7 myths debunked about buying property in Tenerife

The government can knock down your home legally whenever they want. 

This has come about over the past few years from stories of properties having been built illegally and were therefore knocked down. The thing is that the developers more than likely paid the local town councillors who then paid other relevant people and “building permission” was given.

I’m not saying that those types of envelopes haven’t been passed about here in Tenerife but thankfully the only properties that I know about that have been knocked down by the government here are the ones that have been built dangerously too close to the coast and are affected by the Coastal law.

If you’re buying a property in Tenerife, make sure you use a lawyer and if you’re concerned about the legalities of your intended purchase, get them to look into it for you.

Click the following link to get your questions answered about buying a property in Tenerife

You can declare what you like at the notary and use “Black Money” to buy your property in Tenerife. 

Unfortunately, this does still go on but the Notaries and Government are trying to clamp down on it. The thing is, you can’t just declare what you want and pay the rest in Black money…or at least you shouldn’t. You might think that, as a buyer you’re getting away with taxes but there are certain things that maybe you’re not aware of.

If you’re buying a second-hand property here, you’ll need to pay a land transfer tax, today that’s 6.5% of the value of the transaction. So, if you as the buyer paying €150.000 and decide to declare €100.000 and pay €50.000 under the table, you’ll only pay €6.500 as oppose to €9.750 but…your first mistake is if you under-declare the property that you’re buying you could be liable for the complimentary tax.

This tax can be charged if the local town hall think that you’ve paid too little for the property. It may well be that you really did buy the house cheaply, so you’ll have to pay something anyway, but by paying cash and declaring the purchase price lower than what you’re truly paying could end up with you paying more on the complimentary tax than you should have done.

The second mistake is that when you come to sell it for say €200.000 in the future, because you declared €100.000 on the purchase the capital gains is €100.000…that’s when you wish that you’d have declared €150.000 because you’d have had to only pay Capital Gains Tax on €50.000 instead of €100.000…just for your information Capital Gains Tax today is 19%…a bit different to the 6.5% you’ll have to pay when you declare the full price at notary.

You won’t own the property if the UK leaves the EU, Brexit will stop all Brits from buying in Spain. 

Not true at all. If the UK leaves the EU (and I’m still saying IF because I’ve still got a niggling feeling that it’s not going to happen), there’s nothing to worry about for any Brits thinking about buying property here in Tenerife or Spain for that matter.

Think about this for a minute, if you’re American or Chinese you can still buy and own a property here, even though you’re not part of the EU.

The same will go for the British property buyer in years to come, if the UK isn’t part of the EU, maybe there’ll be a little more paperwork to cope with, maybe tax laws might change a little but the reality is that non-EU buyers can buy property here today and they have no concerns at all – there’s no need to worry about any major changes like that affecting your right to own a property in Tenerife.

Click the following link to get your questions answered about buying a property in Tenerife

You can buy a holiday home in Tenerife for less than €50.000 

Yes there are still bargains to be had here in Tenerife but if you’re thinking that you’ll get your holiday home in Tenerife for €50.000, think again.

As I said, there are still deals to be had and in fact, there are properties for sale for this amount of money but they’re in areas that are very residential.

Areas where the apartment buildings don’t have a swimming pool, there are very few properties with sea views and there’s no “easy stroll to the local beach” and even if you wanted to buy one of these properties so that you could get away from the tourists and “live like a local”, they’re probably not the areas that your friends and family would go on holiday to.

Brits are banned from renting their property out

Nobody has been banned from renting their property out.

There’s no new law banning anyone from renting their property if that’s what they want to do…what’s happening is that the law that was initially passed in 1995 about short term letting has been enforced over recent years but it’s not stopping anyone from letting their property…you can still rent it out but you should read about the letting laws in the Canary Islands before you decide on what you want to do.

Click the following link to get your questions answered about buying a property in Tenerife

A Spanish Will protects you from Spanish Inheritance Tax

False, but…a Spanish Will could help you reduce your liability or at least help you sleep at night not worrying about what’s going to happen after you’re gone.

Once you’ve bought a property here in Tenerife, use a good independent Spanish Lawyer to set your will up here and make sure you tell them of any other wills you have in place in other counties.

The taxes for foreigners are prohibitively expensive. 

This might have come about due to the Inheritance tax laws that were in place until recently.

The taxes in Spain in general are no worse than your home country and in a lot of cases much less expensive.

You’ll have to pay land transfer tax, notary fees, legal and land registry fees when you buy and while you own a property you’ll have to pay annual property owners tax, probably non-resident taxes and obviously, your running costs and then when you come to sell you’ll have to pay your plusvalía and probably 3% retention to Hacienda.

These are the normal taxes you’ll have to pay but Inheritance Tax was always much higher for foreigners as opposed to Spanish nationals. However, in recent times several autonomous regions have reduced the Inheritance Taxes and the Canary Islands are one of them.

This isn’t supposed to be a full run-down of the taxes you’ll have to pay throughout the purchase, running and subsequent sale of a property here in Tenerife, I’ve got those on my website so if you need more information on this go to tenerifepropertygroup.com, contact me directly or speak with your preferred accountant or lawyer.

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