Spanish tax-efficient real estate investment funds (SOCIMI)

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A SOCIMI is a type of Spanish Real Estate Investment Trust (REIT), an investment vehicle created to encourage long-term investment in the Spanish property market. SOCIMI stands for Sociedades Cotizadas de Inversión en el Mercado Inmobiliario, which translates as Listed Corporations for Investing in the Real Estate Market.

SOCIMIS benefit from substantial tax breaks on transaction costs and profits if certain conditions are met. This can make a SOCIMI much more attractive than other investment vehicles.

Essentially, a SOCIMI can turn a real estate opportunity into a financial investment with compelling advantages such as:

1. Lower taxes
2. A liquid investment that can be bought and sold on an exchange
3. Specialist management expertise in real estate investment optimisation
4. Diversification over many buildings
5. Convenience for investors, who get a hassle-free investment without wasting time

On the downside, a SOCIMI has higher running costs than some other types of funds, but if the fund is large enough, the tax advantage more than compensate for the higher running costs.