business or individual
The decision to buy a property on the Costa del Sol as an individual or in the name of a business/company depends on several factors related to the investment goals, the tax and financial situation of the investor, and the legal implications in Spain. Here are some aspects that may help you as a foreign investor to determine the most interesting option:
1. Buying as particular
This strategy involves collecting and analyzing data on the real estate market in the Costa del Sol, including price trends, rental demand, and infrastructure development.
ADVANTAGES
- Simplicit: The buying process is generally simpler and more straightforward.
- Taxes: Individuals may benefit from certain tax deductions and exemptions, especially if the property is used as a primary residence.
- Golden Visa Programme: Individual investors who meet the investment threshold may qualify for the Golden Visa, offering residency in Spain.
DISADVANTAGES
- Income Tax:: Rental income and capital gains may be subject to higher tax rates for individuals, especially if they are not resident in Spain.
- Liability: As a private individual, liability is personal, meaning that the investor directly assumes any financial or legal risk.
2. Buying in the Name of a Business/Company
ADVANTAGES
- Taxation: Companies can benefit from more favourable tax structuring, such as deductions for property-related expenses, depreciation and possibly a lower tax rate on capital gains through Corporate Tax.
- Limited Liability: Setting up a company can offer protection by limiting personal liability for debts or litigation.
- Flexibility in Income Management: Operating through a company allows for more flexible management of income and expenses related to the property.
DISADVANTAGES
- Costs and Management: Maintaining a company involves additional administrative costs, such as accounting, audits, and compliance with tax and legal obligations.
- Regulation: There may be more regulations and reporting obligations, especially if the company is incorporated in Spain.
- Transfer Tax (ITP): When buying through a company, in some cases you may be subject to ITP, even if you are buying from another company.
Tax Planning: Adequate tax planning is essential to assess the implications of buying as an individual or through a company, considering not only taxation in Spain but also tax obligations in the investor’s home country.
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