Non-Resident Imputed Income Tax in Tenerife – NRIIT

I’d like to point out that this article IS GOOD ADVICE but in no way replaces any legal or fiscal advice, so please don’t take it as such. Rates and laws change all the time and you should seek that information from your legal and fiscal advisers.

At times life can seem unfair…especially at the end of the year.

No, I don’t mean that you don’t get the presents that you want at Christmas, I mean the dreaded tax man.

“Class… does anyone know what the word – Impute – means?”

“Anyone?” “Anyone?” – a nod to Ferris Bueller.

OK…from one of the online dictionaries, the word Impute in financial terms means:-

To assign a value to something by inference from the value of the products or processes to which it contributes…ie “recovering the initial outlay plus imputed interest”

In my way of thinking…maybe imputed could mean – Assumed.

So, when the Spanish tax office, Hacienda, asks you to pay your Non-resident Income Tax at the end of the year, they’re really asking for the Non-resident Imputed Income Tax….or assumed income tax.

You see, the Spanish government have, for many years, assumed that if you have a second home in Spain, you’ll almost certainly derive a benefit of income from it in one way or another.

The government assumes that you rent your property – even if you don’t.

Whether you rent the property legally or not, you still have to send in your annual tax return and pay your Income Tax one way or another.

This generally raises some questions, so I’ll attempt to answer the most frequently asked ones below…

But what if I’ve never rented my property in the whole time I’ve owned it? – You still have to pay it.

What if I’ve rented my property legally and declared the income? – You’ll have to pay your income tax on that.

As a property owner, can I get away with not paying my Non-resident Imputed Income Tax? – Yes…but they’ll get you eventually – see below. There are LOADS (yes that’s shouting) of people in Tenerife that are not paying this tax. Generally because they don’t know about it because they were never told about it when they bought the property.

Are there any benefits to paying my Non-resident Imputed Income Tax? – Yes, you can sleep at night and when you come to sell your property and you’re deemed not fiscally resident and Hacienda retain 3% of the sale price of your property and hold it in lieu of any taxes that you may owe, you’ll probably be able to claim some, if not all, of it back.

3% of the sale price is quite a lot of money on most property sales in Tenerife, so can I get it back?

Well, if you’re up to date with your annual Non-resident Imputed Income Tax for the last 4 years, then possibly all of it – you see, there is the benefit of paying your NRIIT.

It’s assumed that this 3% that Hacienda retain not only takes into account your unpaid NRIIT payments but also takes into account any Capital Gains that you’ve made on the property.

The thing is that they’re so busy that they’d rather take the 3% and have something back rather than having to chase you for any more, so they kind of turn a blind eye in most cases.

So how do I find out if I can claim any of the 3% retained by Hacienda?

You really need to employ the services of an accountant for that. They’ll normally charge you a fee of something like €100 to work out if you will be able to claim anything back. That’s the best thing to do…work it out first before going to Hacienda to claim anything – you don’t want to open a can of worms.

In general, Hacienda are happy with the 3% to cover them for the NRIIT you owe them as well as any Capital Gains tax, so in a way the majority of you reading this will be able to sit back and relax and assume that once you’ve left your 3% behind, they’ll be happy and show no future interest in you. And that’s probably true in 99% of cases but there’ll be the 1% where the Capital Gain is enough for them to open a case and go after you for the balance that’s owed over the 3% that’s been retained…but to be honest, you’ll probably know that yourself.

If you’ve ever had to do paperwork in a Spanish office, allow yourself the 3 minutes 30 seconds to watch this…it’s actually not as bad now as it used to be….

So, what’s the best advice?

If you’re a property owner here in Tenerife, keep up to date with your Non-resident Imputed Income Tax.

OK, it’s another tax to pay but it’s not loads of money every year, in fact, in comparison to most taxes it’s quite low.

It’s due at the end of the year, every year and payable on or before the 31st December to not receive a fine.

When you do sell your property here the 3% will be retained by Hacienda…that’s a given and will always happen.

Then, if you’re up to date with your NRIIT and you feel that you’d like to see if there’s anything that you’ll be able to claim back, get in contact with a reputable accountant or Gestor.

This is one of the main reasons that I shout about NOT paying anything in black money under the table when you buy a property.

If you buy now for €120.000 and declare €90.000 on the deeds and you’re told that you’re saving tax…you won’t be saving anything in the future, because when you sell in 10 years for €175.000, Hacienda see that you’ve made a €85.000 profit..not the €55.000 that you really have…and that can make all the difference in reclaiming anything back.

As I write, Hacienda are obliged to pay back any outstanding tax within 12 months…I know, you’re bound to get it back on the 364th day but it might be worth the effort.

I should point out that this article IS GOOD ADVICE but in no way replaces any legal or fiscal advice, so please don’t take it as such. Rates and laws change all the time and you should seek that information from your legal and fiscal advisers.

The Tenerife Property market during 2017

10 years after the brakes were put on the rising prices…how is the Spanish market, especially the Tenerife property market?

During the Spanish property boom, prices went through the roof but abruptly came to a screeching halt in 2007 when the ceiling fell in on the property market – I hope you liked the use of the carefully chosen property oriented words there.

Prices crashed throughout Spain and drops of anywhere between 30%-50% were found depending upon the area that the property was situated.

The Tenerife Property market during 2017 — Of course, Tenerife was hit, and quite badly, but not nearly as badly as the mainland.

Here, prices dropped in the region of 35% in comparison to their highs of 2005-2006, but being an island with limited building land and of course an island with sun, the prices were always going to be better than a lot of other areas of Spain.

So, as we see the Christmas trees being put up and the lights being switched on in readiness for the Christmas festivities and bringing to an end 2017, how has the year been regarding sales and property prices in general?

Demand has always been and still is strong for property in Tenerife and obviously continues to rise.

Despite Brexit, Brits still lead the long list of different nationalities of buyers throughout Spain, although the total amount of British buyers has dropped slightly overall. Interestingly though, this year Tenerife has seen Italian buyers become more prominent than British buyers.

Mortgages are getting easier to obtain, thankfully not as easy as it was back in the days of the boom, but nevertheless, things are moving after the Credit Crunch.

Employment figures have eased and are falling from the 33% unemployment high we had in the Canary Islands 4 years ago.

Interest rates are still low, meaning savings returns are poor, so property investment seems like a good idea now.

During 2016, the Spanish bank – Bankinter – made a statement about the Spanish real estate sector in which they said “The price of housing will keep rising modestly throughout all of Spain. Even though the increase slowed down during the first months of 2016, the moderate upward trend of prices that we have been estimating on our reports since December 2013 is still valid.”

This showed that even then prices were starting to the rise.

A growing worldwide economy along with low interest rates and a good chance of capital gain, makes property investment a good contender for your money and so the end of 2017 and going into 2018 looks like there’s going to be a continuing rise in property sales.

A limited number of properties for sale is also pushing prices up and in this is something that we’ve really noticed recently.

Sellers will very often have an inflated view of the value of their property, of course it’s their baby, but nevertheless, there’s been a distinct rise in asking prices and there’s also now a rise in those buyers that are willing to pay them.

It’s become quite apparent that prices in the more popular areas of Tenerife have increased by maybe 5%-10% over last year’s asking prices.

In fact, earlier this year, the property portal Kyero reported that figures showed that the average price of property in Tenerife had increased to just under €250,000, that was an increase of around 5% over 2016 prices and that average matches the average property price in the mainland.

It’s not quite a sellers’ market, where sellers can ask what they like and get it…at the moment it’s a situation where buyers with cash that can move quickly still have the upper hand and can make an offer that could well be accepted.

Mind you, the days of 20% discounts on sensibly priced property have long gone. As a seller, if you price your property realistically there’s a good chance you’ll get viewings and sell reasonably quickly.

The latest figures from the land registry and Spanish notaries seem to support the view that the market is well on its way to recovery in Spain as a whole.

The information for the number of sales recorded in the Land Registry show that property transactions increased by 25% in May 2017 compared to the same month last year.

Sales increased to 40,671, apparently, this was first time monthly sales had broken through the 40,000 barrier since September 2008, so Spain as a country is now on the up and I think we can officially say that the property market in Tenerife is on the turn.

So, here’s to a continuing upward change in the property market for 2018 and I hope you all have a great Christmas and a fantastic New Year…Happy 2018.

Have you missed the boat or is this the perfect storm?

Have you ever, during your lifetime…just felt that you should have done something a while ago, but now feel that it’s too late and maybe you’ve missed the boat?

I wasn’t in Tenerife 25 years ago, but I very often wonder that if I was, would I have bought property or would I have thought it was too expensive at that time.

When I hear or see what some of my sellers paid 25 years ago for the property they’re selling now, I always think to myself that if I was here then, at that price, I’d have bought them all.

But of course, it’s all relative.

Property prices today seem a lot more expensive in comparison to 25 years ago, but of course back then, your earnings weren’t the same, so although you think that property now is more expensive than way back then, you’d have been in the same position…you were a lot younger then and probably didn’t have the savings or the wherewithal to go out and leverage those savings to buy 2 or 3 properties.

Back in the early 90s in the UK, I knew a friend of a friend, Andy his name was, and every time I saw him, he always said that he was going to buy a property because “…the UK market has hit rock bottom”, I really can’t remember how many times he said that, the trouble is, for as long as I knew him he never did buy a property.

The thing is, in the year 2042, when you’re still thinking about this, are you going to look back and wish that you’d bought that property in Tenerife 25 years ago “in 2017/18” when prices were a lot cheaper?

There’s possibly never going to be a perfect time for you to buy a property here but there’s going to be a good time…and that time could be now.

Is this the perfect storm?

Property prices have easily hit rock bottom and we’re seeing prices start to increase…and fast in some areas.

I’ve just looked at my records and when I first started selling property in Tenerife back in 2009 – all those years ago…!!!, I had a 1 bedroom apartment in Los Cristianos on the seafront for €99.995…now, in 2017, you can’t even buy a studio for that in Los Cristianos.

Prices are on the rise, if you’re seriously thinking about buying a property here in Tenerife, prices probably won’t be like this for another 10-15 years, until the next financial crisis…and don’t worry yourself too much about Brexit, as I’ve said many times before, I can’t see it affecting much at all for the British buyer…and that’s if Brexit actually happens anyway (there, I’ve said it again on record).

At the moment, if you’re a US, Australian or Chinese citizen, you can still buy here. There are about 330.000 Britons living in Spain and approximately 300.000 Spanish living in the UK…what are they all going to do? Is the British government going to tell all of the Spanish to get out and vice versa?

If Brexit does happen, then maybe British buyers will have to fill in another sheet of paper amongst all of the other paperwork that needs to be done… I don’t know, nobody does, not even the British government knows what’s going to happen…

Every month, the Notaries’ Association report on the volume of monthly property sales and it’s reported an increase nearly every month since January 2014, although property sales in the whole of Spain are still 40% less than they were in the height of 2007.

Asking prices today for a 1 bed in Los Cristianos can easily be €150.000 plus and show no obvious signs of falling in the short term. In fact, Kyero – a well-known property portal – says that property sales in the municipality of Arona, which includes Los Cristianos have increased by nearly 25% since last year and property prices have risen by 5.9%…although they’re still well below what they were in the hazy days before the crisis.

In 2015, Tenerife came 8th in the list of most expensive places to buy in Spain, behind such cities as Madrid, Barcelona and Ibiza to name a few.

Lending is still cheap ad also banks are becoming a bit more flexible, so there are plenty of buyers about at the moment, keeping prices on the rise. Once again, Kyero report that mortgage completions have increased by 33.5% over the last 12 months.

One of the things you’ll probably have some concern over is the Sterling/Euro exchange rate and that is a question only you can answer at the time of your purchase…is it worth sending the money over now or do I wait a bit?

That’s something you’ll just need to bite the bullet on I’m afraid…it’s been just the same for those that have walked in your shoes before you and it’ll be the same for those that’ll be walking in your shoes behind you.

So, is it the right time to buy now in 2017/2018?

Let’s put it this way. I don’t think it’s a bad time, prices are still good, affordable and there are still some bargains to be had.

It’s always going to be a risk, but if you think you’re going to regret it in years to come, don’t let the opportunity slip away from you.

Buying property in Tenerife

Have you missed your opportunity in buying property in Tenerife?

Have you ever, during your lifetime…just felt that you should have done something a while ago, but now feel that it’s too late and maybe you’ve missed the boat?

I wasn’t in Tenerife 25 years ago, but I very often wonder that if I was, would I have bought property or would I have thought it was too expensive at that time.

Have you missed the boat or is this the perfect storm?

When I hear or see what some of my sellers paid 25 years ago for the property they’re selling now, I always think to myself that if I was here then, at that price, I’d have bought them all.

But of course, it’s all relative.

There’s possibly never going to be a perfect time for you to buy a property here but there’s going to be a good time…and that time could be now.

Is this the perfect storm?

Property prices have easily hit rock bottom and we’re seeing prices start to increase…and fast in some areas.

In 2015, Tenerife came 8th in the list of most expensive places to buy in Spain, behind such cities as Madrid, Barcelona and Ibiza to name a few.

So, is it the right time to buy now in 2017/2018?

Let’s put it this way. I don’t think it’s a bad time, prices are still good, affordable and there are still some bargains to be had.

It’s always going to be a risk, but if you think you’re going to regret it in years to come, don’t let the opportunity slip away from you.

Getting a mortgage in Tenerife

With Spanish mortgage rates being the lowest they’ve been for years and lending in general becoming a little more flexible, mortgage lending in Spain is increasing, so let’s see how easy it is getting a mortgage in Tenerife.

It’s still not easy to get a mortgage as a non-resident…or even as a resident for that matter but nevertheless…it’s becoming a little easier.

All Spanish banks deal with residents looking to borrow money via a mortgage and they also deal with non-residents but Spanish mortgages for non-residents are more difficult to obtain and there’ll be a few more hoops for you to jump through too.

I thought I’d write an article about the process and what’s needed to get a mortgage in Tenerife because my last article was written a few years ago and also written during the financial crisis, when Spanish mortgages had all but disappeared…and the article was very negative and not very up-beat.

In this article, I’m going to write about non-resident mortgages in Tenerife because if you’re a resident, you’re already living here and can pop into pretty much any bank in Tenerife and find out what you need to do to get the ball rolling.

I’d also like to point out that as I write this article in 2017, lending procedures and criteria are still evolving, so what I’m going to write isn’t cast in stone and banks will differ to each other in their lending amounts, loan to value calculations and criteria.

As a non-resident you’re generally going to be allowed up to 60% loan to value (LTV). This means that the bank will lend you 60% of the value of the property or the purchase price whichever is the lower. So, thinking about the last few words of the previous sentence, one thing to consider here is that just because they say they’re going to lend you 60% doesn’t mean that it’ll be 60% of the purchase price.

Here’s what I mean – and skip this bit if you know what I’m about to say – if you’re buying a property for €200.000, that’s the agreed price between you and the seller, that doesn’t automatically mean that you’ll be able to borrow €120.000 though.

The bank will want to have the property valued and if the property is then valued at €180.000, then they’re only going to lend you 60% of that value, not the €200.000 agreed purchase price. This new lending figure is €108.000 that’s €12.000 less than the €120.000 you originally thought they’d lend you…and now, you’re going to have to find that extra €12.000 yourself if you want to carry on with the purchase.

One thing you could do is see if the seller will come down a little in price so that you don’t have to find as much extra cash…but as I write this article, prices have stabilised well here in Tenerife and increasing in some areas…so there may be little chance of that.

Now, if you know anything about buying a property here (and if you don’t you might want to hop over to my videos about how to buy a property in Tenerife), you’ll know that to remove the property from the market, you need to put down a 10% deposit…and this is non-refundable…so what happens if you’ve agreed to buy the property for €200.000 and it gets down valued, in the example above and you can’t find the extra €12.000?…well, you’ll lose your 10% deposit.

What can you do? Maybe before you get into signing contracts and completion dates you can ask the agent to ask the owner if they’ll be prepared to refund the deposit if you’re unable to obtain a mortgage within a certain time-frame… that’s what we do here at Tenerife Property Group. We agree with the vendor that the buyer can have 14 days to arrange a mortgage and if they can provide written proof from the bank that confirms that they can’t go ahead, they can have their deposit back. We think that’s a fair way of going about it.

Lending criteria here can be a little tougher than in your home country. Because you’re a non-resident, they’ll want to know everything about you…and a little bit more at times too.

I very often get asked “What do I need to provide to get a mortgage in Tenerife?”

Here’s a list…although not definitive because as I said before, lending amounts and criteria change from bank to bank.

You’ll almost certainly need to provide the following if you’re a UK mortgage applicant.

Last P60
Last 6 months payslips
Last 6 months bank statements
Credit report (www.experian.co.uk) for all applicants
Last annual mortgage statement (UK main residence)
Copy of employment contract if P60 is not available or if you’re working in a tax exempt industry
Proof of deposits. The bank requires proof of the difference between the purchase price & amount of mortgage requested from the lender.

For self-employed individuals: (In the UK)

Latest Self-Assessment Tax Return
Profit & Loss accounts for that return
Balance sheet up to date
Last 6 months personal & business bank statements
Credit report (www.experian.co.uk) for all applicants
Last annual mortgage statement (UK main residence)
Proof of deposits. The bank requires proof of the difference between the purchase price & amount of mortgage requested from the lender.

You’ll also need your passport and NIE number and if you haven’t got your NIE number yet, you’ll need to get that before the bank will go much further with a decision.

A mortgage application generally takes between 4 to 6 weeks to obtain, depending upon how quick and organised you are in getting the required paperwork to the lender.

There are a number of different types of mortgages but generally speaking they’re capital and interest repayment type mortgages, rather than interest only and most lenders will only lend up to the oldest borrower being 75 years old.

Rates can be fixed or variable but more often than not, they’re variable following the EURIBOR rate of interest.

As I said earlier, getting a mortgage in Tenerife isn’t the easiest of things to do but it is possible with the right paperwork to present to the lender and make sure you use one of the high street banks and that way, you’ll probably stand a better chance of getting one.

Why do the same properties for sale in Tenerife have different prices or are sold – yet still being advertised?

If ever you’ve been looking for a property for sale in Tenerife on the internet, you’re almost sure to have come across this problem in the past.

There you are searching away…all the websites look the same…most of the properties you’re interested look very similar or even duplicated with different agents but the same photos but, after plenty of searching, you come across the property that you’ve been dreaming of buying for years.

It’s perfect in every way, the amount of bedrooms, the view, the pool and the area…all perfect and then there it is…the price, “wow” you think…”that’s just over our price limit but maybe, just maybe we can afford it”.

You save the page on your internet browser and keep on looking, “There’s bound to be something else out there that will fit my criteria just as well…but hopefully a bit cheaper” you think, so you carry on with your search.

Then you see it, the same property but €10.000 cheaper…”???”, well that’s it then, you can get it for just the amount of money you’ve set aside for it, “Perfect” you think and you can’t wait for the next day to come around so that you can call the agent.

You settle down to read the local property newspaper – Tenerife Property Guide – and surprisingly you see the same dream property for sale, with yet another agency…and…at even less money, another €5.000 saving…you just can’t believe your luck.

The next morning you’re chomping at the bit and can’t wait until 9am…the clock strikes 9 and you’re on the phone to the agency with the least expensive price, they tell you they’ll call the seller and will come back to you with a date and time for your appointment to view it.

Fantastic…you can’t wait…but wait you do…

Finally, they call you back only to tell you that the property has been sold…” What???” …”but you’re advertising it in this month’s paper” you say, hoping that they’re mistaken…“How can it be sold?” you ask.

So, what’s happened? How has this come about?

Very often what happens is that a seller puts their property on the market and often want the agency to price the property at the price the vendor wants and hence, they price the property over the market price.

Here in Tenerife, an agency will often take on a property for sale at any price, just happy in the knowledge to have a property for sale on their books.

After six months of it being for sale with the first lot of agents at the higher price and having had no viewings or interest whatsoever, the seller thinks that the agents aren’t doing their job very well at all, so they search for other agents…

This time the seller decides to reduce the price and send out photos and information via email to several other agents.

Those agents add the property to their websites and wait to see what happens.

After another 3 months of waiting, there’s been nothing but crickets…even though the property has been reduced in price, there’s still very little interest.

The seller has had a couple of viewings but no concrete offers, so the downbeat seller decides to put it with another couple of agencies and one of the more switched on agents tells the seller what the true market price really should be, the seller takes the advice and the property is priced accordingly.

The seller forgets to tell the agencies that have had it for sale for the previous months that the price has been reduced to a more realistic price and to top it all, 4 weeks later the property sells.

During all the excitement, paperwork chain and notary visits the elated seller forgets to let the other agents know that the property has now sold as well.

So, let’s look at how this has played out. Estate agency number 1 has it at the highest price, estate agency 2 has it at a reduced price and then agency 3 has it at the lowest price and sells it.

Now, even if the seller managed to remember all the agencies that had it for sale at the higher price and told them about the price drop…there’s a strong possibility that not all of the agents would have acted on it anyway.

This could be lack of time, lack of staff, just plain forgetting to do it.

The seller could also have forgotten to tell them that the property has been sold…so there’s the other problem.

The same property on the Internet with the same photos and different prices…oh, and it’s sold as well.

Well, if we know the problem, what’s the possible solution?

At Tenerife Property Group, we try hard to keep in contact with our sellers on a regular basis. This way, we do our best at keeping the properties we have for sale up to date regarding availability and price.

Of course, it doesn’t always work. The day after we’ve been in contact with the seller, maybe the property sells, so it could be 3 months before we’re next in contact with them, so we could be in the same boat as agent 1 or 2…

To keep up with the changing prices of property and if they’re still available for sale, is not the easiest of things to do and it must be said that some of the lesser honest agents will almost certainly be keeping some of their better priced properties advertised in the hopes of attracting potential buyers…but hopefully now, if you come across this problem, you’ll understand why there are so many duplications and different prices being advertised for properties for sale in Tenerife.

All I want for Christmas – Mariah Carey

All I want for Christmas…

November 1st 1994 and Mariah Carey released the lead single from her 4th album – “All I want for Christmas is you”.

With sales of over 14 million copies, this song is Mariah Carey’s biggest International hit and is apparently the 11th best-selling single of all time and is reported to have earned over $50 million in royalties.

OK, so what…I hear you ask…does this have to do with real estate in Tenerife?

With her Christmas single being one of the best-selling singles ever and James Corden having just recorded a new Carpool Karaoke with the star herself singing the world-famous tune, I wondered what type of property would Mariah Carey buy in Tenerife?

In December 2013, she was estimated to be worth over $500 million, so to work out what property she might like to buy in Tenerife let’s have a look at the property that she had at the time.

– Polished hard wood floors

– A cinema room with a sofa per person

– Bedroom ceilings with pink and blue clouds painted on them

– An island…but not in the kitchen, in the bathroom…!!!

– A room that’s reminiscent of a winter mountain lodge that can seat 100 with wood beamed ceilings and an open fire

– An inside basketball court and gym

– A Moroccan style Gazebo chill-out area

– 360º panoramic views ranging from the city to the sea & to the mountains

– A swimming pool, with her initials on it tiled in the centre of the floor

OK, well that’s a start about finding out what she likes but in 2014 she sold up and moved into rented accommodation.

Paying between $250.000 and $350.000 per month (I can’t get a confirmed figure) she and her boyfriend at the time, James Packer, moved into a fantastic mansion in California.

The property is situated on over 4.000m2 of land and measures between 1.200 and 1.700 m2 inside (again, it’s hard to get a confirmed figure). Just to put that measurement into proportion, the average large town house here in Tenerife measures 90m2 inside and a large villa that you might see in the hills of Roque del Conde might have inside measurements of between 400 – 500m2. So, this rented property could fit about 3 or 4 good sized villas inside it or nearly 19 town houses…madness…

Mariah Carey’s rented property has a massive modern kitchen with the obligatory island, a cinema room (with luxury chairs as opposed to the sofas), a sauna and a gym and a fabulous natural lagoon type swimming pool, a basketball court (outside this time) plenty of parking inside and out and fabulous views.

Due to the attention to details, the property is reported to have been built over a 5-year period and is apparently on a lease with an option to buy – it’s never been on the market since it was first built.

In fact, I found out where this property was and took this from Google Maps, it’s an overhead shot of the property…

But trying to get a street view of the property from outside the front door was impossible.

Evidently, even the Google car couldn’t get any further than the guard house of the secure gated community…so this is as far as we get.

Hardly surprising because within that community she can count the Kardashian Family and Justin Bieber as neighbours, all of whom I’m sure love their privacy.

So, where does that leave us in Tenerife?

A quick search of properties for sale in the south of Tenerife reveals that there’s isn’t anything for sale of 1.700m2…but hang on, I’m sure we can still satisfy Mariah.

I’ll have to admit that I haven’t seen any properties with a full size basketball court but I have seen plenty of villas with gyms, saunas, swimming pools, massive garages and fabulous views.

We’ve got one for sale ourselves, it’s big at 625m2 but would still fit 2 to 3 times inside her rented place, it’s got great views and an infinity pool which makes the most of the views out to sea and La Gomera but at 5 bedrooms…but with 5 bedrooms and just over 600m2 – is it big enough for Mariah?

This fantastic villa has a gym and a sauna, a garage large enough for 4 or 5 cars and it’s secure with steel shutters and alarms…but as the Google car has been allowed past the house on the road outside…is it secure enough for our Mariah?

The kitchen is fabulous, a chef’s delight…oh and it’s got a great island too, but I must confess, there’s no island in the bathroom like her previous home, so is it luxurious enough for her?

And priced at less than €3 million, that’s pocket change for her, is it expensive enough to meet her tastes?

There’s only one other property that springs to mind, I’ve never been there, I doubt I ever will…if I do, I’ll let you know…but the one I’m thinking about is the Castle in Bahía del Duque.

You know the one, the one that’s on that bit of land that juts out into the sea in Bahía del Duque.

This one…

Owned by Santiago and Noelia Puig both massive land owners here in Tenerife and she a 60’s beauty queen.

It’s not for sale, well, not that I know of and if it was, I don’t know how much it would be up for.

I haven’t got a clue what’s behind the doors regarding the number of bedrooms, if it’s got a gym and sauna…I just don’t know.

it’s definitely got a pool, I can see that from the Google Maps overhead shot and it certainly looks exclusive enough, so maybe it could fit the bill for Ms Carey…

Well, Mariah, if you’re reading this article and you’re thinking about buying a villa in Tenerife and you think you might want to see some property that might suit you…let me know…you know where you can find me…

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.

How much is my property worth in Tenerife?

How much is my property worth in Tenerife? – A question that arises quite often in my world.

If you’ve sold a property in the UK over recent years, you’ll have heard of Zoopla. On this site and maybe some others do it now as well, there’s data about how much the houses in your particular road sold for over the last few years – I’ve just looked at their website and seen that some records go back even 20 years.

So, the question is, how much is my property worth in Tenerife and how do you work it out?

Where can you get up-to-date pricing for a property that’s for sale in Tenerife?

There’s nothing like Zoopla in Tenerife – if only. You see, the thing is that over the years there’s been too much black money or under the table payments when buyers and sellers have been at the notary it skews the figures they produce.

If you agree to buy a property from the seller for €150.000 but the seller wants to declare that they’re selling it for €125.000 on the title deeds that get signed at the notary, the buyer must stump up the extra in black money – cash.

This leads to notary offices reporting the value of properties to the Land Registry office as they see them…and in the example I made above, the property was sold for €150.000 but reported as €125.000 – you see the problem? Even if we here in Tenerife or Spain had something along the lines of the data that Zoopla provides for the UK market, there would still be a marked difference between the true and reported sales values.

Now, as an estate agent I don’t like the black money thing at all because it leads to a number of potential future problems for the buyers and possibly sellers, here’s not the place to discuss that but the problem of black money still goes on and until we get this out of the way there’s no way to get around it, but even if it was stopped tomorrow, it would still take years to build up a good database of sold property values in Spain.

So, can we actually get a good idea of property prices and if so, from where?

There are a number of ways that you can get an idea of prices but do we look at asking prices or do we look at supposed sales prices?

As you’ve already seen, prices that are recorded at notary offices and Land Registry offices can’t be relied upon 100% but it’s a good place to start.

You could always look at the General Council of Notaries – (http://www.notariado.org/liferay/es/web/notariado/inicio) – to start with. They offer a website in Spanish and English and you can come up with some metre squared figures for municipalities. so maybe a good place to start but of course, taking the figures with a pinch of salt.

There’s always the National Institute of Statistics or in Spanish, Instituto nacional de estadisticas – (http://www.ine.es/en/welcome.shtml) – this website is a government run site giving statistics for all things Spanish, including their take on property prices in Spain and the Canary Islands. I imagine that they get their prices directly form the Land Registry offices, who in turn have been told their values by the notary offices – OK, and we already know what goes on there.

You could try the website for the Bank of Spain (http://www.bde.es) – again, figures from the Land Registry offices I guess, so probably similar to the other two sources above.

Tinsa is an independent property valuation company – (https://www.tinsa.es) – and they get asked to go out and value property by banks for mortgages so surely these guys will have a better idea. Well, the thing with this is, since the credit crunch and the big crash of 2009, banks and valuers have been a little on the careful side in recent years, valuing property at very safe numbers just in case it happens again, so although they’ll provide us with figures, they’ll be a lot less than the actual selling prices of the properties.

One thing we could think about would be asking prices. We all know that you’re unlikely to pay this price but it would give an idea of the prices people are asking for their properties in Tenerife and then we could gauge it by maybe making an assessment that the actual selling price could be the asking price less say 5 or 10%…maybe that’ll work.

The problem with that system is that some people may have a mortgage that needs paying off on their property and their asking price is based on the fact that the mortgage has to be paid off and then on the other hand there may be some people that are really motivated to sell and their price is a lot keener, so there’ll be a bit of a difference.

In fact, based upon asking prices Idealista, (https://www.idealista.com/en) – one of the property portals for Spain including Tenerife have, over recent times has developed a system where their website users can make an offer on a property and they’ve been collating the asking prices and the offer prices. They now have some quite usable data of the properties that have been advertised on their portal, in fact I think that Kyero – (https://www.kyero.com/) – another property portal has been doing the same and they’ve also got some data too.

So, is there an answer to – How much is my Tenerife property worth?

Of course, the easy answer is – “As much as someone is willing to pay for it” but that’s a very short and unhelpful answer.

You need to take a lot of things into account and as I said earlier, it’s not really that easy.

Of course, there are other things that need to be taken into account. It’s all very well for the valuers and the notary offices to tell us the cost per square metre in Tenerife, but that doesn’t narrow it down as much as the data on Zoopla in the UK does. They’ve got some really awesome data, showing the postcode and at times being able to boil it down to road number too.

Here in Tenerife, there are loads of things we still need to think about apart from the obvious number of bedrooms…

What condition is it in?

What complex is it?

Sea or pool view or maybe no view at all?

Town or countryside?

All of those things will have an impact on the value of the property, so how do we go about assessing the value of the property we have to market?

Of course we have the data of the properties that we have sold personally in the area, also we get to know the areas that we sell properties in, so we get an idea from that. We can also use general asking prices for properties in the area that other agents have for sale.

It’s not a certain clear-cut way of doing it for us agents in Tenerife, there’s always room for error, whereas the local estate agent in the UK will be able to use Zoopla and find information on the last 3 properties that sold in that street but if we can get away from the black money thing – all the better and then, maybe in the future, we’ll be able to reliably use the figures that the notary offices register and maybe we’ll be able to have our own Zoopla type figures.

Roll on the day…