Business or private?
 

Hello folks, I'm planning to build a small villa on a plot near Estepona over the next 24/36 months with a view to using it during the cold and miserable British winter. Renting it out for the rest of the year.

Would the tax burden be lower if I did this via a company structure or if I did this as a private individual?

Has anyone built up a plot in Spain?

​​​​​What was the biggest challenges?

Plot will cost around 150k has full planning permissions I'm told.

Re: Business or private?
 

It is quite a task and no doubt expensive. Do you have experience of this type of project? First you need a good lawyer to check that things like planning permission are officially approved. Don't take someone's word for it especially if they say something like it just needs to be approved etc. As for tax and saving money etc that is something you should worry about after you have thoroughly worked out building costs including things like connection of services, access roads. Remember that unlike uk there is no real premium for land and often buildings with large amounts of land lie unused for decades due to either restrictions or the expense of building.

Re: Business or private?
 

Thanks for speedy reply.

I'm a relatively experienced HMO operator in the UK with a few builds behind me.

I'll employ the relevant professionals to assist with due diligence...

​​​​​Capital gains tax (or its Spanish equivalent) liabilities is what I'm trying to minimise, legally.

​​​​​Will be funded by sales of my UK properties over next few years, given that the UK government is tearing down the private rented sector.

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Re: Business or private?
 

Don't expect it to be anything like the UK. We have built in Spain and know the challenges and I'd agree with Ronnyone, don't trust what others say. You can usually check the local Geo Portal or ask for the Cadastral number and find out what planning regulations you have by asking the local townhall technical architect in advance or check here: https://www1.sedecatastro.gob.es/. Use an experienced lawyer during the buying process and you will of course need a local architect registered in Spain. 150K sounds like a lot of money, must be a large plot with direct beach access;). Taxes are another issue.

Re: Business or private?
 

I would talk to these guys before you draw another breath

https://expatsmagazine.org/building-...home-in-spain/

I have used them for all my legal needs.

Re: Business or private?
 

I suppose the word full planning permission is a bit misleading. If the plot is in an urban area you will have planning regulations, so the first question before paying a lawyer is does the plot have a full project that was submitted by an architect and approved by the council? This means you have a project and have to build exactly the way it was submitted, so just ask the seller for the cadastral number, the technical project and ask the council architect if the project attached is still valid. These simple steps can be done before buying or paying a lawyer to ask the same questions.

Re: Business or private?
 

Thanks, will do.
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Re: Business or private?
 

If you think that owning property and renting in spain will be more lucrative than UK you will be in for a ! big shock. Property inflation in Spain is nothing like UK and most people expect nothing more than their ititial investment back never mind a profit!. Plus renting short term is heavily impeded especially for non residents- you need a licence and quarterly accounts plus taxes- not to mention absolutely every Brit gets given the same old line from the Agent about how they will amass a fortune renting out, only to find that everyone in your street has the same idea!. So the rule for Spain is - never buy to invest buy to live in.

Re: Business or private?
 

No I didn't say that. As far as I can see Spanish property is a poor return and hugely illiquid investment with massive transaction costs.

But it does have better weather during the all important winter months...
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Re: Business or private?
 

I suppose so - but not in the last month, it's been freezing and Spanish buildings are far from cosy!. I dream of carpets and central heating!!!

Re: Business or private?
 

I'm seeing 14-18degrees high and nothing actually under zero in the weather forecast for estepona... Whereas in the UK... - 11 at one point and a high in London of maybe 13deg....
Ps my modern all electric 2bed 2bath in London costs £330 per month to heat... ( not a joke, that's the figure...)

Re: Business or private?
 

Something must be wrong there if you are paying that much. We only use our property now an then in Spain and are in Ireland most of the year.
The last bill in January for everything electric (water, heating) here in Ireland for a 4 bed detached house was €220 for 2 months and we are considered an expensive country:confused:. We do also have a wood stove but £330 seems like you must be heating non stop on full power. Sure there is a difference if you are permanent or part time resident and full time residents usually feel colder in Spain.

Re: Business or private?
 

The temperatures may well seem high compared to the UK, but what you have to remember is that people who live here all year round quite quickly become acclimatised to summer temperatures of 35C+, so when it goes down below 20C in the winter we feel cold. It is almost always warmer outside in the daytime in winter (at least between 11 am and 5 pm) than it is inside.

Having said that, my electricity bill in an all electric 2 bed 2 bath property in the South of Spain was €70 last month. We use an inverter air conditioner to heat our living room and have been putting it on at 29C for a short time around 6pm to warm the room up quickly, then turning it down to 23C and leaving it on until around 11pm. That's comfortable. But that's only heating one room and the other rooms are cold. We use fan heaters in the bathrooms when taking showers and have an electric duvet on the bed. The property is 25 years old now so not the most energy efficient.

Re: Business or private?
 

I agree with Moses, that doesn't sound right at all. I don't pay much more than that for a much bigger detached house and that's my entire electricity bill (we don't have gas). I'd shop around personally, that sounds far too high even given current prices.

Re: Business or private?
 

There has been some terrible weather in that bit of Spain just a few days ago.
https://www.malagahoy.es/malaga/temp...765023672.html
https://www.antena3.com/noticias/soc...0010aa861.html
In case you may think it was a one off then here is another event in 1989
https://elpais.com/diario/1989/02/09...20_850215.html
2016
https://www.20minutos.es/noticia/290...zos-andalucia/
There are more examples:wink_smile:
Have you taken advice on how and what is required to set up a Spanish company?
https://administracion.gob.es/pag_Ho...rre/crear.html