looking at investing in Barcelona

[john]

Hi Forum

Hope I am using this correctly as I am no IT genius, in fact my kids refer to me a the IT Dinosour.

We are visiting Barcelon at the end of March for a holiday and with a view to look at possible investments. If anyone can answer or confirm some of the points blow we would b very greatful. Thank you.

1. Annual property tax……….1% per year payable to who and how
2. Tax on rental income……….. 25% payable monthly to who and how
3. Cost of purchase ( IE: transfer, title deeds, attorney cost. Spanish registration for owners. Etc.)……..up to 8%
4. What is the market saying about Spanish growth, in particular Barcelona……..We have read articles on the expansion of the industrial areas particularly at Airport industrial. Amazon was a leader in this and is investing Millions into warehouse distribution and infrastructure.
5.  Do units with existing tenant come up for sale………..This is common in many part of the world and makes buying easy if the tenant is happy to stay on.
6. What is the norm in making the offer? IE: Is offering 10% less than the asking price a waste of time.
7. Agent fees are for the seller we assume.
8. Rental agents fees – we understand is one month in advance…..Are they obliged to assist if the tenants turn bad, do they offer any other service beyond finding the tenant.
9. Is it normal for a selling agent to act as the rental agent as well or are these two always kept apart in all cases.
10. Are attorneys needed for writing up a will, assist with banking, checking sales agreements, rental agreements. Etc.
11. Do tenant have extra ordinary rights or is the law friendly to a land lord with difficult tenants.
12. Do the rules change for UK citzens if the UK with draw from Europe

Effectively we would like a “one stop shop” for buying, administrating and to manage renting,  (easier said than done, we know). Are their such companies.
Finally are we barking mad if we are looking at a unit in central Barcelona (CBD) for say Euro 160 to 180k, and expecting up to between 700 to 900 Euro rental per month.

[Mark Stücklin]

Hi John,

Sorry about the slow response, been under the weather.

I for one, am impressed by your IT skills 😉

I’ll try and answer your questions one by one, but maybe not all at the same time. If anyone else has an answer don’t hesitate to step in.

Starting with the annual property tax / local rates, which are called IBI (Impost Sobre Bens Immobles Urbans in Catalan).

ANNUAL PROPERTY TAX

Here is the City Hall explanation of the IBI tax (in English):

Who has to pay the tax
This tax has to be paid by legal owners, beneficial owners, leaseholders or freeholders of any landed property (flat, parking space, storage room, shop, house, office, etc.).

The holder on 1 January is liable for the full sum of the tax, even if the property is subsequently assigned. This means that the new holder has to pay the tax from the year after the acquisition date.

Payment
Paying the tax by direct debit will save time: there is no need to go to the bank to make the payment, or to chase up a copy of the bill if you do not receive it. Another advantage is that you don’t need to worry about whether the document has been received or when the payment period is, as long as you have sufficient funds in your account.

This payment can be made by direct debit from your current account or savings account. The bill is paid in four instalments and individuals who property holders receive a 2% discount on the part paid directly to the City Council. For payment dates, see the Taxpayer Calendar. The direct debit can be set up via the Internet, at district Citizen Help and Information office, or calling the free phone number 900 226 226.

If there is an error with the direct debit, the City Council guarantees the cancellation of any surcharges and interest.

Note that the vendor is supposed to pay the year in which the sale takes place, and the buyer starts the next year. So if you buy in 2016 you will be liable for IBI starting in 2017 (unless you agree to pay the vendor pro rata for part of 2016). You have to pay the first year of ownership in one payment by the first of April. The second year you can pay in quarterly installments by direct debit (domicilazión).

The rate you pay is typically 0.75% (so less than 1%) of the cadastral value of your property’s (valor catastral), not the purchase price. The cadastral value in Barcelona is usually much lower than the purchase price.

The full details on Barcelona’s IBI 2016 can be found here (pdf in Spanish).

You can see when it has to be paid in this calendar (or download the pdf here)

[caption id="attachment_190081" align="alignnone" width="642"] Barcelona tax calendar 2016[/caption]

[Author]

Posts