Thinking of buying?? Is it worth it??

[mallorcaboy]

Here’s an interesting question. Is owning a property in Puerto Pollensa (or Spain in general) a “good investment?”
We paid around €135000 for our one bed apartment in Pinaret in 2018. Add to that the 10%, or in our case 11% legal costs. (around €150000)
We don’t rent, so no income, which in my view would be fairly minimal when you factor in that we want to be there as much as possible (we’re retired), your tax liability, additional maintenance etc. Plus living in the Covid era reduced any renting possibilities. This may change, but who knows to what extent (You may feel differently to this, but the hassle and stress would be a nonstarter to us)
Wealth tax payable yearly on a non rental for our apartment including solicitors fees completing our tax return is around €340, additional costs like insurance, community charges etc around €450. Electricity charges aren’t easy to understand even if you are a seasoned owner, but maybe around €600 a year Add to this any minor works you might need/want to do (fix that leaking tap, move that annoyingly placed socket etc), so let’s say an outlay of around €1400 per year
We had air con fitted too at €3000 but others might not want to do this
I haven’t researched the annual increases in prices but lets say maybe 5-7% a year, so over 5 years (around €170000) so that might increase your investment on paper by €15000 with an accumulated expenditure of around €6000 leaving a paper profit of around €9000
Let me add at this juncture, I am being very approximate with these figures. There is compound interest etc which, as I have not calculated this may or may not annoy you (sorry about that if it does) I also may have overlooked something major which might alter these figures dramatically one way or another, who knows, I’m sure you’ll point them out

Of course you need to add outgoings like, actually travelling to and from your property from UK, plus spending money whilst there. You might say, “well we go on holiday anyway”, but I can assure you, actually having your own little home there, and having the odd “cheeky weekend” is going to be a difficult temptation to resist
When you come to sell, you’re going to pay maybe 5% to the Inmobiliaria, and Capital Gains Tax on any profit.
So I would say financially, not a brilliant investment, particularly when you consider the large amount of capital you put in. Also, if you are getting a mortgage, obviously that will impact these figures dramatically.
Having said this, there is one element that totally swings it in favour of owning a little place there…and that is that you own your own little place there . We get huge pleasure from just being in our “own home” 200 meters from the beautiful bay. You’re not renting, you’re owning. It’s not a two week holiday, it’s spending quality time in your home. For us, being able to spend long periods (well 90 days in 180 since Brexit) and forgoing the 14 night eating out, is by far outweighed by the lovely evenings strolling up to the sea front in cut downs and an old t shirt after a day of painting a bedroom, or sorting out some cupboards, then stopping at the local bar, Bar Bondia in our case, for a beer or a coffee with other owners who have become lovely friends
You may feel very different to us. You may have had experiences that are totally opposite to ours, and for that, we are very sorry. You may see the figures differently to ours, I mean I’ve only owned property in PP for 30 years, so I might be wrong , but my advice to anyone who has thought of owning and is teetering, do it. You may regret it, but I doubt it

 

[bobley]

I agree with you 1000%. I'm not retired, I only get to stay 5-6 weeks a year at best and I bring my work with me sometimes but I'm just so happy to hide away from all the %$£ just for a few days. Looking scruffy and heading to the pub after a bit of DIY is a speciality of mine.

P.S. Have you ever worked out what your none rental tax actually is? I also pay via the solicitor but in return he does give me the odd bit of advice via email...

I've been home 2.5 weeks now and I've broken my golden rule of always having my next trip booked before leaving Pollenca!!

 

[mallorcaboy]

I agree with you 1000%. I'm not retired, I only get to stay 5-6 weeks a year at best and I bring my work with me sometimes but I'm just so happy to hide away from all the %$£ just for a few days. Looking scruffy and heading to the pub after a bit of DIY is a speciality of mine.

P.S. Have you ever worked out what your none rental tax actually is? I also pay via the solicitor but in return he does give me the odd bit of advice via email...

I've been home 2.5 weeks now and I've broken my golden rule of always having my next trip booked before leaving Pollenca!!

No I’ve never worked out what the tax is net of my solicitor’s fees. To be honest I wouldn’t want to do a Spanish Tax Return myself, although I have friends who do and say it’s straightforward. Just lazy I guess

 

[Rockape]

It was slightly unusual circumstances that made us buy our place at the end of 2017. I had brought my young family out to PP three times in the early 2000's and used look longingly at properties at the time. Then, we started doing the AI holidays in places like the Dom Republic, Turkey and Mexico and slowly forgot about PP.

In 2017, I thought we should buy a place in North Devon that we could do up, rent out and eventually spend a lot of our retirement there, but my wife said she didn't want to spend long winters in Devon, she wanted to be somewhere warm (er)! So I thought....hang on, what about PP and started to look online at what was available. a few weeks later we were on the plane (Late Oct) and arrived to a few days of glorious weather, which obviously sealed it. By the end of December, we were the owners of a rather tired Townhouse close to the beach.

Almost from the moment I signed on the dotted line, my business had a major downturn and I spent the next few months wondering what I had done! But fortunately things turned around and we've now managed to get the place up to scratch and are loving it. I recently took some old mates out for a six day trip and they were in no doubt I'd done the right thing.

Its definitely not for the faint hearted, but just knowing its there waiting for our next trip does give you a warm feeling inside. Is it worth all the money? I suppose if you have the money spare then for us, definitely, but if you have to scrimp for it, possibly not!

 

[alcanadakid]

Dont forget the impact of the exchange rate which can dominate any loss or gain.

We were fortunate to buy in 2004 when the exchange rate was 1.53, so that transcribes to a 33% gain in sterling terms before the other factors are condidered.

 

[Disorderly]

Two weeks villa rental in the summer for our family of 6 adults and 3 children would run to over £8,500, which is about what our three bed apartment with roof terrace and shared pool (with 3 others) and running a car out here costs for the whole year. Being able to come over whenever we want (Covid allowing) is a great boon. We bought in 2018 and in a usual year the family collectively get 20 odd weeks use out of the place. Even last year we got five trips in and are currently here for our second fortnight this year. Without the apartment we simply wouldn’t be here.

 

[Gooner Jon]

Here’s an interesting question. Is owning a property in Puerto Pollensa (or Spain in general) a “good investment?”
We paid around €135000 for our one bed apartment in Pinaret in 2018. Add to that the 10%, or in our case 11% legal costs. (around €150000)
We don’t rent, so no income, which in my view would be fairly minimal when you factor in that we want to be there as much as possible (we’re retired), your tax liability, additional maintenance etc. Plus living in the Covid era reduced any renting possibilities. This may change, but who knows to what extent (You may feel differently to this, but the hassle and stress would be a nonstarter to us)
Wealth tax payable yearly on a non rental for our apartment including solicitors fees completing our tax return is around €340, additional costs like insurance, community charges etc around €450. Electricity charges aren’t easy to understand even if you are a seasoned owner, but maybe around €600 a year Add to this any minor works you might need/want to do (fix that leaking tap, move that annoyingly placed socket etc), so let’s say an outlay of around €1400 per year
We had air con fitted too at €3000 but others might not want to do this
I haven’t researched the annual increases in prices but lets say maybe 5-7% a year, so over 5 years (around €170000) so that might increase your investment on paper by €15000 with an accumulated expenditure of around €6000 leaving a paper profit of around €9000
Let me add at this juncture, I am being very approximate with these figures. There is compound interest etc which, as I have not calculated this may or may not annoy you (sorry about that if it does) I also may have overlooked something major which might alter these figures dramatically one way or another, who knows, I’m sure you’ll point them out

Of course you need to add outgoings like, actually travelling to and from your property from UK, plus spending money whilst there. You might say, “well we go on holiday anyway”, but I can assure you, actually having your own little home there, and having the odd “cheeky weekend” is going to be a difficult temptation to resist
When you come to sell, you’re going to pay maybe 5% to the Inmobiliaria, and Capital Gains Tax on any profit.
So I would say financially, not a brilliant investment, particularly when you consider the large amount of capital you put in. Also, if you are getting a mortgage, obviously that will impact these figures dramatically.
Having said this, there is one element that totally swings it in favour of owning a little place there…and that is that you own your own little place there . We get huge pleasure from just being in our “own home” 200 meters from the beautiful bay. You’re not renting, you’re owning. It’s not a two week holiday, it’s spending quality time in your home. For us, being able to spend long periods (well 90 days in 180 since Brexit) and forgoing the 14 night eating out, is by far outweighed by the lovely evenings strolling up to the sea front in cut downs and an old t shirt after a day of painting a bedroom, or sorting out some cupboards, then stopping at the local bar, Bar Bondia in our case, for a beer or a coffee with other owners who have become lovely friends
You may feel very different to us. You may have had experiences that are totally opposite to ours, and for that, we are very sorry. You may see the figures differently to ours, I mean I’ve only owned property in PP for 30 years, so I might be wrong , but my advice to anyone who has thought of owning and is teetering, do it. You may regret it, but I doubt it

Just reading this with interest as someone who in the future would interested in buying g property in Mallorca. Do you have to declare to HMRC

Here’s an interesting question. Is owning a property in Puerto Pollensa (or Spain in general) a “good investment?”
We paid around €135000 for our one bed apartment in Pinaret in 2018. Add to that the 10%, or in our case 11% legal costs. (around €150000)
We don’t rent, so no income, which in my view would be fairly minimal when you factor in that we want to be there as much as possible (we’re retired), your tax liability, additional maintenance etc. Plus living in the Covid era reduced any renting possibilities. This may change, but who knows to what extent (You may feel differently to this, but the hassle and stress would be a nonstarter to us)
Wealth tax payable yearly on a non rental for our apartment including solicitors fees completing our tax return is around €340, additional costs like insurance, community charges etc around €450. Electricity charges aren’t easy to understand even if you are a seasoned owner, but maybe around €600 a year Add to this any minor works you might need/want to do (fix that leaking tap, move that annoyingly placed socket etc), so let’s say an outlay of around €1400 per year
We had air con fitted too at €3000 but others might not want to do this
I haven’t researched the annual increases in prices but lets say maybe 5-7% a year, so over 5 years (around €170000) so that might increase your investment on paper by €15000 with an accumulated expenditure of around €6000 leaving a paper profit of around €9000
Let me add at this juncture, I am being very approximate with these figures. There is compound interest etc which, as I have not calculated this may or may not annoy you (sorry about that if it does) I also may have overlooked something major which might alter these figures dramatically one way or another, who knows, I’m sure you’ll point them out

Of course you need to add outgoings like, actually travelling to and from your property from UK, plus spending money whilst there. You might say, “well we go on holiday anyway”, but I can assure you, actually having your own little home there, and having the odd “cheeky weekend” is going to be a difficult temptation to resist
When you come to sell, you’re going to pay maybe 5% to the Inmobiliaria, and Capital Gains Tax on any profit.
So I would say financially, not a brilliant investment, particularly when you consider the large amount of capital you put in. Also, if you are getting a mortgage, obviously that will impact these figures dramatically.
Having said this, there is one element that totally swings it in favour of owning a little place there…and that is that you own your own little place there . We get huge pleasure from just being in our “own home” 200 meters from the beautiful bay. You’re not renting, you’re owning. It’s not a two week holiday, it’s spending quality time in your home. For us, being able to spend long periods (well 90 days in 180 since Brexit) and forgoing the 14 night eating out, is by far outweighed by the lovely evenings strolling up to the sea front in cut downs and an old t shirt after a day of painting a bedroom, or sorting out some cupboards, then stopping at the local bar, Bar Bondia in our case, for a beer or a coffee with other owners who have become lovely friends
You may feel very different to us. You may have had experiences that are totally opposite to ours, and for that, we are very sorry. You may see the figures differently to ours, I mean I’ve only owned property in PP for 30 years, so I might be wrong , but my advice to anyone who has thought of owning and is teetering, do it. You may regret it, but I doubt

Reading this with interest as someone who’d like to buy in Mallorca in the future. It would purely be a holiday home so visits would be limited to the 180 day rule so just interested in the UK tax implications with HMRC of owning a property in Spain? Do you have to declare any property to them? Thanks

 

[James]

Just reading this with interest as someone who in the future would interested in buying g property in Mallorca. Do you have to declare to HMRC

Reading this with interest as someone who’d like to buy in Mallorca in the future. It would purely be a holiday home so visits would be limited to the 180 day rule so just interested in the UK tax implications with HMRC of owning a property in Spain? Do you have to declare any property to them? Thanks

if you receive an income from property overseas you have to declare that income to HMRC. Any tax paid on that income overseas can be set off so you don’t pay tax on it twice (overseas and in the UK) when the overseas jurisdiction has a double taxation treaty with the UK, as Spain does.

If you don’t rent your overseas property out and receive no income for it there’s nothing to declare to HMRC unless or until you sell it.

HMRC will be made aware of your ownership of assets overseas in any event by the local tax authorities under tax data sharing agreements in place.

I’ve never let my property in the Port and don’t have the intention of ever doing so but, during self-assessment in the UK one year several years ago, I faced further scrutiny due to my overseas property ownership.

 

[Gooner Jon]

Thanks James. Lots to think about

 

[Disorderly]

Thanks James. Lots to think about

We bought our place in 2018 and have never looked back. My only advice would be to see a good Spanish solicitor (we used Toni de le Cruz who was excellent) and speak with them before embarking on a purchase, so you fully understand the process. Then be sure to take advice and make British and Spanish wills to cover your assets in both countries. You can never have enough good professional advice!

 

[bobley]

I agree with the above. Once you've bought a place its quite cheap to run. My costs in Euros are as shown here... not incl servicing the car...
This is for a town house...


I'm just sorting out my tax position in the UK a the moment ready to retire. I asked my pension advisor what happens if I move a lot of cash off shore... he was sure I'd get collared for IHT anyway and was going to find out the details

PS, Actually having a Sabadell bank account to pay all the above costs me 240 a year too.

 

[Gooner Jon]

Thanks Bobley,
Do you have Air Con? You say you’re in a town house, is that in the Pollenca Old Town?
I’ve been reading up about Spanish IHT and it sounds far more complicated than ours!
Regarding your retirement, would you be retiring to Mallorca under the non-lucrative visa?

 

[bobley]

We have AC which is useful both in summer and winter (very efficient heat pumps). Over winter I'm only there 25% of the time, then in spring /autumn its more like 40%. In the summer I come occasionally but the house has been used by both my sons and their families hence why the electric bill is a bit higher. We have woodburning stoves in the living room and kitchen and AC in the 3 bedrooms. Its an old terrace house in the old the old town. You can get firewood delivered and there's a gas truck that brings bottled gas to the door on Thursday. I've only used 3 12kg bottles in 8 years as its just for the hob. Gas is €21/bottle (£1.50 / kg is dirt cheap compared to UK bottled gas at £4-7/kg).

If you lived in Pollenca you'd use the AC much less than a UK tourist as you'll acclimatise. The house is quite pleasant downstairs in the peak of the summer, you just lie down on the floor!!

The town is a lovely place to live as there is always something going on. We deliberately bought in winter so we could see how life goes on. We looked at apartments in the port and down in Llenaire but in december - feb you'd be very lonely in Llenaire. I love San Antoni and El Pi, La Fiera.... etc etc

I have a Spanish will for the house. If you leave your house to your children (as I have) then they are except from 99% of the sucession tax. I've moved my UK pension to a company called Reeves IFA ( www.reevesifa.com ) and they know about my Spanish position. I had my pension review last week and we discussed my IHT problem so they're reviewing that for me and we're going to have a review about that soon.

I'm in my early 50s so cant grab my private pension for a few years but I have a widows pension already and I plan to do a little consultancy. I dont want to live in Spain as I have parents and children in the UK who will probably need me but I do like camping/motorhoming in France so I'll def need a visa of some sort... probably digital nomad

 

[Gooner Jon]

Thanks Bobley! Very informative. Do you find those old Spanish houses suffer from damp? I often look at those old places on Rightmove and some of them are stunning particularly the reformed ones but they cost an absolute fortune. On the other scale I’ve seen some complete wrecks that look like they’ve not been inhabited for 100 years…(which still cost a small fortune )
I am of a similar age to you and looking to retire at 60 but would love somewhere to escape to.
My biggest concern would be Spanish succession/ IHT although like you state that seems to have been recently abolished in the Balearic Islands for immediate children which is good otherwise this would really put me off from buying any property.
Thanks again

 

[bobley]

We have a wee bit of damp in the house. The walls in our living room tend to create a bit of while powder which spalls off the paint in small areas. I'm fairly handy with a trowel and the bloke in the local decorating store down the street has been helpful and sold me some really good products to sram the wall without blocking its breathing ability. The bigger problem in town is termites. They can eat through all your joists and rafters in no time at all. Luckily our house is from around 1950 so its steel and concrete ( block and beam) floors. Our house was renovated in the 80s and it's had nice doors, porch and staircase fitted over the last few years all in teak so although it's a little dated, it's beautifully made and I really like it. Some of our old windows were eaten by woodworm and I've had the local guy round to fit new aluminium double glazed units but that was all an education and we met a bunch of nice l locals who helped us out. Everything you do in Pollenca is a learning curve of knowing who does what and where the go for a beer after work. The more you talk to folks, the more you learn.

I'll get back to you about IHT I'll be in Pollença from September 15th for 3 weeks if you want to come for a download and a caña...

 

[ChrisG]

Interesting to read thes posts. We looked for 2 years in Mallorca to buy….couldn't really afford anything we liked! So decided to rent to make sure we enjoyed the idea of long(ish) stinks out here. We struck gold, have a lovely apartment in prime location and would now not ever think to buy. Which is strange as my business is/was property.
Obviously the rent paid is ‘dead’ money but then interest on capital not spent sort of covers that. We are lucky to have a great landlord. Occupation is pretty much hassle free and as I struggle to see much capital growth moving forward less justification to buy if looking at capital growth.
If you can find a long term rent I would certainly suggest to anyone give it a serious thought as stress free option to buying