A Guide to Buying Property in Spain After Brexit
COVID-19 news has dwarfed Brexit news in mainstream media, and many issues relating to the UK leaving the EU are still unclear, even though the 2020 transition period has ended and deals with the EU finalised. Many UK nationals who planned on buying a Spanish property during 2020 have had their plans wrecked by the pandemic travel restrictions, and now face the prospect of buying property in Spain after Brexit and the subsequent law changes.
Brexit has left many would-be buyers questioning how Brexit affects buying a house in Spain. The good news is British residents still have a right to buy property in Spain after Brexit, and Brexit is not likely to affect property prices, although this is hard to gauge at present due to COVID-19.
The bad news is property taxes will be higher, and as non-EU residents, EU law limits British homeowners to spend only 90 days in the country out of every six months.
The right to buy property in Spain
The Spanish government made a significant effort with the "Golden Visa" to attract worldwide property buyers after the 2009 global recession. Hence, buying a property in Spain is not a privilege reserved for EU citizens. Anyone who can pay the purchase price plus relevant taxes can purchase a residence in Spain. Many people from all parts of the world own homes in Spain. Brexit has not altered the right to buy for UK nationals.
Costs of buying Spanish property post-Brexit
The costs associated with buying a house in Spain after Brexit has not risen for British citizens. It costs the same to buy regardless of your
country of origin.
What has changed is the tax rate if you earn rental income from your Spanish property. EU residents pay 19% tax on rental income. Non-EU residents, which now includes the UK, are charged 24% on rental income. Furthermore, as was possible before Brexit, you will not be able to reduce your tax bill by deducting allowable expenses. However, you will be able to report the tax paid in Spain to offset some of your UK tax bill.
Your right to buy and rent out a property in Spain, whether for short or long term lets, is not affected by Brexit.
Apart from rental income tax, you must pay additional taxes as a property owner in Spain. These are purchase tax, IBI (a council tax), and VAT. With these taxes, the same rate is payable regardless of your nationality.
Inheritance tax owed concerning the estate of a UK resident has not changed due to Brexit. The rate varies depending on in which autonomous community the property is located, but not on your country of origin.
Brexit has, and will continue to affect currency exchange rates between the pound and the euro. The exchange rate could affect what you need to pay. However, currency fluctuations have always existed, and you can reduce the risk of paying more because of currency exchange rate risk by using a foreign currency dealer. Read this article to find out more.
Freedom of movement post-Brexit
After Brexit, the freedom of movement for British citizens in the EU is, unfortunately, more restricted. Under the new legislation, UK nationals can visit Spain as tourists but cannot stay in the country for more than 90 days in any 180-day period.
Is buying a property in Spain advisable after Brexit?
If you want to buy a property in Spain, Brexit's changes should not put you off. The essential aspects of buying or owning property in Spain have not changed considerably due to Brexit. We expect to see more favourable changes for UK citizens as time passes. Spain benefits enormously from outsiders buying property and spending time in the country, Brexit, or no Brexit.
If you are considering buying a home in Spain but are worried about Brexit's impact, contact us, and we'll discuss your concerns.