Please also note that some countries have a wealth tax, on the value of your real estate or even on your capital assets. If the value exceeds the available exemptions and allowances, then you may have to pay some new annual taxes, said Jason Porter of Blevins Franks.
“For a UK couple who only own a holiday home, exemptions of €1.3 million in France, €1.2 million in Portugal and €2 million in Spain should mean no tax will be paid on the Heritage. But, if the value exceeds these amounts, then respective rates of 0.5 percent, 0.7 percent and 0.2 percent will apply.”
Do you want to rent your house for vacation rental? Non-resident owners in Spain will now pay 24% tax on gross rental income, without allowing deductions for expenses. Meanwhile, EU residents have a reduced tax rate of 19% with the ability to deduct expenses.
Rent to wash your face
Double the houses, double the running costs.. Amid rising living costs, holiday home owners are increasingly looking to rent out their properties when not in use to offset higher energy bills or mortgage costs.
If profitability is key, consider location, seasonality and climate – how will performance stack up?
Golf and mountain homes tend to offer more weeks than summer-only resorts; Places with mild winters offer rental opportunities to “snowbirds,” a term used for those looking to escape the cold climate of home in the colder months. These have become increasingly popular on the Costa del Sol, reports local agent Panorama Properties in Marbella.
To make optimal use of the property throughout the year, look for areas that attract many nationalities and who visit at different times.
Don’t make the mistake of buying a property to rent out without your lawyer verifying that you can do so legally. Some properties in Spain may come with holiday rental licenses, others may not, and you may not be able to apply for a new one. For example, in the Balearic Islands there is a moratorium until 2026. Additionally, individual buildings or complexes could prohibit Airbnb rentals.
Research what types of properties rent well. Historic town houses or apartment buildings are more popular if they have an elevator and outside space, for example.
You can find out how much you could expect to earn by entering the address into short-term rental portal AirDNA’s Rentalizer calculator and get a projection based on similar properties in the area.
Running costs: buyer beware
Renting your property can cover your expenses, but you need to keep an eye on the bottom line. What are the community fees if you buy in a managed complex? Buying in a development with a leasing group in place can save you the hassle of finding a good managing agent, but always ask about annual fees before you buy.
Keep in mind that anything that offers a “guaranteed rental return” will usually include it in the purchase price.
Facility Energy efficient features can reduce costs, especially solar panels. New developments such as Ombria Resort in the Algarve (geothermal system and vacuum solar panels) and Elounda Hills in Crete (a new sustainable community) are among those aiming to reduce homeowners’ energy bills. Some buyers are choosing not to have private pools due to the expense involved.
Easy access to all areas?
Accessibility is increasingly important, as rental property owners and rental agents report a trend toward people taking frequent but shorter breaks, meaning visitors may be less willing to put up with inefficient trips. from the airport, for example.
For weekend homes, aim for areas that are within an hour of an airport (or, better yet, two airports) and check flight paths and seasonal changes – can you fly there during the winter?
Driveability is increasingly popular with carbon-conscious people or dog owners. Buyers could consider areas of north-west France accessible by car or ferry, such as Brittany, Normandy or Charente, or with a Eurostar connection, such as Provence.
Portes du Soleil resorts in the French Alps have become more popular both for their easy access from Geneva and their summer appeal, says Giles Gale of Alpine Property Finders.
How much time can you spend there?
Another important check to make concerns visa and residency rules – are there restrictions for non-resident buyers? You can stay up to six months in Florida or Barbados, for example, but in EU countries British citizens are subject to the 90-day rule.
Applying for a temporary visa to spend more time in France each year is a cumbersome process, but there is a system to do it.
Also note that the status of so-called “golden visas” (residence permits offered with a real estate investment) changes continuously. Portugal’s will end this year, while Greece’s threshold is doubling in certain areas/islands.
Prepare your property for the future
If you are considering your property as a long-term investment, be aware that some areas abroad offer more liquidity than others. Being able to sell to buyers of half a dozen nationalities (his exit strategy) insulates him from the whims of just one or two economies. Developer Taylor Wimpey Spain sold its Spanish resort homes to 42 different nationalities last year.
Your long-term plan could also include capital gains. If emerging places like Montenegro or Turkey don’t appeal to you, consider them locally.
On the Costa del Sol, properties in Estepona cost an average of €5,000 per square meter, compared to €9,000 in nearby Marbella, according to Knight Frank Research. Your money will also go further in the Western or Eastern Algarve than in the Central Algarve.
Preparing for the future also means anticipating climate change. Some buyers say they are choosing northwest France – or the Alps – to avoid the scorching summers in the southern part of the country or Spain. If you’ve endured the last few 45-degree days in southern Europe, this one might resonate.