What you need to know about buying a second home
SAVINGS AND INVESTMENT I January 27, 2021
If you are thinking about buying a second home, these are the factors you need to bear in mind.
The first aspect you need to think about if you want to buy a second home is how much it will cost and whether you can afford it. Take a look at your regular income and expenses, how much money you have saved up and calculate whether you will need to take out a mortgage and how much the monthly payment will be. It is also worth bearing in mind that mortgages for second homes tend to cover a smaller percentage than for habitual residences.
Some people think about buying a second home to have somewhere to escape city life, while others look at it as an investment opportunity, putting it up for rent (whether long term or as a holiday rental). Both options are valid: you just need to choose the right one for you.
Once again, location is an important factor when it comes to setting the market price for your second home, although you should bear rental prices in mind if you are intending on renting the property out.
Most Spaniards think about a place in the sun, close to the beach when considering buying a second home. Therefore, there are more properties available in regions with the best climate (Mediterranean coast, Balearic or Canary Islands). But perhaps your dream is a home in the countryside or in the mountains. Make the decision based on your preferences, while bearing in mind that the weather will influence how you use the property: whether year-round or just a few months a year.
To make the most of your second home, ideally you should be able to enjoy it throughout the year, not just during your summer holidays. A key factor to this end is the distance from your habitual residence: it should be close enough for weekend getaways to be a realistic possibility, while being far away enough that you can disconnect from your daily life.
Bear in mind that even though you don't live there all year, your second home will generate costs 12 months a year. The Spanish Organisation of Consumers and Users (OCU) calculates annual expenditure of around €1,791 to cover minimum electricity, water, gas and homeowners' association costs (if your property is in a development or is an apartment). Grab a piece of paper and a pen and start estimating the cost of maintaining your second home.
Another factor to bear in mind when purchasing a second home is that taxation is different to your habitual residence. In fact, owning a second home means that you will be required to include an assumption of income in income tax returns equivalent to 2% of the cadastral value of the property (or 1.1% if this value has been revised in the past 10 years). Add to this the payment of property tax (IBI) each year.
Having taken a look at all these aspects, you should have a better idea of the property you want and your ideal location, meaning you can start looking for the second home that best suits your needs.
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