Overseas property investors could benefit from the tax change introduced by the Spanish government on property purchases.
The tax change introduced by Spanish parliamentary officials now means that mortgage tax, which previously was paid by buyers, must now be paid by the bank financing the Spanish mortgage. The new tax change, which has taken effect immediately will dramatically impact on buyers’ charges.
In the past, the cost of buying a house in Spain, including legal and taxation costs, could often easily amount to 10 per cent of the sale price or even more. Now, this figure is expected to drop by up to 2 per cent.
The new tax change is expected to boost an already strong Spanish property market byu encouraging more people to buy. Both Spanish and overseas property investors can benefit from the cost reduction.
Whilst the Spanish property market suffered from a major crash in values following the Global financial crisis in 2008, a consistent and strong recovery has been in place since 2014, supported by strong economic growth in Spain.
2017 saw over 465,000 properties sold in Spain, a 15 per cent increase on the previous year, and the property market is expected to continue strengthening.
According to Spanish bank BBVA, property prices in the country are forecast to rise by 5 per cent in 2018, and the rise is expected to continue into 2019 and beyond.
Rental prices, too, are growing at rapid rates with major Spanish cities such as Barcelona, Palma and Madrid achieving new record-high average rental prices, as more and more properties go up for sale.
Regarding the tax change, Guy Stephenson, from specialist international mortgage broker Offshoreonline, called the move a ‘welcome and unexpected change that benefits buyers who often might struggle to have sufficient savings to pay high notary and tax costs when buying in Spain’.