taxes, housing and sun

It is during the tax payment period when questions about taxes affecting assets like second residence arise; for that reason, this is the time to clarify such questions.

Many people wish to buy a summer house, best known as a second residence, but it is not clear for them how the tax issue works for this type of property.

Let´s check in some issues to slowly make concepts clear.

What is a second residence?

It is a real estate that is not a primary or normal home, instead, it is a place for spare time or entertainment.  That is the reason why beach houses are among the most desirable real estates for this objective.

What is the income tax procedure for second residences?

Last legal changes were made in 2015, with an income tax increased payment.

In the case of taxpayers who have a second residence, they must pay between 2 % to 1,1 % of its cadastral value. This rate must be included on the tax base of the Income Tax for Natural Persons (IRPF for the local “Impuesto Sobre La Renta de las Personas Físicas”).

Are summer house purchase costs deductible?

Since January 1, 2013, deductions for house purchase costs are not possible. However, prior deductions were suitable only for buying usual homes, not for second residences.

It is based on the idea that whoever buys a second residence has a higher economical capacity than, those not buying at all, thus a different tax procedure is applied.

Rent Deductions

In general terms, purchase costs are not suitable for second residences´ tax deductions, thus, they may be suitable if such residence is for rent.

In this case, the following costs are deductible from the rent income:

  • Mortgage interests.
  • Repair and maintenance expenses.
  • Property Tax (IBI for local “Impuesto sobre Inmuebles”) and rubbish collection fee.
  • Neighborhood organization receipts.
  • House insurance.
  • Mortgage payments.

The deduction results from the difference between rent incomes and house expenses.

If rent is a usual rent and not a vacation rental, deductions may be estimated up to 60%.

That is why it is interesting to think about the choice of renting the house during the periods of time when we are not using it. This is the only way to get some deductions from Income Tax.

Having a second residence is still a good choice.

Even taxes for a second residence are always higher than the normal residence taxes, up to date the purchase of a summer house for spare and family time is still a good decision to take.

The first step is to pick a good area.  In Spain, Costa del Sol is one of the most attractive areas to buy.

The weather in this area is pleasant all year long, and sunlight hours are enjoyable even during winter. Besides, summer is ideal for daydream beaches, and several recreation and entertainment deals are available for all ages and preferences. 

Buying a house in this area is one of the best investments if your plan is to rent the house during the time you are not living on it.  Rents are usually higher than in other areas, which allows you to get the best profits for your investment.  In fact, this area has one of the highest demands for temporary rents during summer and winter.

The clarity of your priorities and the knowledge of the area are the key to the best selection of your second residence. That is why an expert advisory is useful for this situation.

At Allee Spain, our priority is you; so, if you are considering the purchase of the second residence at the Costa del Sol area, or, move there your residence, we are available to help you find your dreamed house.


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