March 1, 2009 at 2:20 pm #54790
Hello everyone – this is my first post to these forums. I am looking to purchase a holiday home on Menorca this season, with a view to gradually spending more time out there and eventually moving there, possibly permenantly. Initially I’m likely to use the property for maybe 15 weeks/year. What advice do you have for me? I have holidayed there several times, have a budget in mind, and am not expecting to make a profit out of the property by letting it. My specific questions are: are there any elephant traps to avoid? Are there any recommendations about good estate agents? How do people travel to Menorca over the winter season- as far as i can see flights there, certainly from Birmingham stop around the end of September/October.
Thanks in advance for your advice. Andrew
March 11, 2009 at 8:42 am #90735
Here is the law firm we used to purchase our house in Es Mercadal:
Caballero, Lafuente, Mercadal (we worked with Fernando Caballero)
c/ Norte 12
They speak English perfectly and are located 2 minutes walk from the main market and from the place you go to get a NIE number (sort of a SSN for foreigners), and where you must go to sign a wholotta papers. Not related to them, don’t work for them, not a shill, but a very satisfied customer. They will even keep you apprised of new laws that affect you – sent to your US address.
As far as banks, we used Banco Santander, simply because my wife’s parents used them for 30 years, and in a small town, it is important not to imply negativity of any kind (the worst that a Menorquin will say even about the town murderer is that they are “difficult”). The upside is that they do have a website where you can watch you account balances. Downside is that they are a “world class” bank and will fee you to death (for example, they 0.55% fee to deposit a check denominated in Euros, drawn on a French bank). Also, they seem unable to send statements to the US — about 1/10th of them make it here and the rest are behind the door when we arrive in summer, usually like papier mache due to the tramuntano and our door facing north. The local bank manager does have some wiggle-room as far as relaxing some of them, but they have to show profits to Mother Santander. If we had it to do over again, we would have gone with La Caixa, which is a local bank that plows profits back into the fabric of the community — cultural events, assistance to needy, etc.
The purchase price is the weirdest thing you may encounter. There is a “gentleman’s agreement” that the official (taxable) purchase price is somewhere around 60%-70% of the actual purchase price. Coming from the US where fear of the IRS is overwhelming, this will take some hard swallowing — just go with what your lawyer says. Very important: if you sell your property within 12 years of buying it, you get whacked with a huge tax on any profit – 25%, I think. Even if you don’t rent, you will pay taxes as if you did, unless you are full time resident.
You can also ask around to see what might be for sale. Everyone knows everyone, and you might find a fixer-upper for very cheap, without having to deal with the brokerage firms, who (imho) don’t do much to earn their money, except put pictures in the window of their stores.
As far as location, location, location I would suggest trying to find a “casa antigua”, instead one of the hundreds/thousands of newly erected dwellings. It may cost a little more, but your investment will be protected — the mainland Catalans do not want the new construction tenements and they are the primary buyers with lots of money. The downside with an old house is that you may not be able to change the facade without approval, but you can do whatever you want behind the facade. If you go with a beach house, like those in Son Bou, it might pay to walk around and strike up conversations with anyone you see walking or drinking at the bar — they are like a small town & people know who is selling or may want to sell.
As far as flights, we never have trouble getting to Mahon, but we are in the DC area, with Baltimore, Dulles, and National within driving distance. You may have to fly up to Boston, or even to Chicago, to get heading in the right direction. The only expensive time in the winter is Christmas of course, and most definitely New Year’s. Iberia is our only choice left, now that British Airways forces us to transfer between Heathrow and Gatwick in both directions. Just what one needs — another three hours tacked on to an 18 hour trip… Iberia’s prices are always cheaper on their website than on travelocity, etc. British Air is a fallback, but you may wind up overnighting on the way back.
Finally, here is something that we just learned last week — we usually buy our tickets 5-6 months in advance to ensure seat availability, and have always banked on Iberia’s promise that you can change tickets for $175. It turns out that you can change tickets, but if your new tickets are cheaper you will not see any refund, or upgrade or voucher. We bought $1200 tickets for this June, back when gas was $4.50 a gallon (I know, I know, the EU pays waaay more), and there were fears that oil would go to $200 a barrel. Tickets are now down around $830. No chance of recouping the difference or even more legroom.
Best of luck!
March 11, 2009 at 11:23 am #90738
March 11, 2009 at 6:35 pm #90759
There is a “gentleman’s agreement” that the official (taxable) purchase price is somewhere around 60%-70% of the actual purchase price. Coming from the US where fear of the IRS is overwhelming, this will take some hard swallowing — just go with what your lawyer says.
Sorry, but not good advice. This sort of black money arrangement is outdated, illegal and to be avoided if at all possible. If your lawyer says to do it, ditch your lawyer.
March 13, 2009 at 2:44 pm #90800
You may have to fly up to Boston, or even to Chicago, to get heading in the right direction. The only expensive time in the winter is Christmas of course, and most definitely New Year’s. Iberia is our only choice left, now that British Airways forces us to transfer between Heathrow and Gatwick in both directions. Just what one needs — another three hours tacked on to an 18 hour trip… Iberia’s prices are always cheaper on their website than on travelocity, etc. British Air is a fallback, but you may wind up overnighting on the way back.
Where does he say he is from the US?
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