Are you planning to invest in Spanish real estate? This article gives a rough overview of the main points of interest when buying a second residence in Spain.
1. The notary's remit is fundamentally different
The role of the notary in Spain is not comparable to that of a Belgian notary. The control function of the Spanish notary is indeed limited to an information query in the Registry Office and compliance with anti-money laundering legislation.
Therefore, the notary is not responsible for drawing up or reviewing the purchase agreement/compromise, checking the urban planning situation such as permits, and any outstanding debts on the property. Nor does a Spanish notary check the possibility of letting your future home. For this, you need an independent legal partner.
2. Acquisition costs vary by region
Acquisition fees vary from region to region. Registration fees for a resale vary between 8% and 11%. Catalonia and Costa Blanca are more expensive than Murcia or Andalusia, for example. For new builds, the Spanish mainland has a VAT rate of 10%. But here the additional stamp duty again depends on the region and is around 1.50%. Below is an overview by region.
In addition to these taxes, there are additional costs. Consider, for example, notary and registration fees.
Would you like an indication of the purchase cost? Please send an e-mail to firstname.lastname@example.org with your budget and region.
3. You are buying a new building on plan: bank guarantee is crucial
If your future second residence in Spain is yet to be built, it is best to have a bank guarantee. This will protect your upfront payments to the promoter. A bank guarantee is required by law, but in practice we see that promoters often do not take out a bank guarantee.
4. What about taxes on your second stay?
Here, we distinguish between taxes in Spain and taxes in Belgium.
In Spain there are two regimes for non-residents. If you rent, you pay 19% on your rental income, with a limited expense deduction. The return is quarterly. If you do not rent out, you pay 19% on cadastral income. You calculate the cadastral income by taking 1.10% from the valor catastral. The declaration is per year, before 31 December each time. In addition to the non-resident tax, there is the IBI. You can compare this to property tax.
In Belgium you are in principle exempt from taxes on your rental income from Spanish property. But there is an accumulation effect. This means that rental income does count when calculating the progressive personal income tax rate. So you do need to declare your rental income.
Find more detailed explanations here:
5. What is the impact for my heirs?
If you do not intend to live in Spain, Belgian inheritance law will continue to apply to the whole of your estate. So also on Spanish property. However, it is advisable to draw up a Spanish will. This is not compulsory, but it will simplify the settlement of your estate. It will save your heirs and partner a lot of administrative hassle.
There is also an impact on inheritance tax. Flemish inheritance tax applies to your entire estate, including your property in Spain. You also pay inheritance tax in Spain, but the conditions and rates vary from region to region.