Buying a second home in Spain
Acquiring a second residence different from the usual one in Spain is one of the dreams of many who yearn to have a house in front of the sea or in the countryside, near our family village.
We should also know that Spain is one of the countries with the highest number of second homes. The European Central Bank (ECB) indicates that 36.2% of families have a second home, a percentage that is only surpassed by Cyprus with 51.6% and Greece with 37.1%.
In Font Real Estate we have a wide variety of luxury homes in Girona, Costa Brava, and the Maresme area that could become that house you dream of. In this post, we want to tell you what you should know before buying a second home in Spain.
Differences between first and second homes
Nowadays, it is very common to hear the terms “second homes” or “second residences”. People prefer to telecommute more comfortably from their second home in the country or at the beach. But what exactly are first and second homes?
The “first residence”, also called “habitual residence”, is the first property that we buy, generally to live in, to establish ourselves in a home with a family, and for which it is possible to obtain it through a mortgage in order to be able to pay it over the years.
When you already own a home, we speak of a “second home” whether it is an apartment or a house as an investment (for example, to rent it out), or for holiday use, generally in the countryside or in coastal areas.
The main differences are tax deductions, the type of mortgage, the maximum financing given by financial institutions. Mortgages for second homes are the type of mortgages that a non-resident may apply for since a person who does not reside for tax purposes in Spain cannot constitute his or her habitual residence in the country. A non-resident can never take out a mortgage for a principal residence.
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Requirements for buying a second home
We must emphasize that the requirements for a second home mortgage are more demanding than for a first home, since it is riskier. These requirements are:
To maintain two houses supposes a great expense, reason why it is necessary to justify a higher income than with the habitual house.
In the case of the first home, it is usual to grant up to 80% of the appraisal, even more in certain cases. When asking for a second mortgage, this can go down to 60% or so, so that you have to provide more equity in order to be granted the mortgage.
Second-home mortgages have a shorter repayment term. At most between 20-25 years.
The requirements to be granted a mortgage are tougher, being higher than those of your regular home.
In addition to this, it is obvious that you cannot have any unpaid or overdue debts. Ideally, you should have paid off your first mortgage, although a good credit history is usually sufficient.
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My second home in Spain: Facts You Must to Know
If you are interested in buying a second home, these are the aspects you should take into consideration:
Second-home: Can it be a primary residence?
For the purposes of the Tax Agency, a habitual residence must meet certain conditions:
You have to live in it for more than three years.
- You must prove that you have effectively lived in this dwelling for no less than 12 months since the work was completed or since the date of purchase.
- In effect, a second home can be a primary residence. For income tax purposes, it is advisable to be careful, since only the main residence is tax-deductible.
In addition, the AEAT (Tax Agency) studies certain details of the citizen who tries to include more than one dwelling to be tax-deductible. It will look at the census registration, the energy consumption during the year, etc. If errors are observed, a problem could be incurred that could be accompanied by a penalty.
The current limitations to travel to other destinations, especially international ones, have increased the interest of families in owning a second home in Spain as a safer holiday destination. This phenomenon gives greater long-term profitability to this real estate investment and indicates that rental demand could grow in the coming years, something you could benefit from in your second home.
How many times have you had to leave the house a day before the end of your vacation because you had to return the keys? If the residence is yours, you won’t have to worry about reservations, prices, or time. Therefore, having your own home gives you more freedom and there is nothing better than that on vacation.
Spain second home tax
Another aspect is the tax implications of owning a second home in Spain. The taxation in second home is different from that of a regular residence. In fact, being an owner implies the obligation to make an imputation of income in the IRPF declaration, equivalent to 2% of the cadastral value of the property (or 1.1% if the value has been revised in the last 10 years). It also adds the payment of the receipt of the IBI (Real Estate Tax) every year.
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Best towns in Spain for a second/investment home
Many are considering moving to the countryside or to the beach, but others, on the other hand, will have made accounts to acquire a second home in which to spend long periods and escape, more often, the hustle and bustle of the city.
We can say that the advantages of investing in second homes outweigh the inconveniences. What, are you waiting for, buy your second home!