Would it surprise you if we, as property finders, advised you not to purchase property in Spain?
Would you believe us if we said by not buying certain properties, you could save yourself thousands of euros?
Does advising you not to purchase property in Spain sound crazy? Let us explain …
If you read our previous article, Yes! Now is The Time To Buy Property In Spain, you may be a little confused,
In this article, we plan to explain how sometimes purchasing property in Spain can be a lot more costly than you originally imagined. We like to ensure our purchasers are fully aware of all costs involved, both short term and long term.
As we discussed in this article, a reputable and qualified lawyer can help you avoid a multitude of problems. However, lawyers do not usually involve themselves in your decision making, This is where we, as property finders (buyer’s agents), are here to help you.
It is not unusual to think of buying a small, cheaper property as a stepping stone to a larger, more expensive property in the future. This is a seller’s agent’s dream as they make their money twice. However, not only are you as the purchaser paying agency fees twice (that are sometimes yet not always included in the purchase price), you are are also paying taxes and legal fees twice.
Let us give you an example:
The purchaser is initially looking to purchase a small property for €200.000 and then, when conditions permit, sell that property and “upgrade” to a larger property for say €450.000.
NOTE: For this example, we will say that agents fees are 5% paid by the vendor (ie. no charge to the purchaser) and legal/tax costs amount to 12%
- For the purchase of property 1, legal and taxes amount to: 24.000€ (1)
- For the purchase of property 2, legal and taxes amount to: 54.000€ (2)
- For the sale of property 1, agent fees amount to: 10.000€ (3)
(NOTE: plusvalia tax will also be charged on any profit made on the sale of property 1!)
So, before deciding on such a purchase plan, we need to understand your reasons why …
Why would you choose to pay an extra €34.000 (1 & 3) in fees if it wasn’t essential?
No matter your reason:
- Insufficient funding to currently purchase your ideal property … maybe now is not the most opportune time for you to buy?
- A desire to test the water before taking the leap …. is purchasing the best option? Maybe you should consider rental initially?
- You have been told it is a great opportunity and you are sure to make money on resale … does that come with a guarantee?
Take your time. Do your research. Seek advice. Mistakes, when you purchase property in Spain, especially the wrong property, are very costly!
If you’d like to avoid costly mistakes on your Spanish property, GET IN TOUCH and we’ll be happy to help you.
Oh, and before we go. There is one sure fire way of not losing money if we agree that you should go ahead with your initial “stepping stone” purchase. Our Spanish rental property expert, Louise Brace, will explain more (Article to be published soon!)