Apartment in El Viso
EUR 2,500,000
Madrid, Spain
Property Type: Apartment
Bedrooms: 4
Total Area: 307m²
Situated in Southwestern Europe, Spain is regarded as one of the world’s most popular holiday destinations. It is a vibrant country admired for its majestic landscapes and excellent quality of life and a nation with a rich history and unique culture and traditions. Spain has one of the most important economies in Europe. It is also a full member of the EU and the Eurozone.
Everything you need to know about acquiring premium real estate in Spain and linked to the Spain Residence by Investment Program
Necessary to maintain and renew the residence permit
EUR 500,000
Full ownership
3-5% on residential property
Price
Currency
Total Properties 17
EUR 2,500,000
USD 2,700,000
GBP 2,300,000
Madrid, Spain
Property Type: Apartment
Bedrooms: 4
Total Area: 307m²
EUR 2,500,000
USD 2,700,200
GBP 2,220,300
Madrid, Spain
Property Type: Apartment
Bedrooms: 4
Total Area: 302m²
EUR 2,500,000
USD 2,700,000
GBP 2,300,000
Estepona, Spain
Property Type: Villa
Bedrooms: 4
Total Area: 514m²
EUR 2,490,000
USD 2,700,200
GBP 2,200,700
Ciudalcampo, Spain
Property Type: Villa
Bedrooms: 6
Total Area: 507m²
EUR 2,400,000
USD 2,200,000
GBP 2,600,000
Madrid, Spain
Property Type: Apartment
Bedrooms: 3
Total Area: 253m²
EUR 1,960,000
USD 2,100,655
GBP 1,800,200
Estepona, Spain
Property Type: Penthouse
Bedrooms: 4
Total Area: 269m²
EUR 1,800,000
USD 1,960,900
GBP 1,590,200
Malaga, Spain
Property Type: Villa
Bedrooms: 4
Total Area: 775m²
EUR 1,590,000
USD 1,700,000
GBP 1,400,500
Madrid, Spain
Property Type: Apartment
Bedrooms: 3
Total Area: 144m²
No rental properties available
As Western Europe’s second-largest country by area after France and with 7,000 km of coastline, Spain offers a vast and attractive real estate market. The country features 17 autonomous regions and many different locations with their own alluring features.
Property investors may choose from a sunny villa by the Mediterranean Sea to a cosy apartment in the lively central Madrid, to a traditional country house in the green north region, to a hideaway in a Pyrenees ski resort. Despite recent price hikes (with over 1.6% rise in 2020), the average real estate price in Spain is 36% below the peak of the ‘property bubble’ seen in April 2007, with some regions reaching 50%.
After a decade of price declines, property prices have started to recover in Spain since 2017, making now a perfect moment to step into this asset class. Price increases are expected in the coming years, in line with low interest rates in Europe and economic recovery in Spain. The possibility of high rental incomes is also an advantage in Spain, thanks to short-term tourist leases and the increasing tendency of locals towards rental housing. Historically, only 22% of permanent housing has been rental in Spain, compared with 49% in Germany and 36% in France. Governments have introduced incentives to encourage rental housing, and the population increasingly favors this more flexible option.
No, foreign nationals can acquire property in Spain without any restrictions. Once they are provided with a local tax identification number and have a bank account in Spain, they may also apply for a mortgage-backed loan.
Properties must always be acquired before a Spanish public notary. The buyer may act in person or through a representative via a power of attorney. An acquisition is also possible through a holding company, but there are extra costs for companies domiciled in tax havens.
An account in a local bank is necessary to settle the agreed price for the property because the seller would require bank cheques as the means of payment to transfer the property ownership. Besides, an account in Spain is useful to facilitate the payment of all property-related expenses and taxes. Opening a bank account in Spain usually takes a few weeks and requires some documentation about the holder for the bank (for example, an income certificate and a certificate of the source of funds). Having an account in a Spanish bank will also help the buyer apply for a mortgage-backed loan. Mortgage-backed loans to foreign borrowers are frequent in Spain and may reach 50% of the property value.
The real estate purchase in Spain implies the following expenses and taxes:
Returns vary depending on location, type of property, market conditions, and contractual terms. For housing properties, the average monthly rent in early 2021 was EUR 10.65 m2, with significant differences between regions (for example, EUR 14 per m2 per month in Catalonia versus EUR 6 per m2 in Murcia). The actual annual gross yield lies between 3% and 5%. If the property can be rented to tourists on short-term contracts, the annual yield may easily rise to 7–9%. However, this result is subject to holding a tourist license, which some regions and municipalities have made more difficult to obtain in recent years. Commercial properties have returns around 5–7% per year, reaching 10% in new businesses with high demand, such as self-storage centers, warehouses, and logistics facilities.
Assuming that the property owner is not a tax resident in Spain, the rental income is taxed with the annual non-resident tax, which has the following rates:
Only in the first case (EU residents), the owner will be entitled to deduct property-related expenses. However, if the owner’s country of residence has a double taxation agreement with Spain, the tax paid in Spain may be deducted in the home country. The same rules apply to properties owned through corporate vehicles abroad.
As a result of the 2008 financial crisis, Spain imposed an additional tax on properties of non-resident citizens for their own use (not rented). The measure has remained in place as it is also considered an incentive for bringing properties on the rental market. In this case, the annual non-resident tax with the rates mentioned above will be applied to a fictitious rent equal to 1.1–2% of the property’s cadastre value, depending on the location. If the property is owned through a company in a tax haven, the fictitious rent will amount to 3% of the cadastre value.
Henley & Partners assists international clients in obtaining residence and citizenship under the respective programs. Contact us to arrange an initial private consultation.
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