alilever

After much research and spending time looking at property in our chosen area.
we have found several apartments within our budget and in our favoured location. We have chosen and met with an English speaking lawyer, arranged power of attorney and opened a Spanish bank account. However, still feel very wary of starting the process of buying.
We would be buying an apartment to use as a holiday home,then in a few years time when we can afford to stop working, we would live in Spain for a couple of months at a time every year. We don't want to be residents. We have found property in an area where we could have some rental income in the meantime,
but we are still worried about Spanish tax laws and the fact you have to pay so much tax if you have to sell. Also - inheritance tax for our children in the future.
Would like to hear from anyone who has bought property or is thinking of doing so for similar reasons. We are being cautious and keeping our budget as low as possible. We feel very comfortable in our chosen location having thought very carefully about what we want and where, but is it all just too risky?????

agoreira

Too risky? I'm sure you are more than aware of the risks, the pundits seem to think property prices have some way to go before they bottom, the agents will probably tell you different, and that lots of property is moving! The risks I see are the chance of buying an illegal property (some places much worse than others), if you want to sell you might be stuck with it as are thousands at the moment, plus the rentals might not be as easy to come by as you think. Have a look at the availability of some of the rentals online, many have very few bookings, a few weeks in the summer possibly, other great properties have done very well. Friends of ours have had their best year ever, other friends, quite quiet, very much depends what it is and where it is. When you look at the big expat areas, there is often a glut of very ordinary, very similar properties. Spain seems to be looking up, but it'll be years before everything is back as was, in the meantime the government seems to be thinking up new ways all the time of relieving you of your cash, the "rich" expats seem an easy target. Friends of ours bought years ago in Spain and have never regretted it, however times are very different now, you're right to be wary.

sam54140

http://www.zerohedge.com/news/2013-1...k-down-not-out
well this is an interesting new article. they forecast another crash by the end of 2014 +/-. Could because markets are toppy, tappering of the quantitiative easing in the US, European parliament elections (euroseptic parties surging), Europe deflation (is has started!), the next financial crisis in the US (Detroit-like cascade ? ie muni bonds etc),etc
remember in 2008 crisis, everything almost was sold: stocks, real eastate, gold etc. except bear funds.
some say the Spanish real easte needs a further 15-25% to drop. real estate agents will tell otherwise of course.
Perhaps a cautious approach is to rent for 1 year or two and see how the market is then. A said, a glut of properties exist (excess, supply vs deman, illegal constructions etc). Then again if you see the property of your dream
etc...
We intend to rent first and take our time, being extremely careful before buying anything. this crisis in Spain truely is like they(Spanish authorities) shoot themselves in the foot allowing so many illegal constructions and purchases, complex tax laws,etc. It needs to be fixed. there's a serious need to restore confidence in the system. Too many people got robbed, mislead, ill advised.

Lynn R

You just have to make your own judgement about whether prices are likely to fall further or not, I'm afraid. I wouldn't think anybody believes they are likely to rise by much in the near future. But are you thinking of buying as an investment, or as somewhere to spend your holidays and part of the year in retirement?

As far as taxes are concerned, the fact that you don't intend to become residents simplifies things somewhat. If you bought a second home in any other country in Europe, you would have similar transfer taxes to pay on the purchase. If you bought a second home anywhere, UK included, you would have to pay capital gains tax if you sold it. Tax rates for both these things will vary between countries. Non-resident owners of second homes in other European countries will also have annual taxes to pay, again rates will vary. They can all be researched online, look them up and see if you would be paying a lot more in Spain than anywhere else.

The cost of the type of property you are interested in buying obviously needs to be taken into the equation - if I were considering buying now, I'd look at the total cost including the purchase price, buying costs and approximate selling costs, plus annual taxes, to weigh up whether buying in Spain is a worse deal than any other country,

I know inheritance tax is a worry for a lot of people. Some have said that they have made the purchase in their childrens' names, with themselves having a usufruct to guarantee their right to live in the property for the rest of their lives. As you are UK residents you could legally transfer the money to your children to enable them to be the buyers, provided you live for at least 7 years after making the "gift". If that were to happen, of course the annual non-resident tax returns would have to be made in their names rather than yours.

I remember you enquiring about the pros and cons of various areas - just being nosey so tell me to get lost if you like but where did you decide on, and why?

chopera

Whenever I look at doing something like that, I add up all the costs of buying and selling the property in Spain, the potential profit (or loss) I might make from renting it out after discounting agents fees, energy fees, community fees, maintenance fees, tax, etc, and then I compare it to buying to let somewhere in the UK, and using the profits to rent somewhere in Spain instead. The latter nearly always works out being the better option.

Dxf

Hi

I would suggest that NOW is NOT the time to buy; No-one I know sees the market picking up to any extent. Now is the time to rent to see whether you like an area or not - places are different summer / winter, High season / low season.

I do not have a crystal ball, but have lived long enough to know if the market suddenly takes off, then it will have a period of reduction some time after.

So if you have really chosen an area, then have your holidays renting there and enjoy yourselves. I am one of the people who had (and what I still consider to be) good advice and my children bought the property I live in. Not exactly the same in your case, if you don´t want to live there full time, but can be a good move depending on your way of life.

Davexf

alilever

Thanks for your reply. I will look at rentals - good idea.

alilever

Hi Lynn,
Don't mind you asking at all! You were very helpful earlier in the year. We viewed properties in Almunecar and La Herradura in the summer and saw nothing. They were in poor condition and some were more that we wanted to spend. Even if we had the money, we would never have bought some of the things we were shown. We realised many properties in Almunecar were up hills that we didn't fancy walking up with shopping and in La Herradura, the area with cheaper properties near the tennis and municipal pool was also to much of a walk into the centre. So we decided on one part of Almunecar and the beachfront of La Herradura for more focused searching. We also thought about Nerja / Torrox Costa and visited both of these last week. We stayed in La Herradura and loved it, but still think we want more of the facilities that Almunecar has to offer. San Cristobal beach area of Almunecar is our conclusion and we saw 3 properties that were ideal and within budget. However, still lots to decide - re work / downsizing in UK first etc. Have 4 sons and discussed buying in their names, but just too complicated....Going to take our time deciding ....maybe more renting first ....Loved the area though and felt very at home. Want to be near the ski-ing so both towns good for that.

alilever

That's an interesting idea. Thank you.

missile

To answer your question: I would not buy again in Spain.

However, Spain has much to offer and in YOUR situation as long as you are aware of the risks, my advice is go for it.

cricketman

Depends on your reasons for buying

If you are buying to make money on the mid to long term then it is still the wrong time to buy imo

If you are buying to have a long term base in Spain and you can afford it, then go for it

If you dont know that much about Spain and are not sure what area you want to be in, then don't buy. Rent until you have a better idea.

Neptuno

Buying the property in the children@s names is not a good idea, unless the Mum and Dad are really old;what if one partner dies-the other may be only in their fifties or sixties with many more years to live. may want to downsize, move,travel round the world etc;Control over what should be theirs is lost. Assets from the departed spouse are needed to make a new life unless the survivor is very wealthy.This particular way of avoiding IHT is always given as a solution, but to me it is a useless one;
Until there is a decent state allowance for IHT it will always be a nightmare.

alilever

Know exactly where we want to be, type of property we want and what we can afford. Have found suitable apartments, now just got to decide whether to go for it or whether to carry on renting as we do now when we go to Spain.Reason for buying is to have a long term base, not to make money. Still deliberating ....

la mancha

I know you have decided against buying in La Herradura, but just to point you in the right direction of the pitfalls of buying in Spain, I have just read that some 400 families on an urbanisation in La Herradura are having problems because their properties are sliding down the mountain. I would suggest you do not give anyone powers of attorney, although many may disagree with me. I speak from experience. It is best to be there on the spot when anything concerning your money has to be signed. Why did you give a lawyer powers of attorney if you are still deliberating? Just curious.

johnnyone

I think you have made up your mind and will purchase. If it's to be a base and not to make money why wait?
I know people say rent but that is not the same as having your own place to do as you wish with. I would also never rent out a property that I considered "my home from home"
That's exactly what we did and I have had no regrets and would do the same again.
Good Luck