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Spanish Government extends the 2% rental cap a further 3 months

Raymundo Larraín Nesbitt, June, 21. 2022

Marbella-based Larraín Nesbitt Lawyers has over 18 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.

Copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

As we predicted in our previous article (Spanish Government introduces inflation control in long term rentals – 1st April 2022), because of Spain’s high inflation, the government would continue to ‘chain’ (by this we mean renew every 3 months) the 2% inflation cap on long term rentals.

Spain’s National Bureau of Statistics (INE) reported inflation hit 8.7% Year-Over-Year during May 2022.

In view of this spike in inflation, the Spanish Government took swift action and approved a slew of measures to fight it. Amongst them, was a law to enforce inflation control in all long-term rentals.

Continuing the previous 3-month cap, it will be extended starting on Friday 1st of July and end on the 30th of September 2022. All contracts signed during this period need to abide by it.

For professional landlords, rental updates are capped at 2%. For laymen, there is freedom to negotiate. However, if no agreement is reached, a 2% limit also applies. In practice, this translates into a 2% limit for everyone.

Again, I stress it is highly likely our government will continue to renew the 3-month rental cap until Spain’s high inflation is brought to heel, which realistically could take several years, if we are to go by historic records. So, far from ‘temporary’ inflation as we advised last year (Tax breaks on buying property in Andalusia extended indefinitely! – 8th December 2021).

 

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.

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

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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Tax reminder - IRPF - Wealth & Income Tax 2022

Raymundo Larraín Nesbitt, May, 30. 2022

Marbella-based Larraín Nesbitt Lawyers has over 18 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.

Copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

Just a gentle reminder to all Spanish residents; you must file your IRPF annual tax return now by end of June.

You are being taxed on your rental income for the previous year: it runs from the 1st of January to the 31st of December 2021.

Our cut-off date to accept filing this resident tax return is Tuesday the 21st of June 2022.

Please do not wait until the last moment to submit your annual tax return. We file this tax online all over Spain within 24 working hours.

We can offer you this tax service starting at a very competitive standard fee: 395 euros plus 21% VAT.

The quoted fee is per taxpayer. The spouse/partner has a 50% discount on our quoted fee (only applies to IRPF).

The main highlight of our tax service is that, on renting, we reduce your income tax by 70%, or more, on applying for lenient landlord tax relief on all your property-related expenses. On renting, our fees are 100% tax-deductible from the tax to pay.

Contact us and pay less tax. If you overpay taxes in Spain, it is only because you want to.

 

Wealth & IRPF tax submission period

From the 1st of April to the 30th of June.

Related tax services

 

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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Cashing in on your property: Bare ownership and usufruct right

Raymundo Larraín Nesbitt, May, 21. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of May 2022

It has become apparent to everyone that we have fallen on hard times. The ongoing war in Europe (which threatens contagion to neighbouring countries), the rising inflation, the hike in taxes, hike in petrol, hike in electricity & gas, the ongoing Covid-19 restrictions, and more all add up to our woes!

But none fair harder than those in their senior years. They are hands down the most affected collective with all that is going on.

Many senior citizens struggle to get by on low pensions given the unbridled rise of prices (two-digit inflation). All they know is that each month they can afford fewer things with the same fixed amount of money.

But precisely because of their age, they are likely sitting on properties which value has gone up substantially over the previous years. Moreover, in a high inflationary context, money experts strongly advise investors to buy property to hedge themselves against inflation, so their property values are bound to increase further over the next years.

Unbeknownst to them, there is a way to tap into their wealth without needing to sell the property, much less leave their home.

This is known as selling the ‘bare ownership’ to an investor whilst retaining a ‘life usufruct’ on the property. This is a legal procedure witnessed by a notary. In simple terms, bare ownership grants ownership of a property but does not grant possession.

Pros

  • The seller is allowed to remain in the property for as long as they live. In other words, the seller retains the possession. This, for senior citizens, is a huge bonus as they will not have to renounce to their lifestyle or where they live.
  • The seller access immediately a large pool of money which they can use as they see fit: for medical expenses, lavish holidays, fancy restaurants, or simply as a well-deserved improvement to their lifestyle in their twilight years.
  • The seller no longer needs to trouble himself with paying property taxes or community charges, as it now falls on the investor to pay them all.
  • You will only need to pay electricity and water bills.
  • The seller can in fact rent out the property, or part of it (i.e. rooms), and pocket the money!
  • The seller can in fact also sell his usufruct right, if needed be, to raise even more money!
  • This procedure allows you to supplement and bolster a meagre state pension.

Cons

  • You will receive slightly less money than its market value.
  • If the seller has children, they will receive less by way of inheritance.

 

Conclusion

Selling only the bare ownership is a (very) smart way of cashing in on the accumulated wealth of your property without renouncing to your lifestyle. Because in truth, you won’t notice any difference other than sitting on a large pile of money!

On following this legal procedure, the owner avoids enduring all the associated hassle and aggravation of a standard property sale but reaps all its benefits! That is why this procedure is ideal for senior citizens who are asset rich, but cash poor.

For a seller, it’s a win-win as you get to keep your property (whilst you live) and you also have access to a large pile of cash with which you can do as you please.

For an investor, it is a win-win as they get to buy a property below the market value (BMV) and also do not pay inheritance tax on receiving the possession of the property in the future.

We advise you to retain a law firm -such as ours- to represent and defend your interests.

If you are interested in applying for such a loan, please contact us.

 

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.

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

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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Squatters: Why you need a house alarm!

Raymundo Larraín Nesbitt, May, 11. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of May 2022

As we have been reporting over the last years, the squatter problem has been growing.

This used to be only a nuisance in large cities, such as Barcelona and Madrid, but with the advent of the Covid-19 pandemic, and associated flight bans, they have been actively targeting properties belonging to expats which stood empty.

In light of this I thought I would share this short blog post.

Spanish police can evict squatters by force within the first 48 hours they break into a main residence, following consolidated jurisprudence. A second residence, by definition, is not a ‘main residence’, granted, but installing an alarm may also be helpful, even if acting as a deterrent.

The main problem the police have is to determine exactly when they have broken in. If in doubt, the police back out and do not act, even remanding into custody any property owner that attempts to break into their own home if the squatters are inside (sic).

Installing a house alarm solves this problem as besides alerting the owner, they are connected directly with the police, which get notified immediately of any intrusion attempt. This can constitute irrefutable poof on when the squatters broke into a property. If within the first 48 hours, the police can then remove them by force - if necessary - which avoids the owner a protracted and expensive court procedure to recover possession which could take months, or even years.

Which is why we strongly recommend you install a house alarm in Spain. It adds another layer of protection against squatters and ultimately may even act as a deterrent. What is a certainty,  is that a  house that does not have installed an alarm system is a prime target and may fall prey to squatters (and burglars).

 

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 articles

 

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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Luxury rentals explained (alquileres suntuarios)

Raymundo Larraín Nesbitt, April, 21. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - abogado
21st of April 2022

 

You are probably aware of Spain’s Tenancy Act (LAU, in Spanish). You will have likely heard that all long-term rental contracts in Spain are subject to the LAU and must abide by its terms.

But are they really? Spoiler: no!

There are a number of rental contracts that fall outside the remit of Spain’s Tenancy Act such as seasonal contracts, holiday rentals, luxury rentals, and more. Today’s short blog post is going to focus on the latter.

What conditions does a rental contract need to meet to avoid being subject to the LAU? In short, these two:

  1. The property being rented is larger than 300 m2.
  2. The monthly rental exceeds 5.5 times the average minimum wage. That is on or over 6,416.7 euros/month for year 2022 (changes every year).

If either, or both, of the above conditions are met, the rental contract would be excluded from the protection of the LAU.

What legal significance does this have?

In short, a lot.

Basically, it means that all the thoughtful entitlements the LAU meticulously lays out for the protection of tenants (read totally biased in favour of tenants) do not apply. Meaning landlords are greatly favoured because all the lenient entitlements and rights the LAU rules on are waived legally, leaving the contract to be ruled only by the will of the parties. The legal significance of this is huge as it basically conveys a huge leverage to landlords, if they play their cards right.

This is done because our lawmaker surmises that a luxurious rental contract is signed by a tenant who is either a shrewd businessman or an affluent person; either way someone who does not warrant the protection of our (biased) tenant laws, such as the LAU.

Practical examples on its importance

  1. Standard long-term contracts, subject to the LAU, are capped to a one-month security deposit (fianza, in Spanish). In a luxury contract a landlord is free to demand a full year’s rental (or more) in advance.
  2. In standard long-term contracts, subject to the LAU, you can pull out only after 6 months have passed. In a luxury contract, you may pull out at any time (but there will be consequences); on the very next day even.
  3. Following on the above point, in a standard long-term contract it could be agreed that if a tenant pulls out after 6 months a capped penalty applies which equates to the months left to complete a full year, on a pro rata. I.e. in the region of 3,200 euros. That, by law, would be the maximum. However, on a luxury contract there is total freedom; a tenant could be liable for all the rentals left to complete a full year. I.e. over 70,000 euros if you pull out a week after signing it for whatever reason!

Conclusion

If you plan to sign a luxury rental contract in Spain on a villa or a penthouse, you are strongly advised to take legal advice before signing on the dotted line.

Spending a few hundred euros in lawyer’s advice can save you from losing, or being sued, 100,000 euros, or more! 

 

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:

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. VOV.

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Reminder - Q1 2022 Non-Resident Income Tax filing

Raymundo Larraín Nesbitt, April, 11. 2022

Marbella-based Larraín Nesbitt Lawyers has over 19 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 successfully assisting expats all over Spain. You can review here our client’s testimonials.

Copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

Just a gentle reminder to all non-residents, who own property in Spain and rent it out (whether long or short-term i.e. holiday home); you must file your Q1 2022 quarterly tax return now in April. You are being taxed on your rental income for the previous three months: January, February, and March.

For 2022, the non-resident tax calendar is as follows:

  • Q1 January – March. Filed on the first 15 days of April
  • Q2 April – June. Filed on the first 15 days of July
  • Q3 July – September. Filed on the first 15 days of October
  • Q4 October – December. Filed on the first 15 days of January 2022

 

Our cut-off date to accept filing Q1 2022 non-resident tax returns is Wednesday the 13th of April 2022.

Please do not wait until the last moment to submit your quarterly tax return. We file this tax online all over Spain within 24 working hours.

We can offer you this tax service for a very competitive fee: 125 euros plus 21% VAT.

The quoted fee is per property and per tax quarter, it includes up to two joint owners i.e. husband & wife.

Our fees are 100% tax-deductible from the tax to pay.

The main highlight of our tax service is that we reduce your income tax by 70%, or more, on applying for lenient landlord tax relief on all your property-related expenses.

Contact us and pay less tax. If you overpay taxes in Spain, it is only because you want to.

 

Q1 2022 tax submission period

From the 1st to the 20th of April.

Related tax service

Holiday Rental Accounting Service (HRAS)

Related taxation articles

 

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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Spanish Government caps rent hikes to 2% in 2022

Raymundo Larraín Nesbitt, April, 1. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - abogado
1st of April 2022

Spain’s National Bureau of Statistics (INE) reported inflation hit 9.8% Year-Over-Year during March 2022. This is the highest figure in over 37 years, since 1985. It is a major source of concern.

There are several factors behind this sharp rise:

  • The Covid pandemic (that disrupted the global supply chain impacting on prices)
  • The (irresponsible) quantitative easing policy followed by Monetary Authorities to mitigate the pernicious financial aftermath of the pandemic and the recession that preceded it
  • The outbreak of war in Europe

 

All of the above are to blame for the severe spike in inflation.

If this trend continues unchecked, we will soon have a two-digit inflation in our hands. This will have severe repercussions, most of which escape the scope of this article.

The one I am going to focus on today is how it affects landlords and tenants on renewing a rental contract.

By law, a landlord may not increase a rental unless it is expressly worded into a rental contract. Also, by law, the rental increase in Spain must be indexed to the IPC (Spain’s Price Consumer Index). Spain’s Government enacted a law last year that forced landlords to index their contracts only to the IPC. Although at the time this law was enacted with best intentions in mind to protect tenants (read Nanny State), the fact is that in a high inflationary context, this has backfired spectacularly, and landlords cannot lawfully use any other index which forces a steep increase in rental contracts across the board on renewing them.

For example, a long-term rental contract that ran from the 1st of April 2021 to the 31st of March 2022, and had a monthly rental of 1,000 euros, upon renewal would be updated by 98 euros a month, making a grand total of 1,098 euros/month. This sharp increase may prove as an unpleasant surprise to unwary tenants who were not expecting such a strong rise, catching them off guard. It also implies tenants will now have less disposable income available every month, which may lead some to struggle to make ends meet.

As a result, our government has approved today to cap the increase in rentals by 2% for corporate landlords over a three-month period starting today 1st of April, and ending on the 30th of June. Private individuals will have freedom to negotiate a rental increase. However, if no agreement is reached, the rise will also be capped at 2%. Which in practice will translate into most cases also being capped at 2% over the next 3 months.

Being realistic and planning ahead, inflation is going to be with us for a number of years until it is brought back to heel by the ECB. The ECB needs to drop once and for all its lenient approach and change gears on this matter pronto implementing gradually continued hikes of interest. It must act decisively against this spike in inflation before it gets severely out of control, if it’s not too late already.

Knowing well our government’s paternalistic approach towards tenants, it is almost a given they will approve chaining continued 3-month renewals on this measure going forward. This translates – in a high inflationary context – into landlords being unable to pass on this inflation rise to tenants. Which in turn implies they will be making a significant loss over the next years; in effect, ‘subsidizing’ their tenant’s rental.

Once more, this measure proves the point our government revels in lofty ideals, albeit always at the expense of other people’s private property.

 

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:

 

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. VOV.

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Are you building your own home in Spain? Make sure you store all VAT invoices!

Raymundo Larraín Nesbitt, March, 21. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2012 and 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - abogado
21st of March 2022

Building your own home is likely the cheapest option in Spain, saving you hundreds of thousands of euros, if not more. Many owners resort to it. They buy an empty plot of land and hire professionals do build them their dream home.

When you build your own house in Spain you are legally branded as a self-developer. This means you take on the role of a developer. Being a self-developer is a smart move, but it has associated a series of legal and financial responsibilities you should be aware of.

In today’s post we are only going to focus on the importance of storing VAT invoices issued under your name on building a property.

When you build your own home, you will normally hire a series of professionals such as an architect, project manager, builder, lawyer, and accountant. All these professionals will issue you VAT invoices for their professional services. Moreover, the builder will continuously supply you with a slew of invoices on all the building materials used.

The importance of storing all VAT invoices, is that they can later on be used by yourself to greatly (and I mean greatly) mitigate your seller’s tax bill. All these VAT invoices may be offset, dramatically reducing your capital gains tax (CGT).

I have witnessed first-hand how some self-developers, who were unadvised, had to face a huge CGT on selling because they had failed to store said VAT invoices.

In simplified terms, we can see this with an example. Imagine someone buying a plot of land for 100,000 euros and building a house with a further cost of 200,000 euros. This owner can then sell on the property for 700,000 euros. That’s a 400,000 euros profit that is taxable.

Without taking any action, a non-resident seller can face a huge CGT bill of 96,000 euros.

However, on following our advice, he can cut down his tax bill by 50%, or more.

It’s important to preempt this tax issue from the start, so when you do happen to sell the property further on, your tax bill will be as low as possible.

Planning ahead is key to mitigate your tax bill on selling property.

 

Conveyance services available from LNA:

 

"La primavera besaba

suavemente la arboleda,

y el verde nuevo brotaba

como una verde humareda.

Las nubes iban pasando

sobre el campo juvenil...

Yo vi en las hojas temblando

las frescas lluvias de abril.

Bajo ese almendro florido,

todo cargado de flor

-recordé-, yo he maldecido

mi juventud sin amor.

Hoy en mitad de la vida,

me he parado a meditar...

¡Juventud nunca vivida,

quién te volviera a soñar!"

Antonio Machado.

 

Antonio Cipriano José María y Francisco de Santa Ana Machado y Ruiz (1875 – 1939). Brilliant Spanish poet and one of the leading figures of the Spanish literary movement known as the Generation of ’98. Died in exile during the fratricidal Spanish Civil War. He is credited as being one of Spain’s most popular poets. Amongst his timeless classics, Campos de Castilla stands head and shoulders above the rest.

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. VOV.

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Mortgage loans: fixed or variable interest rate?

Raymundo Larraín Nesbitt, March, 11. 2022

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 has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - abogado
11th of March 2022

In a context of high inflation (Spain has hit 7.4%, the highest in 33 years) protecting your family’s savings becomes a top priority.

Financial advisers normally recommend two options to protect yourself against rising inflation:

  1. The first one is to buy gold (which is rallying)
  2. The second is to buy real estate (which is also rallying)

As a result of buyers and savvy investors buying into the real estate market - to hedge themselves against the pernicious effects of rising inflation - property prices in Spain have increased by an average of 8% p.a. (by two digits in coastal areas, such as Malaga).

Moreover, 2021 was the best year in property sales since 2007. We need to go back in time 14 years, to the heyday of Spain’s property boom, to see such great sales numbers (565,523 properties sold).

As a result of this buying frenzy, a frequent question we get asked is: Should a borrower choose a fixed or variable interest rate in their mortgage loan?

The short answer is that in today’s high inflationary context, we strongly advise a borrower chooses a fixed interest rate.

The reason being is because although Financial Authorities the world over are bending over backwards not to increase interest rates (to protect and secure the fledgling post-pandemic economic recovery), arguing that this inflation is only temporary, the fact is that given recent geopolitical events (read war) inflation is not only here to stay but will significantly increase over the course of the next years.

This translates into an interest rate hike, whether they want it or not, in the near future.

If you have your mortgage loan referred to a variable interest rate, and Monetary Authorities keep raising the interest every quarter over and over again (as it is highly foreseeable) your monthly repayments are going to increase dramatically to the point you may no longer have the financial ability to service them. Which strongly implies borrowers may default in view of rising interest rates.

For this reason, at LNA, we recommend our clients to take on mortgage loans with a fixed interest, so no matter what unfolds in the near future (more volcanoes, more pandemics, more financial crisis, more wars, etc) you know exactly how much you need to repay your lender every month. Because peace of mind is priceless.

That said, you should be aware that some enterprising lenders, in view of a foreseeable hike in interest rates, have amended their loan conditions on fixed rate loans, slightly increasing them.

Bottom line, if you still want to grab yourself a (very) competitive mortgage loan with (an ultra-low) fixed interest, you should act quickly and get a move on.

 

At LNA we can assist you buying, selling or renting out your property in Spain. We have 19 years’ experience in conveyance & tax. We are also specialized in Immigration & Residency permits.

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, 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.

 

Conveyance services available from LNA:

 

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. VOV.

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Spanish admin residency = Spanish tax residency

Raymundo Larraín Nesbitt, March, 1. 2022

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 has a long track record successfully assisting expats all over Spain.

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Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - abogado
1st of March 2022

Increasingly, more and more people are realizing that applying for Spanish residency has in fact tax consequences. I keep seeing this mistake being made over and over again.

A common misunderstanding on applying for Spanish residency is the matter of tax residency.

I have witnessed how several companies, and so-called ‘advisors’, purposely missell residency permits in Spain without properly disclosing to applicants the tax implications of their decision.

I’ve written again another short article on this matter as a gentle reminder.

The golden rule: Spanish residency permit = Spanish tax residency

Although – technically – it is true that admin residency and tax residency are two separate legal concepts, the fact is they eventually go hand in hand in most cases.

As a general rule, the following golden rule applies:

Spanish residency permit = Spanish tax residency

Without going into detail on the whys and why not's, the reason is that as a staple requirement all visas in Spain require on renewals you categorically prove you have lived in Spain long term; defined as spending over 183 days within a calendar year in Spanish territory.

The tax implication of this is that it automatically triggers tax residency in Spain.

Example: Mr. Smith applies and attains a Non-Lucrative Visa in May 2021 to avoid the pesky 90/180-day rule. In the following year (2022), unbeknownst to him, he must file personal income tax in Spain (IRPF) on the previous year because he has now become a Spanish tax resident (depending on the case, he may also need to file a 720).

If Mr. Smith challenges the tax residency status, on grounds that he did not spend over 183 days in Spain during 2021, he will be stripped of his residency permit.

In other words, they go hand in hand. You cannot have one without the other or your visa renewal will be turned down, period.

Is there any exception to this general rule?

Alas, yes.

It’s a special type of residency permit called Golden Visa (Investor Visa).

A GV allows its permit holder to bypass the 90/180-day rule. It also allows its holders' unfettered access to Spain. They may enter and leave as they please (even circumventing Covid restrictions).

Attaining a Golden visa, unlike every other visa in Spain, does not automatically make you tax resident in Spain and the reason being is because renewals are not tied to proving you live in Spain long term (which triggers tax residency), but rather that you have maintained the investment over time in Spain.

This nuance is extremely important and goes on to explain why Golden Visas are so special and why they are so sought after by affluent applicants as they do not preclude your tax residency on application.

As a recap, a Golden Visa allows you:

  • To legally bypass the 90/180-day rule
  • Unfettered access to Spain
  • Do not automatically make you tax resident in Spain (unlike every other visa in Spain)

 

LNA has a 100% track record attaining Spanish residency

 

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

At Larrain Nesbitt Abogados, we have assisted hundreds of EU and non-EU nationals to successfully attain a Spanish residency permit.

Interested? Come and speak to Larraín Nesbitt Abogados’ friendly staff who will be pleased to guide you through the different residency options, choosing the one that appeals to you most. Your family’s success is only one call away: (+34) 952 19 22 88.

Residency services available from LNA:

 

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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. VOV.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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