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How to discharge a mortgage loan in Spain

Raymundo Larraín Nesbitt, September, 11. 2023

Lawyer Raymundo Larraín outlines the procedure to cancel your mortgage loan in Spain attracting little to no tax.

How to discharge a mortgage loan in Spain

Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of Septermber 2023

Introduction

The sharp rise of interest rates over the last 12 months, has prompted scores of borrowers to look into cancelling their Spanish mortgage loans. This is done to avoid servicing large monthly repayments.

Mortgages, besides their obvious purpose of financing a house purchase, have long been used by lawyers and accountants as a useful tool to reduce clients’ tax burden. With careful forward tax planning they prove extremely helpful to mitigate client’s overall taxes. It is for this very reason that even wealthy individuals (that do not really need them) actually apply for them to benefit from the lenient tax breaks available.

However, when an inflection point is reached of high interest rates – such as the one we are now in – clients are inclined to re-assess their tax planning strategy and lean to discharge them.

Additionally, on selling a property, a buyer, or his lawyer, will demand from the seller they cancel the existing mortgage loan. Properties need to be sold with a clean title.

With this in mind, in today’s article we give a brief overview on the procedure to fully discharge a mortgage loan in Spain. Unlike other countries, the conveyance procedure involved is not automatic and requires the input of a seasoned lawyer. You will need to instruct a lawyer to carry it out on your behalf (with a specific power of attorney, or POA). This is not a legal procedure that can be followed by laymen.

Preliminaries

Your lawyer, in use of a specific POA will contact your lender and start the procedure.

The bank needs to agree to it. The borrower is free to choose a notary of his choice to formalize the procedure. The legal representative will sign several documents with the lender. Almost every mortgage loan applies a small penalty for early redemption.

The borrower will finish paying off the balance presented by his lender, with penalty interests rolled on top.

Signing the deed

A bank’s representative will then attend the notary of choice and sign a deed fully discharging the mortgage loan.

In plain English, the property is now legally ‘freed’ from the encumbrance. But it doesn’t stop here.

Land registry

The notary deed then needs to be lodged. Once done, the property will appear as free of charges and encumbrances.

How long does it take?

Overall, you are looking at 2 to 3 months on average, always dependant on how fast a lender accommodates you.

Conclusion

Mortgage loans in Spain are not cancelled automatically when you finish paying them off.

Moreover, banks are perfectly content leaving a mortgage charge against a property indefinitely (as it improves their ratios in investor’s eyes), even when the mortgage was paid off long ago. Lenders are in no rush whatsoever to discharge them, and it takes the proactivity of a lawyer to gently nudge them time and again to cancel them over the course of several months. Without a shadow of a doubt, one of the most aggravating tasks that falls on lawyers, is precisely this; assisting borrowers to cancel them as there is a huge amount of red tape involved.

On paying off a mortgage loan, you ought to cancel your mortgage loan. Banks do not do this automatically.

On selling property in Spain, you need to cancel a mortgage loan. No buyer will acquire a property with an existing mortgage against it. A buyer cannot get a new mortgage on the property if there is already one showing up in the title, that is why it must be cancelled.

In a context of high interest rates, most financial advisors will recommend you to cancel them, avoiding hefty monthly repayments which in fact negate the tax benefit sought on the mid to long run.

Bottom line, whatever the reason for cancelling a mortgage loan, you need to hire a lawyer.

Larrain Nesbitt Abogados offers a competitively-priced conveyance service: Discharging a mortgage loan.

At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in taxation, immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. VOV.

Larraín Nesbitt Abogados, small on fees, BIG on service.

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10 reasons to invest in Spanish real estate

Raymundo Larraín Nesbitt, May, 2. 2023

Lawyer Raymundo Larrain gives ten reasons to invest in Spanish real estate.

You can review here our client’s testimonials.

Article copyrighted © 2023. Plagiarism will be criminally prosecuted

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of May 2023

10 reasons to invest in Spanish real estate

Store of value. In times of political and economic instability (war, stock market crash, global pandemic, bank runs, high inflation, etc), gold and real estate are king as traditionally they act as safe havens where savers shelter their money to weather the storm.
Staves off inflation. At a time when central banks have (irresponsibly) printed money to no end, vastly increasing the monetary mass which in turn has led to inflation spiralling out of control worldwide, real estate offers by contrast a placid solace to deposit your life savings. Savings sitting idly at a bank are devoured by rising inflation, losing value every year.
Tangible asset. Real estate is a tangible asset that you can touch, feel, and see any time of the day. This acts in sharp contrast to ethereal investments, such as cryptocurrencies and other intangible assets, which are really never under your control, hard to understand, and even harder to monitor.
Security. The laws in Spain offer property owners a solid legal framework which protects and upholds their rights as behoves a modern European democracy. In several regions of Spain (i.e. Madrid, Andalusia, Galicia, etc) inheritance tax and wealth tax have been suppressed. These regions have also slashed property transfer tax and stamp duty on buying property.
Capital growth. It’s no secret that real estate always appreciates in the long run. Unlike other volatile investments (such as stocks, bonds, and mutual funds) which undergo huge fluctuations, real estate offers a constant and gradual increase of value over time. Property prices in Spain have risen by 16% over the last five years (and even by two digits year-on-year in some sought-after areas, such as large cities (i.e. Madrid, over 40%) and coastal areas (i.e. Marbella, 40%). You really don’t need to invest in Bitcoin to strike it rich, just stick to the basics.
Generates passive income. Rental yields in Spain have soared by two digits over the span of three years. Spain is the world’s second tourist destination creating a huge pent-up demand for holiday accommodation. Investing in property, and collecting the rent, is indeed a (very) profitable business in Spain. For long-term rentals, you can expect a net yield of 5% per annum; for holiday accommodations it’s over 10%. They don’t call them ‘landed’ gentry for nothing!
Equity leverage. Investing in real estate allows you to leverage your equity over time. In plain English, this means that if you finance a property with an investment loan, the amount of money you borrow will eventually be less than the value of the property once it appreciates over time. After some years, you can refinance and use some of the additional equity to invest further in other properties. This strategy is ideal for investors who want to play it safe and adopt a long-term investment strategy, building up a healthy property portfolio over time.
Source of cash flow. Rented properties generate a constant revenue stream for their owners. Landlords may use the collected rent to pay overheads and other property maintenance expenses - including monthly mortgage repayments! In a nutshell, a well-chosen property pays for itself!
Generous tax deductions. Unbeknownst to most people, Spain offers lenient tax allowances which in effect reduce a landlord’s tax bill by 70%, or more (applies only to EU residents). You can offset all property maintenance expenses, including your lawyer’s fees (to calculate the rental tax) and mortgage interests! Once deducted, property offers great returns on investment.
Strong dollar vs. weak euro. This advantage is unique to those investors holding US Dollars. Due to the lacklustre and reactive performance of the ECB, the US Dollar has strongly appreciated against the Euro over the last months creating unique buying opportunities. In plain English, never before has Spanish property been cheaper and more appealing to savvy US Dollar holders. Not to mention that buying property opens the door to a coveted Golden Visa, which allows unfettered access to the Schengen Area (27 countries).

When you combine soaring rental yields and capital growth, you reach the conclusion that Spanish real estate is delivering a safe two-digit return year on year.

Be smart, don’t work for your money, make your money work for you.

If you take care of your money, it will take care of you.

Invest in real estate.

“One generation plants the trees in whose shade the next generation rests.” – Ancient Chinese proverb.

LNA offers the following tax & legal services:

“Los políticos no son necesarios, pero ellos nos convencen de que los necesitamos para resolver los problemas que, sin ellos, no existirían.”– Sanchez Dragó

Loosely translated as: “We don’t need politicians, but they go to great lengths to convince us we need them to solve all the problems that, without them, wouldn’t exist.”

Fernando Sánchez Dragó (1936 –2023). Was a Spanish writer and journalist. In his idealistic youth, he was an active member of Spain's Communist party; he was imprisoned a few times for his fierce opposition against Franco’s dictatorship. Later on in life, he would gradually gravitate towards a conservative line of thinking. He was a prolific writer who published over 40 books, and wrote thousands of articles. During his lifetime he received numerous literary accolades. A polemic figure, whose private life would fill multiple libraries, that never left anyone indifferent. It is challenging to label such a unique man, greater-than-life.

Sanchez Dragó died last April aged 87. He leaves behind a vast fortune, mainly in real estate.

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Eight pointers on buying property in Spain

Raymundo Larraín Nesbitt, April, 3. 2023

Lawyer Raymundo Larrain delivers useful pointers on buying property in Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1^st of April 2023

Introduction

You would never buy a property in your home country without instructing a solicitor or conveyancer, and yet a surprising number of people choose not to instruct a lawyer or legal representative when buying abroad. If anything, it is even more important to obtain good legal advice when buying overseas as it is highly likely that you will be unfamiliar with many of the key processes.

While it is possible to buy a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. Buying a house is one of the biggest investments most people make in their lifetime. So why take the risk by not obtaining proper legal advice?

Eight pointers on buying property in Spain

Tenants. Unbeknownst to a buyer, on buying property, there could be tenants inside. The new owner takes on the legal position of landlord and must respect - by law - the duration and terms of any pre-existing rental agreement. You should know some rental agreements in Spain lock you in for ten years… and you cannot update the rental. Your lawyer can safeguard your interests in this event.
Utility invoices (water, electricity, etc). Outstanding utility invoices are a nuisance as utility companies may shut down the supplies. Reconnecting the electric supply, for example, can set you back 500 euros and you need to wait at least 4 weeks to top it off!
Community of Owners. Properties within a community can be in arrears. The new owner takes on all the debts dating back five years, which can be fairly substantial. Likewise, a new owner also becomes liable for all the pending community improvements (known in Spanish as derramas). In old buildings, that require much work and maintenance, these hidden debts are in the thousands i.e. replacing the lifts.
Local taxes. The property can be in arrears with taxes levied by the local town hall. In a worst-case scenario, the property can be impounded and sold off in a public auction to recoup the debt. The new owner is held liable for all taxes going back four years.
Report on Title. It is important to acquire a clean title. Mortgages, embargoes, liens, etc can weigh down on a property’s value. Nobody wants to buy a property with a charge against it, as it can be seized by creditors.
Community of owners that ban holiday rentals. A new trend is emerging in community of owners, whereby they agree to ban holiday rentals outright. There is no point investing in a fancy beach pad if you are not allowed to rent it out. It goes without saying that a property which cannot be leased legally has a substantially reduced market value as opposed to other ones which can.
Licence of First Occupation (LFO). Strictly speaking, a LFO should only be requested on buying off-plan property. However, nowadays it is being required even for resales. Buying a property without a LFO brings its owner serious problems that we collate in our article: Licence of First Occupation. For example, a property which lacks a LFO cannot get a mortgage loan against it. Meaning any potential buyer of said property must be a cash-buyer (it goes without saying they are few), which would greatly reduce the pool of prospective buyers, pushing back years the sales date.
Tourist licence. Most regions in Spain have passed stringent laws if you want to offer your property as a holiday accommodation. By law, it is mandatory you attain a tourist licence to offer your property in holiday platforms, estate agencies or private websites. Failure to comply leads to eye-watering fines. There is also the point that some regions in Spain (i.e. Balearics) go to great lengths to restrict and ban holiday rentals. Meaning not all properties can attain a tourist licence as some are located within areas which are zoned out for holiday rentals; that is banned outright by local authorities. It goes without saying that a property which cannot be leased legally has a substantially reduced market value as opposed to other similar ones which can.

In conclusion

I have only listed the basic eight, but you should be aware there are far more points to look out for (in the dozens). A seasoned conveyance lawyer will quickly pick on all the flaws listed above and advice his client on running a due diligence on the title. For reference, we offer a free in-depth buyer’s guide to buy property in Spain: Lawyer guide to buying property in Spain.

On buying property in Spain, you should be mindful the title is clean. It is fairly common the previous owner has fallen in arrears (maybe that’s exactly why they are selling!). In Spain, the golden rule is that debts follow the property, not the debtor. Meaning, when a buyer takes over a property, they also take on all existing debts from the previous owner! And this is not limited only to owed money, if a buyer, for example, acquires an illegally built rustic property on green belt land, the may be held criminally liable for the previous owner’s planning infractions. Planning infractions follow the property; whoever becomes the new owner, ‘inherits’ any outstanding planning problems and will be held liable for them.

Whilst it is true there is no legal obligation to hire a lawyer on buying property in Spain, it would be very foolish (and costly) not to do so. This is why we advise you to hire a reputed and independent conveyance law firm to carry out a thorough due diligence on the property ensuring everything is above board.

We assist clients all over Spain. Our friendly staff will be more than happy to have a chat with you.

LNA offers the following related tax & legal services:

“Eyes up Guardian.” – Lance Reddick

Lance Solomon Reddick (1962 – 2023). Was an American actor and musician. He was best known for playing Cedric Daniels in The Wire (2002–2008), Phillip Broyles in Fringe (2008–2013), and Chief Irvin Irving in Bosch (2014–2020). In film, he was best known for starring as Charon in the John Wick franchise (2014–2023) and David Gentry in Angel Has Fallen (2019). He was also known for portraying Detective Johnny Basil on Oz (1997–2003), Matthew Abaddon in Lost (2004–2010), and Albert Wesker in the Netflix series Resident Evil (2022). He provided the voice and likeness for video game characters Martin Hatch in Quantum Break, Sylens in Horizon Zero Dawn and Horizon Forbidden West, and Commander Zavala in the much-acclaimed Destiny franchise. He will be sorely missed.

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Buying property in Spain

Raymundo Larraín Nesbitt, September, 9. 2022

Lawyer Raymundo Larrain gives us a brief overview on buying property in Spain.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 19 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of September 2022

Introduction

September marks the end of the summer and the start of autumn. Autumn is the high season for property purchases. Traditionally the best months for property sales are September, October, and November.

As we have highlighted in multiple articles over the last two years, there is a property boom ongoing in Spain. Property prices have strongly rebounded post-pandemic.

Capital appreciation has risen by 8.5% for resale property across the board and over 10% for new builds (off-plan). In coastal areas, and large Spanish cities, it’s actually a two-digit property rise! Bottom line, property prices have risen in Spain reaching all-new highs!
Rental yields are also growing by two digits year-on-year. Long term lets offer a net yield of 4.5% per annum, whereas short-term rentals (holiday homes) are far more profitable, delivering a two-digit return.

Pro-tip: The combination of both capital appreciation and soaring rental yields translate into a combined yield of over 10% per annum! No other safe investment offers such high returns.

In some regions of Spain, regional authorities have (dramatically) lowered the taxes associated to buying property in a bid to foster an economic recovery post-pandemic. For example, Andalusia slashed by 20% its tax on off plan and from 13% to 30% in resales (contingent on the asking price; the higher the price, the more tax you save). Indeed, it’s a great moment to seize the opportunity and save dozens of thousands in tax money!

Our law firm, Larraín Nesbitt Abogados, published a detailed (free) guide to buy property in Spain. Simply follow the link supplied: Guide to buy property in Spain

Conclusion

Spanish real estate is poised for combined two-digit gains over the next year, interest rate fluctuations notwithstanding, easily trumping alternative investments (bonds, commodities, cryptocurrencies, gold, etc) and paltry fixed returns in a context of historic ultra-low interest rates.

If you are thinking of buying (or selling), please contact us. We have 20 years’ experience buying & selling property. Our friendly staff can guide you safely through the procedure.

We offer this service:

Conveyancing in Spain – Buying

Larraín Nesbitt Lawyers, small on fees, BIG on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyance, taxation, inheritance, residency, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

Article also published at Larraín Nesbitt Abogados: Buying property in Spain

“If you are not moving forward, you are moving backward.” – Mikhail Gorbachev

Mikhail Sergeyevich Gorbachev (1931 – 2022). Was a Russian statesman who served as the last leader of the Soviet Union from 1985 to the country's dissolution in 1991. Domestically, his policy of glasnost ("openness") allowed for enhanced freedom of speech and press, while his perestroika ("restructuring") sought to decentralize economic decision-making to improve its efficiency. Internationally, he avoided WWIII and nuclear armageddon, in tandem with US President Ronald Reagan, on kickstarting the most ambitious denuclearization treaty to date (START). Despite being broadly scorned in his home country (because he proved instrumental in dismantling the dreaded U.S.S.R. empire and the collapse of the Iron Curtain), the West, and most of the free world, widely regards him as one of the greatest Russian president ever. Gorbachev was a peacemaker who brought freedom and democracy to one of the greatest countries in our planet. In 1990 he was bestowed the Peace Nobel Prize. He left our world a better place.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal and/or financial advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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Sotogrande, the pearl of Cadiz

Raymundo Larraín Nesbitt, June, 6. 2022

Lawyer Raymundo Larrain sheds some light on what makes Sotogrande special and why you should buy property there.

You can review here our client’s testimonials.

Inset photo: The 40th anniversary of Sotogrande’s Gold Cup where team Las Monjitas defeated team Ellerston 11-9. Rider: Fran Elizalde

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of June 2022

Introduction

Continuing on last month’s trend (Where to buy property on the Costa del Sol), I thought it would be appropriate to write on this ‘hidden’ gem. Sotogrande doesn’t really need an introduction - much less from me - but I need to begin my article somewhere, and the beginning is always a good place to start.

Sotogrande, to many of us this word evokes images of unspoiled sandy white beaches, unending forested areas, superb views at dusk against a dashing blue sea, free roaming horses on green fields, and luxury secluded villas. To be honest, every time I’m there, it strongly echoes the Marbella of the 70’s I once knew, unblemished and blissfully underdeveloped.

Sotogrande has a very low building density by rapport to neighbouring towns, with very few constructions actually reaching two stories high. The plots of land are huge, allowing nature to take over. It belongs to the Andalusian province of Cadiz. Meaning all the lenient tax breaks and allowances I have collated in previous taxation articles apply, making Sotogrande an area of ultra-low taxation.

Sotogrande, by Spanish standards, is a very unusual place and that is good! If you take a moment to drive through its wide avenues, you can’t help but notice it bears an uncanny resemblance to a US leafy suburb; you would be forgiven if you thought you were in the US, and you would in fact be right. Col. Joseph Ralph McMicking, a retired US serviceman, bought in the 60’s several adjacent plots of land and set about developing them devising a huge housing estate reminiscent of Boston.

As a result of his ambitious overarching vision, through sheer force of will, this forerunner developed a very exclusive estate that stretches lazily from the coast all the way up to the gentle mountain slopes, adjacent to land earmarked by the Spanish Army where building is banned. This results in a huge estate that is cleverly surrounded by green belt land. This sprawling estate is dotted with lakes, lush forested areas, 18-hole golf courses (such as the Real Club Valderrama, which hosted the Ryder Cup in 1997), and a top private school. Sotogrande is renowned for its beautiful and elegant polo matches during the elegant summer soirees.

If you are the kind of person that shies away from the bling and glitz of sister upcoast resorts, and rather place value in discretion, choice, and exclusive gated communities that keep to themselves, Sotogrande is right up your alley. Sotogrande’s game, unlike other tacky neighbouring coastal resorts, is not about distasteful antics showing ostentatiously what you have, but rather, about enjoying what you have. It is home to discreet affluent individuals from all over the world.

Sotogrande is split broadly into three distinct areas, which I’ll gloss over.

Sotogrande Bajo

This is the part of the estate that borders the coastline. You will find lavish mansions built in huge independent plots of land. Its wide sprawling avenues, with green sidewalks that make them distinctive, are dotted with impossibly tall palm trees that look taken straight out of a postcard from Miami Beach. What they lack in views is compensated by vast plots of land.

Sotogrande Alto

This is the part of the estate that sprawls over the gently rolling green hills with commanding views over the Atlantic coastline and Gibraltar. Impressive views are guaranteed at dawn & dusk. No palm trees here, it’s a leafy suburb. A mantle of evergreen lush vegetation covers the ground whilst a mature canopy, that belongs to the Atlantic climate, provides a welcome respite of shade. You will find multiple impressive gated estates within, such as La Reserva, where discretion is cherished, mum’s the word.

La Marina de Sotogrande

Strictly speaking, it’s located within Sotogrande Bajo. But it has such a distinctive personality, that it warrants being featured as its own space. This is where the port is located, Sotogrande’s main social hub and its vibrant heart. Its unusual bright pastel colours, Moustique like, catch visitors’ eyes. Most homes boast their own private moorings, door-to-door, much like in Venice! The marina is lively and vibrant, dotted with glam cafes and trendy restaurants that cater to all tastes where one can mercifully rest his weary bones basking in the warm sunlight, sipping a coffee, whilst watching life gently passing by; with younglings amorously courting each other, against a backdrop of sailboats and luxury yachts, in a never ending cycle that only gets interrupted, from time to time, by the bickering of seagulls flying overhead.

Sotogrande International School (SIS)

To close, I need to mention a school that was our feared sports rival when I studied in Marbella a long, long time ago.

Nestled high atop the mountains, surrounded by tall pine trees, lays a school with commanding views of the coastline (you’ve got to see the view at the crack of dawn, simply gorgeous) that is one of the finest private schools in all of Spain, directed by Mr. James Kearney.

Once again, I don’t really need to introduce what in time – and by its own merits – has become a renowned academic institution. The syllabus followed is the International Baccalaureate. The school attracts students from all over the coast, not only from Sotogrande, that flock to receive a privileged education from a passionate and dedicated faculty. They have recently built dorms so students can reside on campus during the academic year.

A special shout-out to teacher Mr. Carmelo (Tino) Sanchez, Head of IT, whose indelible passion for teaching his students cutting-edge ‘engineering’ courses, designing and developing all types of ingenious aquatic devices in tandem with local companies, is so advanced that it borders a university course.

Because of its superb sports facilities and installations, which they continuously expand upon through the approval of its ever-watchful Board, it generously hosts every year sports events that gather schools from the area, and beyond. I myself attended several as a kid, representing first Swans School, and later on Aloha College. But we, the underdogs, held our own, and even managed to beat’em at some events, heh!

Did I mention the school’s beautiful views? Simply breathtaking!

Sotogrande, heaven on earth. Sans soucis.

“My main language was music, and my teacher was nature.” – Vangelis

Evángelos Odysséas Papathanassíou (1943 – 2022). Was a Greek musician, composer, songwriter, and producer of electronic orchestral music. He was best known for his Academy Award-winning score to the spiritual Chariots of Fire (1981), sci-fi noir films such as the mythical Blade Runner (1982), Missing (1982), Antarctica (1983), 1492: Conquest of Paradise (1992), and Alexander the Great (2004). He also left a mark for his masterful use of music in the 1980 documentary series Cosmos: A Personal Voyage by Carl Sagan. Vangelis was one of the greatest modern composers of our time whose magic music will echo down the ages, standing the test of time; a hallmark reserved only for a handful of artists.

Larraín Nesbitt Lawyers, small on fees, BIG on service.

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Guide to buy property in Spain

Raymundo Larraín Nesbitt, May, 3. 2022

Larrain Nesbitt Abogados publish a brief guide on how to buy property in Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

8^th of May 2022

Having bought and sold hundreds of properties, and with over 450 articles published over the last twenty years, it was long overdue Larrain Nesbitt Abogados published an in-depth guide on How to Buy Property in Spain. This has been a long-standing request from clients and SPI readers that we needed to fulfil.

Our practical guide will take you step-by-step through the process of finding and buying your dream home, with particular focus on the region of Andalusia. Whilst we have strived to help you to get the best result at every stage of the buying process, please understand this guide is only an approximation to the procedure and should not be construed, or taken, as a substitute for professional legal advice.

You can download our guide on PDF format from this link: Guide to Buy Property in Spain

Larraín Nesbitt Abogados, small on fees, BIG on service. At Larrain Nesbitt Abogados we have over 19 years’ experience buying, selling, and renting properties. We are also specialized in immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

Related services:

Conveyancing in Spain – Buying
Conveyancing in Spain – Selling

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Tax breaks on buying property in Andalusia extended indefinitely!

Raymundo Larraín Nesbitt, December, 4. 2021

Lawyer Raymundo Larraín briefs us on the landmark tax changes recently approved by Andalusia’s regional government, which have turned the tables, making it the region with the lowest taxation in all of Spain, along with liberal Madrid.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 18 years’ taxation & conveyancing experience at your service. We offer a wide range of over 50 legal and corporate services. Our team of native English-speaking lawyers and economists has a long track record of successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of December 2021

To put it simply, now is the right time to buy (or sell) property in Andalusia, period.

Feel free to skip the rest of my article below.

Introduction

As we’ve been hammering in previous articles, there has never been a better time to buy property in Andalusia than now. A series of factors have coalesced to the point it has created unique buying opportunities. I can only think of 1998 (which kickstarted the longest real estate bull market that Spain has known to date, lasting a full decade) as a comparable situation to the one we are now living.

2021 was poised to be one of the worst years in record in Spanish real estate sales. The virus’ financial aftermath proved devastating, nothing seemed to withstand in its relentless wake.

And that’s when – least expected of all – Andalusian politicians stepped in saving the day.

Andalusia’s regional government took the bull by its horns and approved in April of this year a taxpayer’s aggressive relief package to combat the adverse consequences brought about by Covid-19. These included, amongst many others, drastic tax cuts on buying property, both off-plan and resale. The two most notable tax changes, from a real estate perspective, were a 20% reduction in Stamp Duty (off-plan property) and the simplification of Property Transfer Tax into a single flat rate of 7% on buying resale property (which translates into massive savings ranging from 12.5% to over 30%, contingent on the sale price as this tax followed a sliding scale). In plain English, huge tax savings for property buyers.

But there was a catch. These lenient tax breaks from April 2021, conceived to combat the pernicious effects of Covid-19, were time-gated. Buyers only had until the 31^st of December 2021 to take advantage of them.

That was until the Junta de Andalucia passed its new Law 5/2021 of 20^th October. In effect, what this pivotal law did was to make these tax breaks permanent, indefinite. No longer are these tax breaks subject to an end-of-year deadline. On approving this law, the Junta have in fact extended the tax breaks into 2022, and beyond.

But the significance of this new regional law doesn’t only stop at Stamp Duty and Property Transfer Tax cuts. That’s just scratching the surface. It also extends to drastic cuts in Inheritance Tax (yes, again!), IRPF (personal income tax), Wealth tax, and a long etcetera.

Frankly, I would need to publish a couple of taxation articles every month only to keep abreast with all the taxes they keep tweaking, lowering or downright suppressing in a trend which remains unabated since 2019. Kudos to them.

I normally criticize Spanish politicians a lot in my articles, for which I make no apologies, but on this occasion, I take off my hat to what they are doing in Andalusia, because they are doing what’s right for the economy, and ultimately what’s best for the people.

What do these tax changes spell out for the real estate market?

Basically, it’s a win-win.

On the one hand, the Junta de Andalucia, and by extension all the inhabitants in this region, benefit from lowering taxes as this, paradoxically, increases the tax revenue. Hang on, you may be wondering, how on earth can they increase the revenue flow if they are cutting down taxes drastically left, right and centre? Well, the previous administration, which had been in power for almost 40 consecutive years, had extremely high taxes in place. On drastically lowering taxes – to more reasonable levels in line with fellow European countries – it has now levied an extra 600 million euros a year because of the increase in economic activity! Madrid too lowered its regional taxes, and as a result also raked in billions of euros in additional revenue proving – once more – that lowering taxes is the right path to attract foreign investments, foster job creation, and generate wealth for society at large. In Economic Theory, we know this as the Laffer Curve, after reputed US economist Arthur Laffer. This increase in additional tax revenue translates into the Junta offering better services to all its citizens and reducing public indebtment.

On the other hand, taxpayers and property buyers, likewise reap the rewards of a low-taxation environment. Taxpayers pay significantly less taxes having more purchasing power available to spend, propping up the economy. In a post-vaccination scenario, this is really being noticed as more and more people spend their extra money in amenities, boosting the overall economy. As for property buyers, well, that’s easy, you pay significantly less taxes on buying property in Andalusia! It ain’t rocket science.

One of the winners of this liberal fiscal policy is the real estate market, no doubt, but ultimately society as a whole, as this property bonanza translates into the creation of more jobs, which in turn creates wealth, and attracts even more foreign investments creating an upward spiral.

In effect, these generous tax breaks on buying property from April 2021 have created a property boom in Andalusia, as we wrote here: Andalusia: now is the right time to buy property – 8^th October 2021.

Permanent real estate tax breaks in Andalusia

Off Plan (Stamp Duty): 20% discount on Stamp Duty Tax. Tax rate is now a flat 1.2%.
Resale (Property Transfer Tax): tax savings range from 12.5% to 30% (or more) on Property Transfer Tax, hinging on the sales price. Tax rate is a flat 7% on any sale price.

Of particular interest are the tax cuts in resale property. The gist is that the higher the sales price, the more tax a buyer stands to save. With numbers:

On a €500,000 sale price, the tax savings are 15%.
On a €3,000,000 sale price, the tax savings are 27%, and so forth.

In short, simply spectacular for high-end property. This has prompted a tidal wave of villa sales, the press reports 573 villas are selling a day in Spain!

Yes, but what about Spain’s new Housing Act? Surely that’s a spanner in the works!

Actually no, it is not. Last month I published a scathing article on this new law. On the bright side, as I pointed out in the article itself, this pernicious law will not be implemented in Andalusia because regional governments have devolved competencies on housing matters.

This means that while other regional governments in Spain will gladly embrace the hardships of a planned economy (increasing property taxes, fining landlords, dictating at what price you can, or cannot, rent out your property, extending tenant evictions) in Andalusia we will continue to enjoy economic and personal freedom, which translates into attracting even more foreign investments, spurring job creation and wealth.

Spain’s new housing bill will, unfortunately, fracture and polarize Spain furthermore, into two regional tiers: investment-friendly and those regions which are not. It’s an insidious side effect I cared to point out in the article’s conclusion, but it will not impact Andalusia one iota, nada.

If anything, Spain’s new Housing Act will only contribute to consolidate Andalusia’s status as a tier 1 tax region; an investment-friendly region which boasts an ultra-low taxation that attracts foreign investments and property buyers from the world over.

8 reasons why you should invest in Andalusia

Ultra-low taxation. As we’ve covered in previous articles (Andalusia lowers Property Transfer Tax and Stamp Duty), early on this year Andalusia drastically reduced the taxes on buying property, to the point we have never seen such low taxes in this region. Furthermore, the tax breaks on buying property have now been extended indefinitely, so they are no longer time-gated. The Junta de Andalucia has also approved a batch of measures to also cut down several other taxes (Inheritance Tax, IRPF, Wealth tax etc) turning Andalusia de facto into an ultra-low taxation area, along with Madrid. In plain English, Andalusia and Madrid are now the two areas where you pay fewer taxes in all of Spain. And last I checked, Madrid had no beach, so the choice is easy. To sum up, the continued landmark tax changes implemented by the new regional government since April 2019 (lowering, negating or suppressing them) are so eventful they have ushered in a new era of wealth-planning in Andalusia.
Ultra-low interest rates. Interest rates are sitting now at an all-time low, which enables would-be buyers to secure cheap loans (fixed interest is your best bet if the ECB hikes the interest rate in the future to offset a spike in inflation). Bank loans become ‘cheaper’ as inflation rises, as you actually owe less money to your lender (in real terms).
Pandemic & Brexit induced price reductions. The ongoing pandemic and Brexit have forced sellers to reduce their asking price creating once-in-a-lifetime buying opportunities for savvy investors.
Property boom. Andalusia is in the midst of a property boom, since April’s huge tax cut, that has prompted a rise in property prices, specifically in coastal areas. Property is appreciating an average of 8% p.a. in coastal resorts and gathering pace. In some exclusive locations, such as Marbella, property prices have already risen by over 30% over the last two years. More on this property bull market here: Andalusia leads house price boom triggered by Covid.
Spike in inflation. In a financial context of a sharp rise in inflation, having your money stuck in a bank is a losing proposition. In an inflationary environment, such as the one we are in, money depreciates fast losing its value day-to-day. Finance experts agree that a smart way to hedge your savings against rising inflation is to take on a mortgage loan and invest in real estate to avoid losing purchasing power over the long run as bank deposits devalue over time with high inflation. Although Financial Authorities, the world over, are quick to point out this surge in inflation is merely transitory, and bend over backward to downplay the situation and assuage our fears (or is it really theirs?), the fact is that new virus strains emerge all the time; such as the new South African one from last week which caused worldwide mayhem. Meaning disruptions in the supply chain are here to stay and we need to factor this in over the long run; which implies that inflation is also here to stay, at least for several years. Taking on a mortgage loan and investing in real estate was the key strategy that many savvy investors followed in the 70’s, during a time of high inflation, which in hindsight made them very rich.
Buy-to-rent. Annual rental yields are over 5% net. If you also add on top the capital appreciation (point 4 above), you are looking at a safe investment that is netting you over 10% p.a. risk-free. No other safe investment offers you such yields in a context of an underperforming bond market. In addition to this, the Spanish Tax Office offers lenient tax breaks which on average reduce landlord’s tax bills by 70%, or more (if EU-resident). A landlord can offset most, if not all, of their property-related expenses, vastly reducing their income tax on buy-to-lets (i.e. holiday rentals). More on this topic in my articles: Rental prices soar for 5th consecutive year in Spain! and 8 Tips for Buy-To-Let Success in Spain.
Pound rally vs. Euro. For our UK readers only, following up on point two above, expectations are high the BoE will raise the interest rate to combat the pernicious effects of inflation. In anticipation of this move, the pound rallied, since April this year, appreciating significantly against the Euro. This translates into UK buyers having greater ‘purchasing power’ on buying euro-denominated property. In plain English, any property in euros becomes much cheaper for sterling pound purchasers.
Gorgeous weather. I know, it’s so cliché, but I had to tack it on, soz. Andalusia boasts 330 days of sunshine a year. After having spent years working in the UK, under dull grey skies and non-stop rain, I can only say it’s pure gold.

The point being, is that if you are thinking of buying property in Spain, and you like to pay little to no taxes, think Andalusia.

Can you really afford to miss out on a new property boom?

At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.

Larraín Nesbitt Lawyers, _small on fees, BIG on service.

“Yo no voy a bajar impuestos, un socialista no baja impuestos (nunca). Esas recetas del neoliberalismo son ya historia. Está demostrado científicamente que la Curva de Laffer es una falacia.” – Luis Ángel Hierro Recio

Loosely translated as: “I’m not going to lower taxes; socialists don’t lower taxes (ever). These are neoliberalist ideas which are phased out. It is scientifically proven that the Laffer Curve is a fallacy.”

Luis Ángel Hierro Recio (1963). Ph.D. in Economics at the public University of Seville. Teacher of Economic Theory at Seville’s public University. Director of LL.M. in Urban Planning. Board member of the public University Pablo Olavide. Ex-congressman for Andalusia. He bid for the leadership of his political party in Andalusia and attained 5.51% of the ballots.

Mr. Hierro has never worked a day in his life in the private sector, devoting all his professional career to the public sector, paid for with our taxes.

Legal services available from Larraín Nesbitt Abogados:

Related articles

Buying distressed property in Spain – 8th August 2011
Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
Buying resale property in Spain – 21st February 2013
How to buy commercial property in Spain – 4th July 2014
How to buy rural property in Spain – 8th August 2014
How to Buy Property in Spain Safely – 10th October 2014
House Hunting in Spain – Interview with The New York Times. June 2015
Buying property in Spain from a private seller (Resale Property) – 21st of February 2017
Buying property in Spain – 10 reasons to hire a lawyer – 8th November 2016
Selling property in Spain – 10 reasons to hire a lawyer – 8th December 2016
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
8 Tips on Buying Off-Plan in Spain – 8^th June 2018
Tax advantages on becoming resident in Spain – The Address magazine (pages 358 - 373). December 2018
Do’s and don’ts on buying property in Spain – 8th April 2019
8 tips on buying a home in Spain – 8th June 2019
Home-Buyer's Checklist - OFFPLAN – 1^st March 2020
Home-Buyer's Checklist - RESALE – 11^th March 2020
8 reasons to buy property on the Costa del Sol (Andalusia) – 8th April 2021
Marbella’s high-end market is booming! – Idealista 30th June 2021
Andalusia: now is the right time to buy property – 8^th October 2021
Andalucia property tax reduction extended into 2022 – Kyero 9^th November 2021

Article originally published in Spanish Property Insight: Tax breaks on buying property in Andalusia extended indefinitely! – 8th December 2021

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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Spain’s new Housing Act

Raymundo Larraín Nesbitt, November, 5. 2021

Lawyer Raymundo Larraín does a quick rundown on the major highlights this new bill introduces.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 18 years' taxation & conveyancing experience at your service. We offer a wide range of over 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record of successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of November 2021

Introduction

Spain’s social-communist government is in the last legislative stages of enacting a new housing bill that will create ripples across the real estate industry. A bill that has not been exempt from controversy, ruffling the feathers of all those involved in the industry. No doubt, a new feat of our beloved communist government.

As I can only review a draft bill at this stage, albeit a final draft with few changes to be expected, please be aware alterations may be introduced.

The lofty goal of this law is to stop speculation on housing and reduce rental prices, making them more affordable for vulnerable collectives, such as despondent youngsters.

To reach a wider audience, I will shy away from esoterics, and go the good old-fashioned way of listing the major highlights in bullet points in no particular order.

Housing bill’s major highlights

Housing earmarked as public is banned from being sold to investment funds to avoid speculation of a good of first necessity.
Landlords who leave housing empty for over two years may be faced with higher municipal tax rates (of up to 150% surcharge on IBI tax). Some communist regional governments, such as the Balearics, have already made public they will levy the maximum penalty as soon as the law allows it. This is done to avoid speculation and free up the housing to those in need. The question arises with second residencies, such as those held by fellow expats.
Creates new mechanisms to draw out (sic) non-paying tenant evictions (particularly longer for legal persons acting as landlords). We actually need the opposite in Spain to foster a robust rental market, but whatever.
The new law will cap rental prices in earmarked areas where demand is stressed out with a view to curb rampant speculation.
The law forces property developers to reserve 30% of all developed land for social housing.
Tenants may apply for forced renewals on periods lasting from one to three years, forcing the hand of landlords.
A new concept is created, the ‘great’ landlord. Defined as someone (legal or physical person) who has more than ten properties or who has a built surface of 1.500 m2 on rental.
Great landlords are now forced to offer rentals at a price set by Authorities, under huge penalties.
Great landlords cannot update the rental price year-to-year (as currently) and must remain frozen for a period of up to 10 years
Physical landlords will rent at a fixed price determined by Authorities in areas under ‘rental duress’ (zonas tensionadas, in Spanish).
Sliding tax breaks will be introduced for landlords who lease properties to tenants within the age group of 18 to 35 y.o.
Reduction or suppression of 85% tax breaks for great landlords.
Creation of landlord tax breaks of 60% when improvements over the previous three years exceed a 6-month rental.

Potential negative repercussions of this new law

We already glossed over them in detail in previous articles: Government to introduce rental control in 2021 – 28^th October 2020.

Sharp rise of off-the-books rental agreements
Sharp increase of rental prices (as offer will foreseeably retract following these changes)
End of buy-to-let boom as we know it
Introduction of legal insecurity on creating several undefined legal concepts
Artificial creation of ‘guettos’ in large cities with long waiting lists
Rise of unemployment in a sector that was thriving (we are in a property boom!)
Restriction in offer. Sharp decrease in offer as landlords, on learning the government will fix at what price they can rent, will cease renting
Introduction of price market distortions. Huge price distortions with new and old rental prices, creating ‘privileged’ rentals
New problems: What happens to existing signed rentals?
New problems: What happens to signed contracts under this new law if it is found unconstitutional and is repealed (as is likely under a new government)?
On reserving 30% for social housing on all developments, how are you going to market (and sell) a luxury development?
Landlord tax break on long term tenancies reduced from 60% to 50%
Longer tenant-eviction procedures (effect pursued on purpose)
Sharp tax rise (IBI) for some landlords

Personal opinion

To sum up, lofty ideals at the expense of other people’s estates.

This law introduces a plethora of undefined legal concepts left for ulterior regulation to develop, listing but a few:

Areas under ‘rental duress’
Empty homes
Fixed sliding rental scale set by Authorities

A golden rule is never to create a legal text with undefined legal concepts that can be construed in any manner of ways. Needless to say, this creates legal insecurity for investors. This is not what investors want to hear. This is exactly the type of regulation they abhor and move away from.

Spain has huge potential to attract foreign investments, creating jobs and wealth on its wake. We see this actively happening in Madrid and in Andalusia which are in a property boom. But clumsy laws such as this one, which openly favour market interventionism over a free market economy, in a move straight out of the playbook from Maduro’s Venezuela, are counterproductive. Spain is not a planned economy. Spain's economic potential is held back by laws such as this one. Investors will invest elsewhere. The Spanish government should stop demonizing foreign investors which are key to our economy.

This piece of legislation is the latest in a long string that further undermines the rights of property owners. Spain’s social-communist government is hell-bent on curtailing ownership rights as much as they can, and then some.

We don’t need a nanny state that dictates at what prices we can rent out or not. I was under the impression we lived in a free market economy in a democratic country, silly me.

Conclusion

This law (unfortunately) will likely fracture Spain further into regions which are investment-friendly and those which are not. This introduces pernicious market asymmetries which stifle competition.

Regional governments in Spain have devolved competencies in housing matters. It can be reasonably expected that regions under moderate right-wing control will implement this law lightly, or not at all, in sharp contrast to left-wing regions. This is a very important nuance and the reason why I write this law will directly contribute to fracture the country and introduce market asymmetries.

Free-market regions, with ultra-low taxation which enshrine personal and business freedom as core civic values, such as Madrid and Andalusia, not only will ignore it, but vehemently fight it. Much to the disgust of our beloved social-communist government.

Whereas regions under left-wing control, such as the Balearics and Catalonia, can be expected to implement the new housing bill stringently, imposing immediately the 150% surcharge of IBI on empty houses.

Honest to God, the last thing Spain needs right now is to exacerbate social or regional polarization further, thank you very much.

There is also the matter of housing affordability. As I mentioned in the article's introduction, the aim of this new regulation is to make housing more affordable, particularly rentals, for vulnerable collectives such as young people on low and precarious McJobs. Whilst the government's goal is certainly commendable, no doubt, the way it is trying to achieve this may backfire, at least to my mind. As I have collated above as possible negative effects, it is foreseeable that landlords (offer) will remove from the market properties given the stringent conditions that are now government-imposed (i.e. Authorities set rental prices in areas under rental duress, no updating of rental price in 10 years, taxes on empty property, temporal expropriation of empty properties to be rented out, 30% of all new developments earmarked for social housing, etc). These effects are far-reaching and greatly affect landlords and developers who will likely pull out their units from the property market. When offer retracts but demand remains steady, following the laws of demand and supply, the price of an asset undergoes a rise. This is why I write that all these new changes enacted through this law - as commendable as they are - will likely impact on the market and translate into a general rise of all rental prices as there will be fewer properties on offer to chase after. This, in a context of a sharp rise in inflation, is very negative as it affects precisely the vulnerable collectives this law attempts to protect and assist.

If there is a change in government in 2023 (highly likely) this new bill will be top on the list to be repealed. Key laws – ideally – should be consensuated, reconciling both political sides, and agreeing to a common text that can be upheld regardless on who wins on poll day. Otherwise, laws are short-lived and last what a 4-year legislature lasts (or even less), which is daft, unproductive and fosters widespread legal insecurity which deters foreign investments in Spain. You can expect this new Housing Bill to last a year. Smart money is risk-averse, the market rules need to be fair, clear and long-lasting.

Spain’s social-communist government unconcealed goal with this housing bill is to win the hearts and minds of a disenfranchised youth, mired by record-high levels of unemployment, the highest in any OECD country, wooing their vote in the upcoming election of early 2023.

God willing, these changes will be for the better.

"I commend thee to Almighty God. He is the source of all good. Do the Will of God, which is the Way of Peace. Beware of bloodshed; de not trust in that, for spilled blood never sleeps. Strive to gain the hearts of thy subjects and watch over all of their interests, for thou art appointed by God and by me to look after their welfare. I have become as great as I am because I have won the hearts of men by gentleness and kindness. Never nourish ill feeling toward any man, for Death spares none. Be prudent in thyself. God will pardon the penitent, for He is gracious.” – Saladin’s parting words to his son, al-Zahir.

Al-Nasir Salah al-Din Yusuf ibn Ayyub (1137 - 1193). From humble Kurdish origins, Saladin displayed from an early youth a series of unique traits which distinguished him from his peers, allowing him to quickly climb through the ranks and elevate him to commander of all Muslim armies (over 70,000 men). He became the first sultan of both Egypt and Syria, founding the Ayyubid dynasty. As a master chess player, he developed an uncanny ability, almost preternatural, to ‘read’ opposing Christian commanders’ minds to the point he could effortlessly anticipate their every move; much in line with Alexander’s prescient ability. He would regularly inflict huge losses to armies who vastly outnumbered him and – in theory – were better equipped (with superior European manufactured gear). As a master tactician, he would cleverly deploy his troops in such a manner to always take advantage of the surrounding terrain paying great care to logistics. His unmatched military prowess and gallantry would garner him great admiration, not only from within his own ranks, but from his enemies alike, most notably from Richard the Lionheart, King of England. Through his strategic campaigns, in a tour de force, he would eventually wrestle the control of Jerusalem from Crusaders, which had held onto it for over 88 years. When Saladin recaptured the city, there was no killing and no desecration of holy places, and Christian pilgrims were allowed free access to their places of worship (unlike the first Crusaders who took the city in 1099, murdering thousands, including women and children). He encouraged the establishment of institutes of higher learning in Cairo, Damascus, and Jerusalem. He also set up courts of law. Unlike other potentates, before and since, Saladin did not set himself above the law. But more importantly, he displayed a rare acumen that singled him out and made him human and relatable to all, even his foes. He showed great compassion and piety and would refrain from any unnecessary bloodshed. In Saladin’s possession at the time of his death were one piece of gold and forty pieces of silver. He had given away his huge wealth to his poor subjects, leaving nothing to pay for his funeral. Ironically, Saladin incarnated like no other man the best of chivalric qualities making him a true knight in all but name. Salah al-Din is likely the greatest Muslim commander of all time bar none.

At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.

Larraín Nesbitt Lawyers, small on fees, BIG on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyance, taxation, inheritance, residency and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

Legal services available from Larraín Nesbitt Abogados:

Related articles

Buying distressed property in Spain – 8th August 2011
Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
Buying resale property in Spain – 21st February 2013
How to buy commercial property in Spain – 4th July 2014
How to buy rural property in Spain – 8th August 2014
How to Buy Property in Spain Safely – 10th October 2014
House Hunting in Spain – Interview with The New York Times. June 2015
Buying property in Spain from a private seller (Resale Property) – 21st of February 2017
Buying property in Spain – 10 reasons to hire a lawyer – 8th November 2016
Selling property in Spain – 10 reasons to hire a lawyer – 8th December 2016
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
8 Tips on Buying Off-Plan in Spain – 8^th June 2018
Tax advantages on becoming resident in Spain – The Address magazine (pages 358 - 373). December 2018
Taxes on buying Spanish property – 8th December 2018
Do’s and don’ts on buying property in Spain – 8th April 2019
8 tips on buying a home in Spain – 8th June 2019
Rentals climb for fifth consecutive year in Spain! – 12^th February 2020
Home-Buyer's Checklist - OFFPLAN – 1^st March 2020
Home-Buyer's Checklist - RESALE – 11^th March 2020

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Andalusia: now is the right time to buy (or sell) property!

Raymundo Larraín Nesbitt, October, 1. 2021

Lawyer Raymundo Larraín briefs us on Spain’s ongoing property bull market.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of October 2021

Plain and simple, now is the right time to buy (or sell) in Andalusia, period.

Feel free to skip the rest of my article below.

Introduction

2021 was poised to be one of the worst years on record in Spanish real estate sales. The virus’ financial aftermath proved devastating, nothing seemed to withstand its relentless wake.

And that’s when – least expected of all – politicians stepped in saving the day.

We published a detailed article in SPI: Andalusia lowers taxes including Property Transfer Tax and Stamp Duty in move that will boost the market – 28^th April 2021

Little did we know at the time of publishing it that it would give way to one of the best performing years on real estate sales ever.

Six months later, we have witnessed one of the strongest bull markets to date in the Spanish real estate market. We have published several articles during this time to reflect this:

€40mn villa sold in Marbella – 21st March 2021
Stunning €32mn villa sold in Marbella – 11th May 2021
Villa property boom: 573 selling a day in Spain! – 11th July 2021
Spain records highest number of property sales since 2008 – 1st September 2021

Spain’s National Bureau of Statistics (INE) published in August the hard figures on this bull market. INE reports a record-breaking 267,700 properties sold during the first 6 months of this year. We need to look back 13 years, all the way back to Spain’s property boom heyday, to see such strong sale figures.

You can see it in a graph here: House sales in Spain in 2021 (first six months of 2021)

In June ’21 alone, over 48,000 properties were sold, which is an 73.5% interannual increase. This is hands down the best performing June in real estate history. This confirms the unabated trend that we are witnessing the best sale figures in real estate in over 13 years. The property market has been nothing short of spectacular from March of this year.

There are several underlying factors that help to explain this spectacular property rebound (huge liquidity, new covid-induced consumer trends, drastic property tax cuts, ultra-low interest rates, sharp inflation spike, underperformance of bonds and other financial assets, etc) which we’ve collated in the above-mentioned articles. But to avoid beating about the bush, hands down it is the spectacular tax breaks now in place in Andalusia which have fostered the bull market we are in.

Even El Mundo (newspaper daily) reports how the buying frenzy is slashing the available stock of real estate in large cities in Spain.

Long story short, if you were ever expecting someone to tip you off when was the right time to buy real estate again in Andalusia, the time is now. If you’re thinking of buying (or selling) property in Andalusia, you should most certainly take advantage of the ultra-lenient tax breaks this regional government has on offer (for a limited time only):

Off Plan: 20% discount on Stamp Duty Tax
Resale: tax savings ranging from 12.5% to 30% (or more) on Property Transfer Tax, hinging on the sales price

Of particular interest are the tax cuts in resale property. The gist is that the higher the sales price, the more tax a buyer stands to save.

With numbers:

On a €500,000 sale price, the tax savings are 15%.
On a €3,000,000 sale price, the tax savings are 27%, and so forth.

In short, simply spectacular for high-end property. This has prompted a tidal wave of villa sales, the press reports 573 villas are selling a day in Spain! This is the highest figure on record since 2007, in the midst of Spain’s property boom.

As El Pais (newspaper daily) reports in August ’21, the capital appreciation of real estate in coastal areas has surged by 8.4% in 2021, as compiled by property surveyor TINSA (Spain’s largest surveyor). We hadn’t seen such capital appreciation figures since the early 2000’s.

Spanish financial newspaper The Economist reports today how some property hotspots in Spain have increased the asking price by over 20% year-on-year, particularly in coastal areas.

Undeniably, there is an upwards sales trend in Spain going on since March, but it is more prominent in coastal areas.

Bottom line, now is as good time as any to invest in real estate in Andalusia and take advantage of its time-gated tax breaks. In plain English, we’ve never had such low taxes on buying property in Andalusia – ever. ’Nuff said!

This is of particular interest to some fellow European investors, such as Dutch, who now face negative interest rates on their bank deposits (that is, you need to pay the bank to deposit your money)! Ha ha ha. Excuse me, cheeky buggers!

It’s booming y’all! Are you gonna miss out?

At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.

Larraín Nesbitt Lawyers, small on fees, big on service.

"We human beings become what we dream as children and during our youth.” – Manuel Patarroyo

Manuel Elkin Patarroyo (1946, Colombia). Reading comics as a young boy on Mr. Louis Pasteur, Father of Immunology, would inspire him to heed his calling in life as an immunologist and save (millions) of lives. He is a Colombian Professor of Pathology and Immunology who developed, under precarious third-world conditions, the world’s first synthetic vaccine against a severe strain of malaria, a disease which kills 1.5 million people per year. The man was offered a fortune by leading US Pharmaceuticals for his patent (rumoured at over 1bn US Dollars). Anyone would have accepted such a generous offer; anyone but him. He altruistically donated his patent to Humankind, and as a result the prices charged for his vaccine are ultra-low, because anyone can mass produce it without having to pay royalties brutally reducing the costs of the development pipeline. It is estimated his work saves two million lives every year. Much like his childhood hero, M. Pasteur, he too would one day grow up to become a real-life hero.

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Article originally published in Spanish Property Insight: Andalusia’s hot property market means it’s a good time to buy (or sell) property!

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Do you need an updated NIE certificate to sell property in Spain?

Raymundo Larraín Nesbitt, December, 1. 2020

Marbella-based Larraín Nesbitt Abogados (LNA) has over 17 years' taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of December 2020

We published several years ago (in eight languages) a detailed article explaining what a NIE number is and how to go about getting one. A NIE number is assigned by the national police and is yours for the remainder of your lifetime, it never changes. Many years ago, Spanish police issued them as an A4 sized certificate that had a three-month expiry date printed on them. Modern-issued NIE numbers no longer show ‘expiry’ dates.

At times notaries, on selling, demand a seller procures a new updated NIE number certificate. This is because they have seen the 3-month expiry date is (long) overdue and are asking for a ‘new’ updated copy. In truth, the ‘new’ certificate will bear exactly the same number and details as the former, the only difference is that there will not be any expiry date on it.

Imagine sitting the morning of completion at a notary’s office, surrounded by a group of anxious strangers, and feeling a knot at the pit of your stomach when the notary officer informs you the sale has fallen through because your NIE number is not accepted by the notary! Now imagine millions of euros are at stake. It can well happen. The sale needs to be postponed or else change over to another notary (not always possible when mortgage loans are involved, as is often the case).

Then again, some notaries, who are not prone to nit-picking, will have no qualms accepting an ‘expired’ NIE number certificate. They will find it completely unnecessary to re-apply for a new copy and are more than happy to accept an old one which shows a 3-month expiry date.

The problem is that sellers cannot pick the notary witnessing a sales deed. This is a right that belongs only to buyers, who are legally entitled to pick whichever notary pleases them most. One of the many disadvantages this poses to sellers, is that they are unable to know beforehand - often until it is too late in the day - which notary will be the one selected by the buyer. Meaning they cannot know if the selected notary will demand they update their old NIE number certificate, or not, on selling.

This can be easily pre-empted by your appointed conveyance lawyer on including a clause in the POA to attain a duplicate NIE number should the need arise on selling. Bottom line, in practice it’s a bit akin to playing Russian roulette; a seller cannot know for sure if the chosen notary will demand an updated NIE certificate, or not. It is the duty of your conveyance lawyer to plan ahead for this eventuality and overcome any unforeseen obstacle.

“Politicians were mostly people who'd had too little morals and ethics to stay lawyers.” – George R.R. Martin

George Raymond Richard Martin (1948). Is an American novelist and short-story writer in the fantasy, horror, and science fiction genres. He is best known for his international bestselling series of epic fantasy novels, A Song of Ice and Fire, which was later adapted into the HBO dramatic series Game of Thrones.

At Larrain Nesbitt Abogados we have over 17 years’ experience assisting clients buying & selling property in Spain and dealing with its taxation.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

Legal services available from Larraín Nesbitt Abogados

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Home-Seller's Checklist – 21st February 2020
Home-Buyer’s Checklist – OFFPLAN – 8^th March 2020
Home-Buyer’s Checklist – RESALE – 8^th April 2020
Home-Seller’s Checklist – 8^th May 2020

Article originally published at Spanish Property Insight (SPI): Do you need an updated NIE certificate to sell property in Spain?

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely on websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No dragons, Lannisters or self-serving politicians were harmed on writing this article. VOV.

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