Crunch time, do we complete on house in Spain?

sammyjammy

I_want_to_break_free said:

Assuming you only have British passport you will be limited to 90 days in any 180 unless you have a special visa etc.  Also, Spanish property may not be as quick and easy to sell on if /when you want to.  And having a property in Spain does cost all year round so dont under estimate the running costs.  Not sure as you are both working how often and long you plan to visit and stay in Spanish property.  Maybe you can work from Spain?  If not, it does seem a big commitment for staying in property just a few weeks each year.  Assume you have looked at renting similar property.  There is also risk of squatters.  So a lot to consider.  We bought in Spain in 2019 and retired.  We spend most of our time in uk with much time in the autumn winter in Spain.  Finance wise it does not make sense, but we love the place and pace of life etc.  Hope you get a place if not now then when its right for you.  

OP already owns a property in Spain they just want a bigger one.


Question for the OP I assume you would sell that smaller property?  Surely that offsets the finances slightly? 

Its not something I would consider but I'm very risk averse when it comes to finances (and everything else!), given you already own property in Spain some of the issues around that will already apply to you so I guess its just the financial aspect.

SomeMadeUpName

I believe now we are a third country to the EU then any rental earned in Spain is subject to 24% tax with no deduction for expenses.  Even if you don't rent there is an assumed rent on which you will be taxed 24%.  These changes may not have kicked in yet, so you may not have felt them on your existing smaller prop. Something to research and bear in mind (ie am I right, and what will it cost).

Having said the above then I will add that we have a place in France that costs us a bloody fortune but we have never regretted it for a minute, and if the next 6 or 7 years go to plan then we hope to buy in Spain also.

You're a long time dead.

Though some would justifiably counter that you are a long time living if your funds run out!

PS France has already released details of it's extended holiday visa, I imagine if Spain hasn't already it will soon, so I wouldn't worry about 90days in 180.  You will just need to stay under 183 in a year to not need to come under the Spanish tax system.  My long term plan is just under 4 months in France, just under 4 months in Spain, just over 4 months in UK (giving the UK the strongest claim on my taxes) we'll see if that proves viable.

uk1

Bossy_bird said:

Afternoon everyone, Newby post but at a real decision crunch point and could do with your advice….
Me and hubby both 43 and trying to avoid slipping into our respective mid life crises by actively engaging in pension planning. Ideally we would like to be flexible with employment choices at 55 and retired at 60. We have been lucky in our careers and could absolutely do more over the next few years to secure our future. We have been frivolous previously but both now love a  spreadsheet!!
A little bit about us…
Combined DC pots are currently at £476k and I have a mini DB pension giving £4400 pa at 63. £75k in ISAs. Both have 3 yrs working left to full SP allowance. We have a mahoosive mortgage of £560k but with c. 50% equity. 19 yrs left. We also have a small place in Spain with no mortgage. 

We have found a bigger place in Spain that would be perfect for us to retire to or at least spend the 180 days permitted! However it would involve equity release  from current home increasing LTV to 70% at a time when the world seems to be going slightly mental. Our target would be to pay off additional borrowing in 5yrs and then know that our retirement home is ours and then it’s just all about ‘the number’. However I’ve started to become anxious about job security and the pressure to maintain our current high salaries. We probably earn enough to retire early (50 ish) if we were sensible….but we are not 😬. The completion date is in 3 weeks and mortgage offer is currently on our kitchen table…extra borrowing at just over 1% fixed for 5 yrs feels like a great deal. I’m rambling, I guess I have two questions; Do we buy in Spain or is it too risky? and are we doing ok from a pensions perspective? I think we could do more….your advice is needed!!

Congratulations on finding yourself in such a great financial situation that allows you to consider these options.  Othes have provided you with excellent financial considerations so for what it's worth I'll suggest a consideration or two intended to help you test the more wider lifestyle considerations.

This seems to me to be in your minds a quite finely balanced decision but one which will undoubtedly tend to project you into a direction that may or may not be one that you will either be happy you made or not at some point in the future.  You seem currently to think the positive aspects are on balance heavier.  Here are a few I've had when thinking and sometimes regretting the acquisition of expensive overseas property.

Firstly, it is extremely difficult now to predict how you will feel about decamping to Spain in a decade or two in the future.  I won't dwell on all the many many things that might change. You can think of them yourselves.  Overseas property can an amazing opportunity or become an irritating burden that you feel obligated to use as well rather than enjoy the other options you might feel in the future.  For example extended travel staying in luxury hotels or cruises. Or renting different properties in different places or even an extended over-winter stay in Spain those years you feel like it.  To hedge this uncertain set of bets might it bemore prudent to play a safer route and retain your current property to enjoy for vacations, invest the cash you might have spent on the upgrade and make the life-changing decisions later?

As a general weakness of my own, I'd say that once I have a "brilliant idea" or "an extermely cunning plan"  I am often far too anxious to get started and plough on and as I get older I sometimes wonder whether I would have made the identical decision today or could it have been left a while longer.  Sometimes even an astute and “profitable” financial decision has an unforeseen set of non-financial negative unplanned and later regrettable consequences. 

Good luck with your difficult decision.

Bossy_bird

cfw1994 said:

I’d take the contrarian view and say (in summary) GO FOR IT!
😎👍
Of course there will always be concerns….

….but you’ve built a very decent pot up for your young (yes!) age.  

You sound like the goals drive you forwards: why not set this one?

I do agree with jamesd that your TFLS would be able to help pay things off, but that is a few years away.
What might cause me to pause is if I had other significant outgoings looming - school fees can take a chunk, for a number of years, for example, maybe funds to help start the kids off with cars or deposits later - but if not, then why not. 

IF you have doubts….then press pause.  If not: I say again, go for it!  (just remember this is the internet, I could be a small puppy stabbing my owners keyboard whilst waiting for dinner to arrive……🐶)

There are always doomsayers here pointing out we are due a recession, rates could be high (I was a mortgage payer when they hit around 15%!), jobs could disappear…..but the world does keep moving forwards, and whilst some businesses will indeed struggle (& this winter could hit a few), others will prosper.  Interest rates will indeed rise (OECD suggest 3% by end of 2022), but if you can lock in for a period, happy days!

If you could head into retirement with the ability to downsize your UK home, have it as your bolthole and move to warmer climes, why not 🌞

This made me laugh 😂 thank you for this and yes you are absolutely right, targets and goals seem to make us really motivated so we know we’d make it work even if times got tough. 

Bossy_bird

sammyjammy said:

I_want_to_break_free said:

Assuming you only have British passport you will be limited to 90 days in any 180 unless you have a special visa etc.  Also, Spanish property may not be as quick and easy to sell on if /when you want to.  And having a property in Spain does cost all year round so dont under estimate the running costs.  Not sure as you are both working how often and long you plan to visit and stay in Spanish property.  Maybe you can work from Spain?  If not, it does seem a big commitment for staying in property just a few weeks each year.  Assume you have looked at renting similar property.  There is also risk of squatters.  So a lot to consider.  We bought in Spain in 2019 and retired.  We spend most of our time in uk with much time in the autumn winter in Spain.  Finance wise it does not make sense, but we love the place and pace of life etc.  Hope you get a place if not now then when its right for you.  

OP already owns a property in Spain they just want a bigger one.


Question for the OP I assume you would sell that smaller property?  Surely that offsets the finances slightly? 

Its not something I would consider but I'm very risk averse when it comes to finances (and everything else!), given you already own property in Spain some of the issues around that will already apply to you so I guess its just the financial aspect.

Yes, selling our smaller Spanish property would definitely be part of the plan. It’s tiny but perfectly formed and would contribute £55k to new purchase. 

Bossy_bird

uk1 said:

Bossy_bird said:

Afternoon everyone, Newby post but at a real decision crunch point and could do with your advice….
Me and hubby both 43 and trying to avoid slipping into our respective mid life crises by actively engaging in pension planning. Ideally we would like to be flexible with employment choices at 55 and retired at 60. We have been lucky in our careers and could absolutely do more over the next few years to secure our future. We have been frivolous previously but both now love a  spreadsheet!!
A little bit about us…
Combined DC pots are currently at £476k and I have a mini DB pension giving £4400 pa at 63. £75k in ISAs. Both have 3 yrs working left to full SP allowance. We have a mahoosive mortgage of £560k but with c. 50% equity. 19 yrs left. We also have a small place in Spain with no mortgage. 

We have found a bigger place in Spain that would be perfect for us to retire to or at least spend the 180 days permitted! However it would involve equity release  from current home increasing LTV to 70% at a time when the world seems to be going slightly mental. Our target would be to pay off additional borrowing in 5yrs and then know that our retirement home is ours and then it’s just all about ‘the number’. However I’ve started to become anxious about job security and the pressure to maintain our current high salaries. We probably earn enough to retire early (50 ish) if we were sensible….but we are not 😬. The completion date is in 3 weeks and mortgage offer is currently on our kitchen table…extra borrowing at just over 1% fixed for 5 yrs feels like a great deal. I’m rambling, I guess I have two questions; Do we buy in Spain or is it too risky? and are we doing ok from a pensions perspective? I think we could do more….your advice is needed!!

Congratulations on finding yourself in such a great financial situation that allows you to consider these options.  Othes have provided you with excellent financial considerations so for what it's worth I'll suggest a consideration or two intended to help you test the more wider lifestyle considerations.

This seems to me to be in your minds a quite finely balanced decision but one which will undoubtedly tend to project you into a direction that may or may not be one that you will either be happy you made or not at some point in the future.  You seem currently to think the positive aspects are on balance heavier.  Here are a few I've had when thinking and sometimes regretting the acquisition of expensive overseas property.

Firstly, it is extremely difficult now to predict how you will feel about decamping to Spain in a decade or two in the future.  I won't dwell on all the many many things that might change. You can think of them yourselves.  Overseas property can an amazing opportunity or become an irritating burden that you feel obligated to use as well rather than enjoy the other options you might feel in the future.  For example extended travel staying in luxury hotels or cruises. Or renting different properties in different places or even an extended over-winter stay in Spain those years you feel like it.  To hedge this uncertain set of bets might it bemore prudent to play a safer route and retain your current property to enjoy for vacations, invest the cash you might have spent on the upgrade and make the life-changing decisions later?

As a general weakness of my own, I'd say that once I have a "brilliant idea" or "an extermely cunning plan"  I am often far too anxious to get started and plough on and as I get older I sometimes wonder whether I would have made the identical decision today or could it have been left a while longer.  Sometimes even an astute and “profitable” financial decision has an unforeseen set of non-financial negative unplanned and later regrettable consequences. 

Good luck with your difficult decision.

It’s almost like you can read my mind. That is exactly the thought process we are going through. We don’t want to make a mistake but we also don’t want to have any regrets. We just recognise we have a daredevil streak that has got us to where we are now professionally and personally. I guess it’s about taking a balanced risk. My parents retired to Spain but gave up after 10 yrs and then found it difficult to settle back in the uk so I’m happy to split my time between countries. We love to travel so would still want enough funds to explore the world. I speak some spanish (degree level
with a northern accent 😬) so Spain has always been a passion of mine.

Bossy_bird

I_want_to_break_free said:

Assuming you only have British passport you will be limited to 90 days in any 180 unless you have a special visa etc.  Also, Spanish property may not be as quick and easy to sell on if /when you want to.  And having a property in Spain does cost all year round so dont under estimate the running costs.  Not sure as you are both working how often and long you plan to visit and stay in Spanish property.  Maybe you can work from Spain?  If not, it does seem a big commitment for staying in property just a few weeks each year.  Assume you have looked at renting similar property.  There is also risk of squatters.  So a lot to consider.  We bought in Spain in 2019 and retired.  We spend most of our time in uk with much time in the autumn winter in Spain.  Finance wise it does not make sense, but we love the place and pace of life etc.  Hope you get a place if not now then when its right for you.  

I have an Irish passport, does that mean I can be in Spain more frequently than hubby?!? 👀 this could be a game changer 😂

nigelbb

SomeMadeUpName said:

PS France has already released details of it's extended holiday visa, I imagine if Spain hasn't already it will soon, so I wouldn't worry about 90days in 180.  You will just need to stay under 183 in a year to not need to come under the Spanish tax system.  My long term plan is just under 4 months in France, just under 4 months in Spain, just over 4 months in UK (giving the UK the strongest claim on my taxes) we'll see if that proves viable.

You may well find that being tax resident in France is more beneficial to a pensioner particularly if you are a couple. Income tax is lower & if the UK pays for your healthcare with an S1 your pensions won't be subject to social charges.

nigelbb

Bossy_bird said:

I_want_to_break_free said:

Assuming you only have British passport you will be limited to 90 days in any 180 unless you have a special visa etc.  Also, Spanish property may not be as quick and easy to sell on if /when you want to.  And having a property in Spain does cost all year round so dont under estimate the running costs.  Not sure as you are both working how often and long you plan to visit and stay in Spanish property.  Maybe you can work from Spain?  If not, it does seem a big commitment for staying in property just a few weeks each year.  Assume you have looked at renting similar property.  There is also risk of squatters.  So a lot to consider.  We bought in Spain in 2019 and retired.  We spend most of our time in uk with much time in the autumn winter in Spain.  Finance wise it does not make sense, but we love the place and pace of life etc.  Hope you get a place if not now then when its right for you.  

I have an Irish passport, does that mean I can be in Spain more frequently than hubby?!? 👀 this could be a game changer 😂

A spouse accompanying an EU passport holder can spend as much time as they like in another EU country. Freedom of movement applies to the spouse as long as they are with their EU spouse.

SomeMadeUpName

nigelbb said:

SomeMadeUpName said:

PS France has already released details of it's extended holiday visa, I imagine if Spain hasn't already it will soon, so I wouldn't worry about 90days in 180.  You will just need to stay under 183 in a year to not need to come under the Spanish tax system.  My long term plan is just under 4 months in France, just under 4 months in Spain, just over 4 months in UK (giving the UK the strongest claim on my taxes) we'll see if that proves viable.

You may well find that being tax resident in France is more beneficial to a pensioner particularly if you are a couple. Income tax is lower & if the UK pays for your healthcare with an S1 your pensions won't be subject to social charges.

Yep, I'm across that, and will consider it when the time comes (eg get 25% out whilst in UK, move to France, cash in balance at 7%**).  My point really though is that I may not want to, and if I don't there are still options.

**not sure if that's actually accurate, but quote it to illustrate there are tunes to be played when the I do 'retire'.