The results of the Brexit vote have left many wondering what the future will bring. One of the questions we have been asked most frequently in recent weeks is “what will be different about buying property in Spain after Brexit?”
We set out our thoughts on how Brexit will affect those Brits who are already property owners in Spain in a previous article, which you can find here
. In this article we consider life after Brexit for those still thinking about buying property in Spain.
It is important to remember that the Brexit negotiations have not commenced at the time of writing. While it is almost certain that the United Kingdom is leaving the EU, the terms of the exit and the reality of how UK citizens will be treated within Spain after Brexit have not been discussed. Hence, when we refer to non EU citizens we have used for reference the existing regime in relation to those who are currently non EU citizens. The eventual system for Brits in Spain is a matter very much up for negotiation. That said, what we can say with certainty about buying property in Spain after Brexit is as below.
You will still have a right to buy property in Spain after Brexit
The right to buy property in Spain is not restricted to EU citizens. Anyone who can pay the purchase price is able to purchase property in Spain. After Brexit this will not change. Many people from all corners of the world buy and own property across Spain.
Buying property in Spain after Brexit will not cost you any more money
The cost of buying a property in Spain is the same whether you are a Spanish national, a national of the UK, or a national of the USA or China. The costs of buying a property are not affected by your nationality. Broadly speaking, the costs of buying a property in Spain are comprised of the purchase tax, the Notary’s fee, the property registry fee and some small miscellaneous expenses. These are the same for anyone who buys a property in Spain and will not be affected by Brexit.
The effect that Brexit will have upon the Spanish property market and upon currency may affect the cost to you in real terms, but it has always been the case that the worldwide property market is subject to fluctuation.
For more information about the costs of buying property in Spain, please take a look at our page here
which guides you through the expenses associated with a property purchase in Spain.
You will still have the right to buy a property in Spain to rent it out after Brexit
In Spain your right to do what you wish with a property that you own is not affected by your nationality. If you wish to buy a property in Spain to rent out, whether short term or long term, then you will still be able to use the property for that purpose after Brexit, according to the rules applicable in each autonomous community.
What may change is the rate at which you pay tax upon the rental income that you earn in Spain. At present, for EU citizens, the rate at which rental income is taxed is 19%. After Brexit it may be the case that UK citizens are obliged to pay tax at the same rate as non EU citizens, which is currently 24%. It is important to note, however, that you may be able to set off the tax paid in Spain against your UK tax bill for the same income.
However you are taxed on income received from your Spanish property, it will remain essential that you rent out your property in accordance with the local laws. Take a look at our page on renting out your property in Spain
to find out more.
If you buy a property in Spain you will still be required to pay tax after Brexit
As Benjamin Franklin famously said, “In this world nothing can be said to be certain, except death and taxes.” Even Brexit cannot remove the certainty that if you own property in Spain you will be obliged to pay tax. As you will have seen above, after Brexit the rate of taxation may be subject to change in relation to rental income, which may increase by a small amount.
However, many of the taxes you are obliged to pay in relation to property ownership in Spain will remain unchanged. The main taxes you will encounter as a property owner in Spain are purchase tax, IBI (similar to council tax) and VAT (called IVA in Spain), all of which are charged at the same level no matter what your nationality.
The biggest area for potential change comes in relation to inheritance tax. At the moment, as citizens of an EU Member State, UK nationals pay inheritance tax at the same rate as Spanish citizens. This has greatly reduced inheritance tax bills for many. It is possible that the situation in Spain may change after Brexit and so greater attention will need to be paid to estate planning if that is something that concerns you.
For more information on inheritance tax in Spain, please take a look at our Succession and Probate pages here
You will still be able to visit your property in Spain regularly after Brexit
At present, as EU citizens, UK nationals benefit from freedom of movement, meaning that they have the freedom to live and work in any country within the European Union, including Spain. Many Brits have taken advantage of that freedom of movement in order to start a new life in Spain, or to retire to Spain. The thought that this could become difficult, or impossible, after Brexit is very concerning for many who are considering buying property in Spain.
It has never been necessary for UK citizens travelling to Spain for a holiday to require a visa or any other travel document than their passport. For that reason we consider it unlikely that there will be severe restrictions placed upon short term travel to Spain from the UK.
When it comes to long term stays, or relocating to Spain after Brexit, matters could become more complex. We will be keeping a close eye on the effect of the negotiations in this area in order to advise our clients. Stay tuned to our website for updates in the future by joining our mailing list below.
So, is there life in Spain after Brexit?
If you have made the decision that owning a home in Spain is for you, the looming spectre of Brexit need not be met with trepidation. The truth is that while there will be changes in the future, many of the fundamental aspects of buying and owning property in Spain will not change after Brexit.
If you are thinking about buying property in Spain and you are concerned about how Brexit will affect you, please contact us for a free initial consultation. You can contact us by email at email@example.com, by telephone on 020 3478 1420 or by completing our contact form.