If you have considered purchasing property in Spain, you’ve likely done your research. You may have come across the terms ‘community of property owners’ and ‘community fees’, and asked yourself what they mean. Here we set out what a community of property owners is, what community fees are for, and why they can become a problem.
In Spain, as in most places, the majority of property available for purchase is resale property, although the off-plan market is showing signs of a comeback. Resale property in Spain benefits from character and a well established community in the surrounding area.
Buying property off-plan is back in Spain again, with developers keen to sell properties before they are built and purchasers equally keen to buy at a lower price, pre-construction. It can benefit both parties well, but of course there is a risk for the buyer that the property will not be built after they have paid upfront, either due to unscrupulous builders, or developers going bust.
We are all familiar with the old saying ‘buyer beware’. Certainly, many prospective purchasers of property in the UK know to proceed with their transaction with extreme caution. By enlisting the services of surveyors and solicitors a buyer can avoid spending money on a defective property or one without good title.
If there is one thing that sticks in the throat more than taxes, it is retrospective taxes. In the seven years since the economic crisis gripped Europe by the purse strings, property prices have taken a downward trajectory. No country knows this better than Spain, where properties are being sold at prices sometimes less than 50 per cent of the value they achieved in 2008. In the past few years, there has been an alarming increase in the number of claims made by the tax agencies of the different Spanish autonomous communities for unpaid purchase tax against homeowners who have acquired property, whether by purchase, gift, or inheritance, on the basis that the acquisition value declared in the transaction was too low.
Buying a property is never easy. It is especially more complicated if you are attempting to buy a property in Spain, and you are unfamiliar with its property laws and language.
That is why it is important to enlist the help of an independent Spanish property lawyer to ensure that you are aware of the pitfalls and obligations associated with purchasing a property in Spain. Failure to do so could have serious consequences for you and your family.
When an individual inherits assets located in Spain they are required to pay inheritance tax on the amount they have inherited. Up until very recently non-residents of Spain often found themselves paying more in Spanish inheritance tax than those who were resident in the country – even if the amount they were inheriting was the same.
The good news is that due to recent changes to Spanish inheritance tax law, if you have paid Spanish inheritance tax in the past four years and either you, or the person from whom you inherited, were non-residents of Spain at the time you inherited, then you could be eligible for a full or partial refund from the Spanish tax authorities.
It is said that there are two things certain in life: death and taxes. Up until the last few years those taxes appeared especially high for non-residents in Spain who were inheriting property in the country.
The European Court of Justice has recognised the unfairness of Spain’s different rates of inheritance tax for residents and non-residents, which ultimately led to the Spanish authorities streamlining the tax liabilities faced by residents and non-residents alike. But the hangover of getting a raw deal in terms of inheritance tax still lingers for many expats and foreign investors in Spain.
A warm climate, beautiful views, great food and a steady source of income to support your lifestyle are things that many of us aspire to. A potentially viable means of achieving all of the above in one fell swoop is to open a business on the Spanish coast. During the ‘80s and ‘90s opening a bar was considered a likely route to success. As we begin to recover from the economic crisis we have noticed that the Bed and Breakfast is the business that many Brits are favouring.
As with most economic downturns there are always winners and losers. When it comes to real estate in Spain, those who experienced financial uncertainty during the economic downturn were often faced with the prospect of losing their homes. Ironically, and despite claims of financial mismanagement, it was the banking sector that was able to make a series of gains through property repossessions during the Eurozone crisis.
So what does this mean for the Spanish real estate sector? Well, it would now appear that banks have a substantial stake in the property market. Those banks are also keen to sell on those properties to recoup recession-era losses. Bank repossessed properties have become an attractive purchase prospect for those seeking to invest in a property in Spain.
E&G Solicitors in Spain were extremely professional and patient, whilst they made every stage of the buying process easy, explaining each step along the way. Thank you for making our dream come true! 11/05/2016
