Should you buy property abroad?
Should you buy property abroad?
One of the questions I’m asked quite regularly, and one of the things I’ve been looking at recently is whether to buy property abroad for investment purposes.
Now, one of the international regions I am looking at is Spain.
Spain has previously had a bit of a bad reputation. When it first started out, it was problematic, for example, with Spanish developers selling properties including blocks of apartments that were built on land that didn’t actually belong to the developer!
So when the owner of the land came along at some point and said,
“Hey, you can’t build on my land. I want my land back,”
and people lost their investments.
Well, all of that’s been ironed out now, and actually buying investment property in Spain has been quite popular for some time, and certainly it’s less problematic
There are even UK estate agents in Spain now selling properties all the time, so there’s quite a lot of people buying, especially from UK,
Other internationals such as, the Belgians, Dutch, Swedish, and lots of others going to Spain to buy. It’s a great time right now, because the prices are at a good level to go in and get some good deals.
It of course, depends on the location.
Location, location, location, as we always say, is a very, very important,
You need to do your due diligence. However, there are opportunities in Spain right at this moment, one of which I’m looking at, where you can pick up properties for a fraction of the price they were sold for years ago.
In fact, a very good friend of mine has purchased something in Spain that was sold for €250,000 – €300,000 10 years ago, and they picked up this particular property, a two-bedroom flat, for €100,000.
When you look at the rental opportunities, whether it’s to the holiday community going to the beach, or the golfers seeking drier weather,there’s really, really good income possibilities there.
So while I’m not saying you should all buy in Spain, I am saying it’s definitely something that might be worth considering, finding out more and doing your proper due diligence. As always getting a good quality power team around you to find out if this will work for you.
Don’t forget to look at the tax advantages or disadvantages as well, and how the Spanish government treats UK investors, if you’re a UK investor.
A great Spanish Tax advisor , lawyer and management agent can make all the difference to the investment situation.
Knowing the rules and laws are very important. For example to rent a property in Spain you need a license. Different regions in Spain have different ways they administer and issue the license.
There are 3 ways to look at a business of investing in Spain.
- Buy in your own personal name.
- Buy with a sister company that is connected to your company in UK.
- Set-up a new Spanish company to run the investment property(s).
Each has its own advantages and disadvantages.
Remember I am not a tax advisor so I can’t give you specific tax advice. What I will do is give you points you need to investigate for your own personal circumstances from a professional advisor .
Buying in your own personal name may give you some tax advantages. It also leaves you open to full access to you assets should anything go wrong. For example, should you have an insurance policy on your apartment and the place burns down only to find out that all the other owners are suing you for their losses , such as income, rebuild costs etc. They may think something or someone in your apartment caused the fire and if your insurance policy does not cover this then they could come after all your personal assets to recover their losses. Your home in UK could be part of the claim!
Buying with a sister company that is connected to your company in UK.
This is where you would set-up a new company in Spain that is owned by a company you have in
The UK. For example, I have a company in UK that owns some of my properties.
I could set up a new company in Spain that the UK company has 100% shareholding in. Therefore the
Spanish company is owned completely by the UK company.
Here I may be setting myself up for double taxation , once in UK and once in Spain. Or there may be
some great tax advantages to do this…Again you need to seek professional advice on this. This will also
limit your liability to what the company is worth if you had the scenario from the fire example and you
house would not be at risk
Set-up a new Spanish company to run the investment property(s).
This again would limit your liability to what the company is worth if you had the scenario from the fire
example. There could be some great tax benefits from having a Spanish company with Spanish property
You will have money in the Spanish system that would be a disadvantage if you wanted to transfer it
to UK with transfer rates and limitations
So there’s an insight to investing abroad with Spain as the main example. I hope you found this useful?