The Buying Cost
Just like anywhere else in the world, the total cost of buying a Spanish property will generally depend on the location. However, when it comes to Spanish property, it is important to note that each independent Spanish region set their transfer tax (Known as ITP or Impuesto de Transmisiones Patrimoniales).
This tax is payable on a resale purchase. For example, a property the size of a football park may require you to pay ITP of about 7%. The percentage tends to be higher in regions that are popular with foreigners. For this reason, you may be required to pay 6.5% for a bar size property.
If purchasing a property in the Costa Blanca, which is part of the Valencia Region; the transfer tax rate for buying a property would be 10%. If you buy a similar property in Costa del Sol, which is a part of the Andalusian region, the buying tax would be 8%, of the property.
Other costs include; a notary fee of €1,800, land registration cost of €2,000, legal fees and other costs. For this reason, the average price of purchasing a property in Costa Blanca and Costa del Sol are €393,035 and €386,035 respectively.
The Ownership Land Rates (Annually Ownership Taxes)
The Impuesto Sobre Bienes Inmeubles also known as SUMA and abbreviated as IBI is Spain’s equivalent of the Tax Council. Their rates vary slightly to the municipality. Their charges are applied to a property’s, and it is equivalent to a property’s chargeable value, which is most often less compared to its market value. SUMA will most often- but not always include taxes for rubbish collection. Therefore, the average yearly IBI budget is €600-€800. The cost is much lower for apartments.
Moreover, if the property is part of complex or urbanization projects, then you should expect to pay fees to cover upkeep costs for the communal areas. The average price for this ranges between €400 - €900 per year. Payments can either be paid once a year or twice a year.
Keep in mind that imputed income tax declaration must be filed even if the property is not rented and a small tax must be paid, mostly about €200-€400.
The Cost Of Living
Well, even though there are many taxes associated with property buying in Spain, there are some benefits to it. The leading being that buying a property in Spain is 19% less expensive compared to the UK. When it comes to eating out, it is 29.5% less expensive. All this makes Spain cheaper by 16%. What does all this tell you? Well, it is a fact that the cost of living in Spain is much lower compared to the UK.
Furthermore, connecting to the internet is affordable in Spain by 32% and paying for basic utilities are 29% cheaper. The cost of broadband ranges from €24 to €55 per month. Electricity can be expensive, but there are ways you can make it affordable. A six-bedroom house with a swimming pool may cost you around €118 for electric bill and €84 for water per month.
The Rental Regulations
11 of Spain’s independent regions have put in place regulations governing short-term holiday rentals. For this reason, Airbnb has become a hotbed for this kind of investment. On the other hand, Barcelona, Balearics, and the Canaries have strict rules limiting this kind of investment (meaning the type of property and the area allowed). Every owner is required to get a license through registration at the town hall, for rental properties.
The property must meet certain standards. At the same time, the property must be declared and taxed. In these areas, tax percentage is 19% for non-resident and given allowances for particular expenses. The double taxation treaty between Spain and the UK means you shouldn’t pay tax on any income from rentals twice.
Estate agents in Tenerife offer comprehensive property services on the island and is worth consulting before making any purchase decisions.
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