. Also available are household insurance and life insurance. Household insurance like standard homeowners insurance helps protect your home and the contents in the event of a major catastrophe or rent. You should make sure you read the policy thoroughly and understand any limits or exclusions when shopping for insurance.

If you shop for life insurance, you can look for a policy that will guarantee payment of the mortgage if you pass away.

Taxes

There is good news when it comes to taxes in Spain. All homeowners living in Spain more than six months of the year must apply for a residents permit, though officials may abolish this law. Applying for residency however, does have advantages, particular related to tax.

For example, inputted income tax is an annual tax non-residents must pay. This tax is roughly .5% of the catastral value of the property. Residents aren’t charged this tax on their principal home.

In addition, the government assesses a wealth tax on all properties in Spain. The tax is .2% of the value of all properties owned. However, for residents, the first 108,000 Euros is tax-exempt. If you and a partner own the property, you are both exempt for this amount individually, thus you realize a $216,000 tax exemption

Residents also pay a lower capital gains tax when they profit from the sale of a property.

Property Investment Trends

Many real estate investors are turning their attention to properties in Spain. Because the interest in properties is rising, so too are property prices. The average new villa or condo in Spain now goes for roughly 381,000 Euros, thought this fluctuates dramatically based on the size and location of the property. In some regions including Costa del Sol, more than 75% of homebuyers are foreign investors. This contributes to increasing prices and multiple growing municipalities.

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