Understanding the Impact of Brexit on Spanish Property Owners

It has now been more than two months since the UK officially left the European Union: a time of confusion that has been difficult both for British nationals living in Spain and British nationals who own Spanish holiday homes alike. The British love affair with Spain has been long-established, and tourists have been buying property in Spain since the 1960s. But many Brits who have long dreamt of living in Spain or retiring Spain, they probably have more question marks than ever about whether or not these dreams can be a reality in a post-Brexit world.

To help answer some of these questions, and to better understand the impact of Brexit on Spanish property owners, here are some frequently asked questions about the right of Britons to buy property in Spain. All of this information is based on current Spanish law, and is therefore subject to change.

Can I Still Buy a Property in Spain?

Perhaps the most important question for Brits hoping to buy property in Spain to ask, and the answer is a resounding yes! Your legal right to own property in Spain is not based on your residency status, so anyone is allowed to own a Spanish property.

Will the Process of Purchasing a Property in Spain be Different?

The process of purchasing a property in Spain will be exactly the same. Regardless of whether you are a Spanish resident or not, the steps involved in making your house purchase will remain exactly the same.

What Rights as a Property Owner Will Change as a Result of Brexit?

In short, none! Your rights to remain in Spain, and therefore in your property, will be different as a result of Brexit, but the rights that you secure as a property owner won’t change at all. You will have both the same rights and the same obligations as a Spanish national.

Will Buying Spanish Property Become More Expensive?

This is a huge concern shared by many potential homeowners, but in real terms the process and costs involved in buying a property will remain the same, regardless of your nationality or whether you are resident in Spain. In fact, as a result of the uncertainties caused by Brexit, many people are reporting that property prices are lower than they expected.

Costs change a little if you choose to rent out the property you purchase, however, as the amount of tax you will expected to pay will change.  Prior to Brexit, UK nationals had to pay 19% income tax regardless of whether they were resident in Spain or not. However as a result of Brexit, this figure has increased to 24% as Spain distinguishes between EU/EEA and non-EU/EEA nationals. (and Brits now pay the higher figure, as they are no longer EU citizens).

What's more, when it comes to renting out their properties, non-resident British owners will no longer be able to deduct any expenses meaning that the full gross rental income will be taxed at the 24% rate.

Can I still rent my property out?

Absolutely! Although the tax implications of renting out your property may be higher than they were before Brexit, there is absolutely nothing to stop you from renting your property out.

All property and rental law in Spain come under the regulation of the LAU (Ley de Arrendamientos Urbanos)  and if you are renting out a property as a main home, this is the regulation that you are covered by. Holiday rentals, however, are not covered by this legislation: instead the 17 individual autonomous regions  regulate the rental of these properties.

Right now, there are no restrictions on anyone outside of Spain or the EU from renting their property out, but in most cases you will be obligated to register your property with the regional authorities.

If I Buy a Spanish Property, How Long Can I Stay in it?

Unfortunately, this is the main change that has resulted from Brexit: non-residents of the EU can only stay in the country for 90 days in every 180 day period. This means that you can no longer buy a property in Spain and live in it permanently unless you are able to secure a residency permit or visa to remain in the country.

The 90-day rule does not apply to British nationals who live permanently in Spain and have a green A4 residency certificate or one of the new TIE residence cards. But if you choose to buy a property in the country now, the 90-day rule would apply to you, meaning that you could enjoy plenty of long holiday periods in Spain, but couldn’t live there permanently.  These two 90-day periods in a year cannot be joined together, meaning the longest stay you can enjoy is effectively three months every six months.

What are the tax implications of selling my Spanish property?

This is more good news, if you’re wondering about the costs involved in selling your Spanish home. The UK and Spain operate a Double Tax Treaty agreement, and this covers both income and capital gains. Effectively, the treaty ensures that you do not pay tax twice in both the UK and Spain, so you won’t be penalized if you choose to buy and then sell a Spanish property.

 Have you always dreamt of retiring to Spain? Ready to invest in the Spanish property you’ve always wanted? Whether you’re looking for golden mile properties in Marbella or bargain property in Andalucia, our local property experts are perfectly placed to turn your dreams into a reality. Why not get in touch to find out more about how we can help you.

 



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