Non-EU Swiss Resident buying Real Estate in Spain

Real Estate
1

Hello all,

I am interested to diversify myself out of strictly financial instruments, and I have an interest in dipping my toes in real estate. I recently visited the Costa del Sol in Spain and fell in love with the region. So much so, that I am interested to have a spot there for personal use, but possibly for renting* out in the future.

Background:

  • I am an American citizen
  • B-permit until 2024, and likely C-permit afterwards
  • No debts, and adequate cash and semi-liquid cash available for down payments and fees on top of catalog price.
  • Secure employment

Apartment criteria:

  • 1BR or 2BR, Costa del Sol (between Malaga and Marbella)
  • Maximum cost 200k EUR
  • Mortage: 10-year or 15-year
  • Purpose: Personal use for friends and family, with possibility for possible rental in the future. I don’t intend to buy and flip.

Questions:

  • The real estate agent mentioned that I should assess whether I would want a mortgage in Spain or in Switzerland. For those of you with relevant experience, what should I consider when making this decision?
  • Are there any concerning tax implications (or benefits) about owning a rental property outside of Switzerland?
  • Any other advice that you’d give to a first-time home buyer?

*With respect to renting, I have not yet modeled the costs of a management agency, and local regulations and licenses to be a renter in this region, as a foreigner.

Thanks for any advice!

2

Hi, A Swiss bank won’t give you a mortgage for an overseas property.

If you are serious about renting out, ask a local agency but keep in mind they might be over optimistic as they want your business. You can check prices on Airbnb. Airbnb take about 17-20% of guest fees for our place in CH.

3

If you want to rent it think also about the Spanish tax considerations:

While this is illegal according to EU law, you really would need a local tax advisor/lawyer to fight this.

3 Likes
4

I’d suggest to invest in the real estate ETF of your choice for the investment part and rent an apartment in Spain for the time you stay there. Depending on how many weeks a year you want to spend there, it would be a holiday rental or an unlimited contract.

3 Likes
5

Hi

I can share based on my experience which is relatively similar (non-EU/CH in Switzerland).

We looked heavily in Spain, but from my research (please verify) as a non-EU there are disadvantages including higher tax on rental, but also less deductions available which seemed significant. I was also cautioned by someone regarding Spain squatter laws which can be a risk (as I see that it is for personal holiday use and therefore may be vacant for a longtime… google it).

I think the most favorable mortgage you can get is in France as there are 2nd home loans from Swiss banks available. Many EU countries provide non-resident mortgages relatively easily from their local banks, but with worse LVR. We did it with no problem. Swiss wages are looked upon favorably.

Also consider each additional country you add is a country tax number and a country tax return usually - extra costs. These aren’t huge, but it is something to consider and there are additional complexities. e.g. some countries require you to have an EU, or even local in country person as your tax representative. If you need to pay someone to be this representative, it’s another cost. Your Swiss tax return becomes more complicated (and expensive if you have an agent)

It probably sounds like I’m negative, but I’m just cautioning the complexity. For us, we own a couple of properties outside of Switzerland and we think it is a better investment. But it is work to do… you need to find a ‘bargain’ to have the opportunity for gains. Lots of in country in person research from our experience.

2 Likes