Originally Posted by spainrico

Many people laundered their 'black' pesetas via property deals in the currency change era - bought off plan in pts and sold for €uros when it was built - this all added to the boom in building and prices. Of course, some were never built/completed (certainly in the Torrevieja area) and so their pts were lost but that practice was very common at that time when notaries and the tax systems were laxer.

Yes, 2007/8 was a wipeout with the financial crash triggered in the USA. Loads of people had bought property at inflated prices (boosted by huge agents' commissions) and then could not sell as well as loads of new/unfinished projects being unsold.

Originally Posted by bobd22

As you say it was all about timing and 2008 brought in falls in price which in some areas have never recovered. Unfortunately we bought in 2007 and like many realised propertywas far from an investment in Spain. There are still properties that were for sale 15 years ago for sale where we live. That said a few have recently sold so maybe things are improving? We never bought hoping for profit but for somewhere to retire to. We used it as an holiday home for 11 years and then moved into it full time.So if one gets use out of the property it lessens the pain. If looking to make a good profit I would look at other ways than investing in property in Spain. Its not imòssible to make money on property here in Spain but location and type of property dictate end result so if looking for profit very careful research is required.

Originally Posted by Moses2013

I suppose it's a bit like buying a new car or boat and expect the value to drop once it's in use. Saying that, we are all the lucky ones who are/were able to buy and a lot of people will never be able to do that.
With global warming and the way things are going anything can happen. With Brexit people already have to pay higher taxes on rental income and who knows what will happen next. The government could introduce more environmental taxes in the future and even holiday home owners who have properties in areas with water scarcity could be forced to pay up soon, then filling up the pool will be an even more expensive luxury that people can't afford.

Originally Posted by Bouldrd

Hi, I am considering moving to Spain in the next 10 years or so. With this in mind, I am looking to acquire my first property in the Canary Islands (Fuerteventura) with the intention to rent it out to holidaymakers purely as an investment. I understand that the amount of Spanish tax on rental income you pay as a non-resident is dependent on the country in which you are currently a fiscal resident and not your nationality. In my case, since I live in the UK, this rental activity will then be subject to a tax rate of 24% as I am a non-EU resident instead of 19% (even though I am a Belgian national). Also, expenses such as letting agency costs, electricity, IBI etc. are non-deductible.

I ran some calculations to estimate what kind of profit margin I could expect. Based on a rental property that generates an annual rental income of €17,459 and expenses of €9,834, the following tax will have to be paid in Spain:

• Total rental income: €17,459
• Non-deductible expenses: €9,834 (€2,793 (AirBnb) + €1,210 (Cleaning) + €154 (Insurance) + €3,491 (Letting agency) + €425 (Electricity) + €184 (Water) + €394 (Internet) + €150 (IBI) + €1,032 (Service charge))
• Spanish tax due (24%): €4,190 (€17,459 * 0.24)
• Yearly profit remaining: €3,434 (€17,459-€9,834-€4,190)

This leaves me with a monthly profit of €286 which surely isn’t worth the trouble — yet I hear many UK nationals still continue to invest in Spain even after Brexit… What am I missing?

I have two issues: the high tax rate and the non-deductible expenses from the Spanish tax that are driving this very low profit.

Are there other options to invest in Spain to make it more cost-effective perhaps by acquiring the property via a UK company or a Spanish company?

Any tips or expertise to share?

Originally Posted by Pulaski

I am not sure where you got your list of "non-deductible" expenses from.

Originally Posted by Joppa

Those who live in non-EU country, like UK now, cannot deduct expenses from rental income, according to Spanish tax law.

Originally Posted by Pulaski

So he needs a Spanish corporation, or at least one recognised as an entity taxable in Spain, to hold his investment.

Originally Posted by mikelincs

I suspect that there are still very many properties empty in Spain since Brexit, and that there will be a lot of people fighting for a decrease number of visitors, the long term rental market is much more difficult with visits limited in time. 10 years ago there were abundant empty rental places in mainland Spain due to oversupply, people relying on rental income were having a lot of problems, we were renting and had a huge number of properties to choose from.

Originally Posted by spainrico

there is nothing equivalent 550€ barely gets you a studio if you can even find it.