Spain emerging as top investment for South Africans

Source: MoneyWebb, 02/10/2017

As more South Africans look to invest in property abroad, Spain’s
golden visa programme is offering them one of the best deals in global
real estate.
With the Spanish property market in full growth phase and Spain’s GDP
growth nearly double the Eurozone average at 3.2%, Spanish real estate
is emerging as a strong investment for foreign nationals.
For South Africans looking to buy property overseas, the benefits of
investing in the Spanish market are two-fold; buyers can make a return
on their investment and can easily rent their second home to either
locals or the millions of tourists who visit Spain each year.
But even more appealing than the financial returns of Spanish property
is Spain’s decision to grant residency permits to non-EU citizens who
buy property worth 500 000 euros or more. Spanish residency permits
are extended to the property owner’s spouse and children.
Although the high price tag limits Spain’s golden visa programme to
the wealthy, Spanish residency permits give South African families the
ability to travel visa-free to Spain and within the Schengen zone,
access to some of the finest schools, universities and healthcare
systems in the world and establish or expand their business in the
stable European economy.
What should investors be aware of before investing?
As with any overseas investment, there are tax implications associated
with buying foreign property from South Africa that investors should
be aware of before diving into Spanish real estate.
Under current legislation, South Africans are only permitted to take
R10 million out of South Africa each year, equivalent to just under
630 000 euros. Whilst this is more than enough to cover the cost of
buying a 500 000 euro property and securing Spanish residency, it is
something for investors to bear in mind should they wish to purchase a
more expensive property.
Investors should also be aware of local taxes before purchasing
property in Spain. In Spain, these taxes include IBI tax (Impuesto de
Bienes Inmuebles tax �" the local property tax), income tax, wealth tax
and community owners tax. IBI tax, community owners tax and income tax
are all comparable to municipal taxes and tax on rental income in
South Africa whilst wealth tax only applies to properties over the
value of 700 000 euros, making it worthwhile for investors to stay
below this threshold.
Sergio Codonyer, managing director of Door, believes that despite the
tax implications of buying property overseas, we will see a rise in
the number of South Africans investing in Spanish real estate.
“The costs associated with investing in Spanish real estate apply to
all foreign markets, every country in the world has some form of local
property tax. With the Spanish property market booming and the many
benefits attached to Spanish residency, I think the opportunities
Spanish real estate can open to South African clients far outweigh the
cost of local taxes.”
Where and how to invest
For South Africans looking to invest in Spanish real estate, the best
markets are Catalonia and coastal Spain due to their booming tourist
industries and the rising capital growth of properties in the areas.
Barcelona is especially popular among investors due to the high demand
for rental properties and the projected 7% rise in value of Barcelona
property for 2017.
Investors should be sure to do their research and visit Spain before
investing in Spanish property and should consult with a lawyer and a
trusted local estate agent at all stages of the process to ensure that
they are being properly assisted with local law, tax and residency issues.
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