Rosana Tejada
Buying to let in Spain can be both financially rewarding and good for your wellbeing in the case of a second-home rental investment in a place like Málaga city, Andalusia, which Forbes declared one of the best cities in the world to live in as recently as 2020. But, as always when investing in property – a big-ticket item – make sure you do sufficient due-diligence, bearing in mind the points we mention below.
As a well-known tourist destination, holiday lettings are almost guaranteed during the tourist influx and the price of buying property in Spain continues to be lower compared to other EU countries. This makes it very attractive to buy a property in Spain as a second home and rent it out whilst not in use.
Before you buy to rent, study the costs associated with the purchase, the rental, and the maintenance of the property. Its location and its surroundings. Visit the area at different times of the year.
When you are ready to start the process, seek professional legal advice to help you with:
- Your paperwork as a resident or not resident.
- Open a bank account,
- Check for outstanding debts on the property you wish to purchase.
- Verify the ownership of the property
- To obtain the market value, building permissions and to check is legally registered.
- The licenses required to rent out the property
- You tax implications along the process.
For example, as a resident in Spain buying property to rent:
- You will pay taxes in Spain of all your assets worldwide.
- Income from other countries will be taxed jointly by Spain and the country in question, in accordance with the double taxation agreements.
- If you rent your property long-term you are eligible to 60% tax credit on the net rental income.
- You can claim a mortgage tax allowance
As a non-resident is harder to get a mortgage, the duration of it is shorter, and can only obtain 50 to 60 percent of the appraised value. The income from the rental of your home in Spain must be taxed in Spain, as well as the Non-Resident Income Tax.
Purchasing a property of €500,000 or more as a buy-to-let investment will earn you income AND residency through the Golden Visa in Spain residency-by-investment scheme.
When buying-to-let in Spain, the paperwork needs to be completed diligently to ensure the viability of your investment, and understanding your options tax-wise can help you save money at a later stage. Tejada Solicitors is a specialised law firm in property and international taxes. Get in touch to find out how we can help you make a success of buy-to-let investments in Spain.
