Tax on Spanish property purchase

Many people look to purchase overseas property for holiday use and the moment in can seem like there is a mad rush to buy an overseas holiday home. Sometimes you need to slow down and examine the facts and figures in detail. In Spain for instance, you could say why bother buying a holiday home in Spain . It costs 10% to buy, 8% to sell, your have an Inheritance tax liability and there is no exemption between spouses. You could instead buy a buy to let in the UK and go on holiday abroad on the rents. To buy a 200,000 property costs you 20,000 which can buy you a lot of holidays. Of course if your're successfull in renting it out this alters the figures but don't be fooled - rentals can be difficult to obtain inspite of what the estate agents say. So you may say what are the benefits. Well in tax terms, (and this is a tax blog) the main issue will be capital gains. Overseas gains even in Spain can be huge - and this is one of the key reasons for overseas property ownership. Someone I know for instance bought a property for 300,000 Euros in November, was in the process of putting a pool in, and was offered 350,000 for it 2 months later. A 50K uplift in 2 months is a huge return. You need to take into account the acquisition costs though. Although the purchase cost was 300,000, the acquisition costs would be another 30,000. In addition the pool will have cost 15,000-20,000 so in reality he's only covering his costs. In terms of structuring property purchases overseas to minimise taxes there are lots of considerations. Members should look at articles such as THIS