Property purchases by ex-pats have again recorded: over 61,000 houses in 2017

The growing arrival in Spain of ex-pats not only benefits the tourism industry but also stimulates the property market. In 2017, foreigners acquired more than 61,000 homes, mainly in the islands and the coastal provinces. Ex-pats acquired 13,11% of properties that changed hands last year, according to data from the Spanish register, with British, French and German leading the way. pearl

The acquisition of properties by foreign buyers was record numbers. More than 61,000 transactions closed last year, 13.11% of the Registry's total number of transactions. Although the percentage of transactions they bought in 2016 was lower than that of 13,25 percent, the number of transactions that were recorded that year was nearly 54,000.

"Foreign demand was an important factor not only in the recovery of the Spanish property market, one of the principal centres, but also in the middle of the recovery process with rising transactions and prices in which external demand is increasing actively," states the Property Statistics Registry.

The British continue to be at the forefront of ex-pats who choose to buy property in Spain, accounting for 15,01% of foreign national transactions. Following that are the French (8.64%), the Germans (7.77%), the Belgians (6.39%) and the Swedes (6.38 percent ).

"The profile of foreign purchasers is primarily derived from nationalities associated with the purchase of tourist properties in Spain. This fact is demonstrated not only by the leading nationalities but also by the geographical composition of the coast areas, where the highest demand is," the Registry says.

Where ex-pats purchase houses (4th quarter data)

The attractive thing for foreigners about Spanish properties is clearly sun and sand. Not surprisingly, once again, the coastal provinces have the highest number of transactions involving foreigners, especially in the Mediterranean and in the islands.

In data from the fourth quarter of 2017 (not having detailed annual figures), foreigners accounted for the larger percentage (more than 30%) of total operations and 14 regions recorded two digits as well in terms of the importance of the other nationalities in sales closed for the year in five Spanish Provinces: houses in Alicante (42.47%), Tenerife (38.75%), the Balearic Islands

ITP: what it is and how it can be processed

In English, the Impuesto sobre Transmisiones Patrimoniales (ITP) and Actos Jurídicos Documentales, is an indirect tax applied to expensive transfers of land, i.e. exchange of wealth or assets among living persons (such as the purchase or sale of a car, renting a house, payment for use of land, etc.). It is not applicable as an inheritance in cases of transfer of capital or assets.

Common Conditions

Passive subject of the tax: the person who uses the capital, normally the buyer or the renter, and the person who has to pay the duty.

Taxable basis: this is the total value of the transferred capital used to calculate how much tax is due and whose rate changes according to the Autonomous Community and Territory. Taxable basis:

ITP on buying, selling and renting

Buying or selling a second-hand property: In order to calculate the amount of ITP payable, it is necessary to adhere to the rules imposed on passives or property by the autonomous community.

The percentage is calculated using the taxable base of the asset. In this case, the taxable rate used is the financial value to be calculated for each autonomous community in the same way as the internal taxation agency.

The applicable percentage differs in each Autonomous Community and is usually between 6% and 10%, although some exceptions exist. In some communities, the financial or family situation (e.g. large families) of a buyer or the value of the asset may vary (e.g. protected properties vs. luxury properties).

House rental: the rental of a property between two is considered to be an expensive transfer of property within a limited period of time. In order to be official, the tenant has to pay the ITP and receive his rights to use the property.

The taxable basis shall be the rental price for the whole duration of the contract. For example, the taxable base would be 36,000 euros for a monthly rent of 1000 euro for 3 years. The amount of tax to be paid is based on the percentage set by the autonomous community on the taxable base, as in the case of the purchase or sale.