CLARIFICATIONS FOR FOREIGNERS ABOUT THE PURCHASE OF PROPERTIES IN SPAIN
The Spanish Government is working on legal modifications that will allow foreigners to automatically receive the residence permit, if they buy a Spanish property of more than 500.000 euro.
These could be some key points of this new measure and explain how foreigners can currently buy a property in Spain.
> Can foreigners buy a property in Spain? Do they need to comply with any type of special requirement: job, residence... to be able to buy a property in Spain at present time?
> Can i buy a property off plan or design directly and still qualify for permanent residency.
> If a foreigner buys a property in Spain but keeps living in another country, it is compulsory to pay taxes in Spain?
In Spain, there is also a Tax for non-Residents (IRNR), which tax the incomes earned by Non-resident natural persons and entities, unless they are taxpayers of the Personal Income Tax (IRPF). The permanent residence of someone living in Spain will become clear when the person spends more than 183 days living in the country during the calendar year.
However, everything will depend on whether citizens are subject to a tax liability in their own countries and on the existence of double taxation conventions. Therefore, regarding returns on property investments, we should set the tax base over the cadastral value and regarding leased properties, it should be done over the annual tax return. The general IRNR rate is 24%.
> Will the Government only grant the permit of residence to the holder of the property or will also include his/her immediate family? Who could also benefit from it?
Governments usually referred to a temporary permit of residence or to a period of extension of it. Anyway, they do not grant permanent permits of residence. Nevertheless, there are major differences among countries shown as example: Ireland and Portugal.
In Portugal, all foreigners get the permit of residence if they buy a property from 500.000 euro onwards. In Ireland, it also exists a minimum amount of 500.000 euro to get it. Furthermore, applicants are extremely evaluated due to the granting of residence is subject to a Committee decision.
Regarding the issue concerning to whether residence should be granted only to the holder, or also to his/her whole family, it should be point out that there are some proceedings and deadlines to comply with, in order to extend resident permits to the family. In Spain, family reunification is regulated by a temporary residence. However, foreigners with legal residence in Spain can apply for the permanent residence of their family members.
> If the property is sold, will foreigners lose their residence permit?
The Government may set deadlines for the residence permit's renewal by removing any type of speculation in the short-term, although what we intend to do is to help real estate's properties to be sold. Regarding permit of residence renewal, we expect that the same proceedings will still be applied in the future. Currently, when you want to renew a permit of residence, of no matter which type, you should go to the correspondent foreign office 60 days before your permit's expiration, and up to 90 days after the permit had expired.
In this regard, it is important that the Government defines the nature of the permit.
A temporary permit of residence enables a staying of 90 days to 5 years in the Spanish territory. There is a first granting of one year residence, which can be renewed. In general terms, and leaving out exceptions, after five years of continuous temporary residence, it's possible to apply for a permanent residence.
> Why are Chinese and Russian people thriving clients in the real state Spanish market? Are they interested in Spain to invest in property or to live in? Why do they want to own a property in Spain? Would they be interested in getting a permit of residence?
Deterioration of property prices has created a favorable atmosphere for this growing type of investments.
There are two different types of Chinese buyers: On the one hand, there are multimillionaires who like to buy magnificent houses in the best areas, especially in Madrid and Barcelona, as recently revealed by some developers. However, they also consider buying a second residence in Mallorca or Marbella, regardless of whether a number of Chinese people are also living in the same district or building. On the other hand, there are middle class Chinese people who invest in real estate Spanish sector for working purposes and are interested in 60 or 80 square meters houses, or even smaller. Registration figures are connected to this growing interest. Regions with the highest number of registered Chinese people are Catalonia, with 49.290, and Madrid with 46.032, so far from the figures that other coast regions provide: 19.344, in Comunidad Valenciana and 17.789, in Andalucía. According to the National Statistics Institute, there were a total number of 175.813 Chinese registered citizens in Spain, early this year.
Concerning Russians, we usually count on buyers with a high purchasing power but also middle-class citizens. The most common medium purchasing power buyers are couples of 30 to 50 years old, who tend to buy second residence apartments of one or two bedrooms. In 2011, Russian people acquired a total of 1645 properties in Spain, that is to say, 7, 8% of properties bought by foreigners. They mainly bought them with touristic purposes.
Unlike Chinese, they prefer to focus their real estate purchases on Levante, Andalucia and Almeria Coast, together with other singular properties in Madrid, Barcelona and Marbella. In fact, some people say that they are superseding the traditional market of British buyers. According to INE, at the beginning of 2012, there were already 57.275 Russian people living in our county.
As stated in recent data from the Ministry of Employment & Social Welfare, corresponding to June of this year, almost all Chinese citizens living in the country are holders of the residence card (174.585 from 175.813 Chinese citizens who are registered). On the contrary, Russian citizens lacks of these documents, in a higher extend (40.386 from 57.275 of the Russian citizens who are registered).
A high number of these potential foreign buyers have been complaining for a long time about the paper work that the Spanish Government demands them to go through in order to own a property in Spain. A lot of real estate's developers have suggested to make this procedure more flexible to be able to sell their properties.
One of the most common complaints by non-residents foreigners are the amount of bureaucratic proceedings to follow when buying a property in Spain. The solution provided by Government expects to make easier the purchase of properties. Residency Spain.com will take care of all the issues and ensure the permit is received with the least stress and issue.