Tips to keep in mind while investing in Costa Del Sol property

Costa Del Sol property:  a haven for property investment

Costa Del Sol is an ideal place for property investment because of the scenic beauty, excellent transportation and good resale value for the properties. Although land prices are high here, one can obtain low priced homes and plots before construction work begins.

Things to look out for while buying property in Costa Del Sol

The prospect of a Costa Del Sol property is enticing to many visitors and they may get quickly enamored by the vast choices and lucrative options available.

However, there are certain things one needs to keep in mind while investing in the place:

• Various taxes to be paid – Before you purchase any Costa Del Sol property, you need to understand what are the various taxes to be paid.

  • VAT and Stamp duty: These need to be paid if you are purchasing a new house or property from a developer. The VAT usually ranges between 7 to 16 percent, while stamp duty is around 1 percent of the property value. If you make an initial deposit before the purchase, then also VAT and stamp duty will apply to this deposit.

  • Transfer tax: This needs to be paid if you are purchasing a property or a home from an individual owner who is reselling the home or plot. This tax ranges from 6 to 7 percent, is inclusive of stamp tax and if you are making an initial deposit this deposit won’t be subject to transfer tax.

  • Income tax: This will be applicable if you are purchasing from a non Spanish person, residing in Spain. Then you will need to keep aside 5% of the value of the property or home, to pay to Income Tax department.

• Property evaluation – It is strongly recommended that you get the Costa Del Sol property evaluated from a recognized property inspector. This helps to ascertain the true value of the property and prevents any kind of loss from the buyer’s perspective. This also is a prerequisite to qualify for a mortgage loan.

• Mortgage loans – You need to apply for a mortgage loan to meet the expenses of the Costa Del Sol property. To do this, you will firstly need to qualify for the loan and also meet associated costs once the loan gets funded. There may be a deposit of 10 to 15 percent depending on the mortgage lender and the type of property.

• Ownership costs – If you are planning to buy a property or a house in Costa Del Sol, there will be many associated costs such as property ownership tax, annual wealth tax and personal income tax.

• Seek legal assistance – This is essential if you are planning to purchase any Costa Del Sol property. The reason being hiring a lawyer can help you save a lot of the hassles in reviewing contracts, performing all due diligence checks etc. A lawyer will also assist you in negotiating the terms of the contract between you and the seller. The fees charged by a lawyer will differ based on the services you require and the reputation of the lawyer as well.

Steve Magill is the author of numerous articles on the topic of Spanish real estate. He is a partner in www.buyspain.co.uk and a Fellow in the British Association of Entrepreneurs (FBAE). He is also an internationally renowned Spanish property expert.