What are the Brexit implications when buying a holiday property in Spain?

May 2024

Brexit has had an enormous impact on the UK and its relationship with the European Union (EU), but what does it mean for landlords of holiday rentals? Is buying a house in Spain from the UK still a legitimate option now that the process has been finalised?

Can you still buy a holiday home in Spain after Brexit?

The good news is that it’s still perfectly possible to buy a holiday home in Spain, even if you don’t have an EU passport. In fact, the basic mechanics of purchasing property in Spain haven’t changed. However, there are some things to be aware of in the post-Brexit landscape. British property owners face new, steeper taxes when they buy a holiday rental in Spain, and they may not be able to spend as much time as they’d like in their new home. Here’s the lowdown on what Brexit means for you.

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Buying property in Spain after Brexit

For decades, Spain has welcomed international property investments — and that hasn’t changed. If you want to buy a holiday home there, you don’t need to have Spanish or EU citizenship. You do, however, need the following things:

• An NIE (Número de Identidad de Extranjero, or foreigner identity number) number: This is your unique code within the Spanish legal system. Any legal action that you take in Spain requires an NIE. It doesn’t necessarily give you the right to live and work in Spain, but it allows you to own property in the country. The easiest way to obtain one is to contact a Spanish lawyer, who will also help you through the process of buying your property.
• A Spanish bank account: To open one, you need an NIE and a legal form of ID, probably your passport.

If you’re buying property in a popular tourist area, you can easily find an English-speaking lawyer who has experience dealing with foreign investors. They should be able to talk you through the entire process. A good lawyer will also help you identify any potential pitfalls of buying property in Lanzarote, the Costa del Sol, and the legal requirements in any Spanish destination.

How can I rent my holiday home in Spain after Brexit?

Now we come to the first big difference in the post-Brexit world. As a British citizen, you’re based outside the European Economic Area, which means you’ll pay a higher rate of income tax on your rental. It’s best to be aware of this before you start advertising on holiday rental websites, so you can adjust your prices accordingly. You must pay 24% income tax on your rental income.

The difference here between EEA residents and non-EEA residents is subtle but important. As a non-EEA resident, you’ll pay tax on your gross rental income. You’ll also find that you cannot deduct expenses like utility bills, maintenance costs or your mortgage interest.

This is separate from IVA (VAT), which is charged at 21% for everyone, regardless of their residential status. You may need to whip out your calculator before you advertise a holiday home for rent, as these taxes may well have an impact on how much you decide to charge. Calculate your profit margins carefully, to avoid ending up in the red. If you’re going to work with a rental agency, look out for one with experience dealing with non-EEA landlords.

Can I live in my holiday home in Spain after Brexit?

One of the biggest consequences of Brexit is that British citizens can no longer move freely around the EU. This means that living in Spain after Brexit is a lot more complicated than it used to be.

In short, owning a property in Spain does not entitle you to live in the country. In fact, you can spend a maximum of 90 out of each 180 days there. If you’re buying a property with the intention of using it as your own personal holiday home, this may be a very important consideration. If you just want to rent a holiday apartment as a source of income, it won’t matter so much.

Keep this new rule in mind when you go to advertise your holiday home in Spain online on holiday rental portals. You may want to get more regular guests than you had initially anticipated or risk your home standing empty for long periods of time.

Spain does offer a golden visa, but to qualify, you’ll need to invest at least €500,000 in property. To be clear, that doesn’t have to be a single property; you can buy multiple apartments or homes for a total of €500,000. The golden visa entitles you to live in Spain for one year and can be extended after that — as long as you can show that you are still maintaining your investment.

If you don’t qualify for a golden visa, there are still other ways to live in the country. However, you’ll need to go through a visa application process just like any other non-EU citizen. The fact that you own a property in Spain does not mean that your application will be prioritised in any way.

Can I sell property in Spain after Brexit?

There’s one final thing to be aware of when it comes to property investment in Spain in the post-Brexit landscape. As well as higher income tax, you’ll be subject to higher capital gains tax. This will only kick in when it’s time to sell your property, and it may be a bit of a nasty surprise if you’re not prepared for it.

EU citizens pay 19% capital gains tax, but as a third-party citizen, you’ll face a higher rate of 24%. This tax applies to the profit that you make on selling your property. It’s in addition to the plusvalía, which is a municipal tax that everyone needs to pay, regardless of residential status. This latter tax changes according to region, while capital gains tax remains set.

These are the main difficulties that you’ll face buying a holiday rental property in Spain in the post-Brexit landscape. Luckily, other aspects of the process haven’t changed, and a rental property can still be a lucrative investment. As always, though, it’s worth making sure you have a good lawyer to help you along the way. Some of the rules and regulations may well change in the future, so make sure you stay up to date on the latest news if you’d like to buy a rental property in Spain.

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