Buying a home in Spain
Spain has always and will always remain a top destinations for Ex-pats looking to buy a property in the sun.
Whether you are looking for an apartment by the beach a golf resort property or a country retreat Spain has it all, depending on your location to purchase property prices can start as low as €25,000 for an inland country house. On the other end of the scale you can purchase a property on the Costa Del Sol from €65,000 for a studio apartment, Marbella being the most well known part, properties can cost around €9,000 per square meter compared to Inland it is around €2,000 per square meter.
Spanish property sales have been recovering robustly this year due to the boom in sales of resale properties. In Q2 this year, 199,408 properties were sold of which 99,343 were resale’s, according to the Spanish Land Registrars’ Association. The figures bring resale transactions to their highest level for almost ten years, and sales at the end of June were back at levels seen in 2007, before the property bubble burst.
The total cost of a property will depend on its location. This is because each autonomous Spanish region sets its own rate of transfer tax (Impuesto de Transmisiones Patrimoniales or ITP), which is payable on a resale purchase. A national ‘ballpark’ for ITP is seven per cent, although this tends to be higher in regions popular with foreigners, bar the Canaries where it is 6.5 per cent.
“If buying in the Costa Blanca, part of the Valencian region, the transfer tax rate for this purchase would be 10 per cent, making it €35,000,” conﬁrmed Alex Radford, a partner at law ﬁrm My Lawyer in Spain. “If buying in the Costa del Sol, part of the Andalusian region, the rate would be eight per cent, worth €28,000.”
Other buying costs for a €350,000 Spanish property would include: €1,800 for notary fees; €2,000 for land registration and other disbursements; and €4,235 (incl. VAT) for independent legal fees. This makes the total purchase cost €393,035 in the Costa Blanca or €386,035 in the Costa del Sol.
On-going ownership taxes/fees
Spain’s equivalent of council tax is Impuesto sobre Bienes Inmeubles (IBI), also known as SUMA. IBI rates vary slightly by municipality and are applied to a property’s rateable value, which is usually signiﬁ cantly less than its market value. IBI often – but not always – includes the tax for local rubbish collection. An annual budget of €600-€800 for IBI should be adequate, less for an apartment, dependent on location. If the property is part of an urbanisation or complex, community fees to cover the upkeep of communal areas and facilities will need to be paid. “These can range from €400 to €900 a year,” says Helen Blackburn, a Costa Blanca resident working for agent HomeEspaña. “Payment could be once or twice a year, or even every couple of months.”
Even if the property is not rented out, an annual ‘imputed income tax declaration’ will have to be made and a small amount of tax, likely to be €200-€400, paid.
Cost of living
According to global consumer price website Numbeo.com, Spain is 19.9 per cent less expensive than the UK in terms of consumer prices, with eating out and groceries 29.5 per cent and 16.5 per cent cheaper respectively. “Eating and drinking out is deﬁnitely cheaper here in Spain, especially the wine
Notably, Numbeo lists internet connection as dearer in Spain, by 32 per cent, while basic utilities are 29 per cent cheaper. “Broadband ranges from €30 to €100 per month,” continued Ms Blackburn. “Electricity can be expensive but you can reduce your bills by switching, for example from Iberdrola to Iberswitch. My six-bedroom house, with two kitchens and a pool, costs me roughly €118 a month for electric and €250 quarterly for water. Gas bottles are around €16 and last a long time - for my hob, one bottle can last six months.”
Eleven of Spain’s 17 autonomous regions have regulations governing short-term holiday lets which where brought in to effect early 2016, this will only effect you when buying a property if you are renting a property for less than 2 months and 1 day. In the Canaries, Balearics and also Barcelona there are strict rules limiting the types of properties and areas in which rentals are allowed. Typically, owners are required to obtain a licence by registering their property for rentals at the local town hall. The property will be required to meet certain standards. Any rental income derived from the property must be declared and taxed in Spain, with tax levied at 19 per cent for non-resident EU citizens and allowances for certain expenses. The double taxation treaty between Spain and the UK means you shouldn’t pay tax on any income from rentals twice.
Retiring to the Costa Del Sol
Retirement, everyone thinks about retiring at some point in their lives, free time to enjoy themselves, a pleasant and warm climate, sunshine, clear blue seas and relaxation. Where better to retire to than Spain’s Costa Del Sol, with approximately 320 days of sunshine each year and an average temperature of 20 degrees Celsius. We all worry about our health. However, an outdoor life where we can eat and socialize in a warm and friendly environment is an instant way of de-stressing for many people. Even just waking up to the sunshine puts us in a more positive frame of mind and helps us to relax. The health care facilities are offered free of cost in some parts of Spain. Even the cost of private health care is very competitive and often costs less when compared to health care in other countries. A comfortable life style in Spain is affordable and achievable for many people of retirement age or who wish to retire early.
Purchasing a property in Spain is also not that difficult if you have a good lawyer who speaks both English and Spanish and a property finding agent who listens to you and has your best interest at heart. Always remember that the property you buy should be free from debts and from any restrictions before you consider buying. It is recommended to holiday or stay in a particular village or town before you purchase a property there.
Enjoy your retirement to Spain’s Costa Del Sol.