Article copyrighted © 2020. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Lawyer - Abogado
12th of February 2020
Spain has one more year pulverized its own records; for the fifth year in a row rental prices climbed 5.1% YOY. But that’s not all, the price per rented square metre has reached unprecedented levels since 2007! Source: El Mundo daily. Given how rental yields have soared year-on-year across the board over the past five years, this has translated into a 50% increase, which is quite substantial. The average annual rental yield in Spain equates to 5% of a property’s value.
As we published back in October 2019 (8 Tips for Buy-To-Let Success), Buy-To-Let in Spain has proven a very successful investment for savvy investors. Scores of landlords make large amounts every tax quarter. You can realistically expect to rent out nine months a year in Spain as a holiday rental, with huge landlord tax breaks of 70%, or more, on (rental) income tax. This lenient tax relief also extends to non-resident landlords.
The rental money can be used to offset overheads and maintenance expenses, including mortgage repayments. No other investment is giving a 5% yield/year safely.
But that’s not all, it only gets better!
Besides soaring rental yields, you also need to factor in the capital appreciation of property (the increase in value of real estate over time). Properties in Spain have seen their value increase over the previous five years at an average rate of 5% pa. Source: Moody’s
Pro-tip: When you combine both soaring rental yields and capital appreciation, you reach the conclusion that Spanish real estate is giving a safe two-digit return year on year. In plain English, that's over a 10% yield every year safely. This is ideal for retirees who are afraid of sharp stock market fluctuations and seek a save investment in bricks for their pension pot.
At Larraín Nesbitt Lawyers we can represent you buying properties and dealing with their non-resident taxation. We can also put you in touch with other reputed professionals that will assist you to choose and make the most out of your property portfolio, maximizing your ROI.
"Leave nothing for tomorrow which can be done today." – Abraham Lincoln
Self-taught American lawyer, strategist and politician who would rise to serve as the 16th US President. He resolutely ensured a pro-Union victory, strengthened the federal government, modernized the economy, brought about the emancipation of slaves and preserved the Union. A true statesman that would always put ahead of any consideration the best interests of his people, by tearing down divisive walls and fostering at every opportunity union. Likely the greatest American of all time, towering above the rest.
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