Hidden costs of buying a property abroad

Cook_County

There are also financial hidden costs. For example you'll need to set up a Spanish company if you want to deduct running costs and mortgage interest against rental income for Spanish tax purposes.

You may also want Spanish, French etc Wills to cope with forced heirship laws if you plan on leaving property to your spouse on death.

Then there are income taxes to cope with in more than one country plus wealth tax reporting and local community tax reporting.

These complications can all add to the volume of paperwork so do think carefully so you know what is involved...

EdInvestor

Ian_W wrote:

Nope, no long lets - occasional 4 weeker in winter but between Sept and May almost exclusively 1 week winter sun visitors. June, July & August almost always 2 week family hols... Exceptionally high occupancy - Yep

Very impressive, well done

Helps to do those figures if 30%+ of your guests are repeat visitors. ;)We used an agent who also let the property at the start but after 3 yrs we just did private lets as we had the demand. You do need someone at hand to make sure cleaning and maintenance gets done and sorts any probs your guests may have.

It would be interesting to hear more details about how you manageed the property, so many seems to get it wrong.

Ian_W

Cook_County wrote:

There are also financial hidden costs. For example you'll need to set up a Spanish company if you want to deduct running costs and mortgage interest against rental income for Spanish tax purposes.
Don't know anyone who has set up a co to be able to claim those exes - I mentioned earlier that tax on letting is 25% of the gross income. The fact you can claim them in the UK but not in Spain just points to a different tax culture - makes it less profitable not necessarily unprofitable.
You may also want Spanish, French etc Wills to cope with forced heirship laws if you plan on leaving property to your spouse on death.
Easier if you have a Spanish Will but Article 9 of the Spanish Civil Code provides that where a foreign property owner dies the disposal of assets in Spain will be in accordance with his own national law, not Spanish forced heirship laws. A UK Will is valid in Spain but may be more expensive and time consuming to prove than a Spanish one.
Then there are income taxes to cope with in more than one country plus wealth tax reporting and local community tax reporting.
We used to meet for an hour each year with our Fiscal advisor, detail our letting income and she would work out our wealth tax [180€ last time I think] she would then submit the relevant forms to the Spanish Hector along with payment - then email me stamped copies showing it had been paid. If the OP has a accountant for his BTL in the UK, the additional work here shouldn't cost much if records are provided and the Spanish advisor was cheaper than a UK accountant.
These complications can all add to the volume of paperwork so do think carefully so you know what is involved...
Didn't personally find it too onerous - and I can't be alone as several hundred thousand Brits happily own in Iberia.

One downside you didn't mention CC [surprised at that!] is that there isn't a spousal exemption in respect of IHT in Spain - so if one spouse dies there is still death tax to be paid on half the value of the property though it is at a lower rate than UK but without a fairly huge nil rate band.
On the upside CGT on the sale of property by non-residents has recently been reduced [or is about to be] from 35 to 18% and the retention from the sale price the buyer pays towards the sellers CGT is down from 5% to 3%. Too late for us unfortunately.

EdInvestor wrote:

It would be interesting to hear more details about how you manageed the property, so many seems to get it wrong.

I'm not sure where we were that so many did get it wrong but it helps if you know the place before you buy there and don't jump in for a new build which is one of several 1000 identical units all being bought by Brits intending to let!

Click on my profile and go to my homepage - it's no longer being let so no personal gain - have a look at The Apartment page and tell me what's not to like? As I said before - decent property, well furnished, good location, little extras like full subs Sky TV, at a reasonable price with a bit of personal service.

Oh, and it does help to work for a large firm employing 12,000 staff that allows you to advertise free in the monthly staff newspaper.

EdInvestor

Oh, and it does help to work for a large firm employing 12,000 staff that allows you to advertise free in the monthly staff newspaper.

Ah so. Having access to that kind of free marketing is worth its weight in gold. But it certainly looks very pleasant and the Canaries seems likely to have a good future to me all year round, with all those retiring baby boomers looking for winter sun...