Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Celia Fernández

Celia Fernández has started 1 posts and replied 5 times.

Post: Refinancing in Spain (BRRRR?)

Celia FernándezPosted
  • Valencia
  • Posts 5
  • Votes 5

Hi everyone! BRRRR in Spain is difficult but it can be done. You can request a mortgage for a property that you own. The bank will make a valuation (tasación) and will give you up to 60-70% of what it's worth.

The trick, as always, is in buying under market price and rehabbing it to increase its value. For example: 

You buy a flat for 50k and you put 20k into it to rehab it (all cash). After the renovations it's valued at 100k. You go to the bank and they give you 70% of the appraised value = 70k. 

This way you take all the invested money out of the operation, plus the 30k that is "in" the property, plus the monthly cashflow from the rent. Important to note that the bank will normally only refinance you if you're going to invest that money into another property.  

It's not an easy process but I certainly know people who are doing it. Of course, you will still need to have a good credit history. 

Hope it helps!!

Hi Juan Martin! Here's another Spanish investor ;) I'm from Valencia and keeping a close eye for investments in this market. Where are you thinking of investing?

Definitely keen to be in touch as well! I am an investor working as a real estate broker in Valencia. Happy to connect and share ideas!

Hi Paolo, 

Yes, I´ve followed him for a while and has very interesting content. It seems he knows all the good tricks. He has a new book called "Los trucos de los ricos" which is good value too. 

For what I have found online and from reading the law this is only applicable to companies. It is an special regime that you can choose if you have an S.L that manages long-term rentals (at least 3 years) of at least 8 apartments. Also, at least 55 percent of the value of the S.L.'s assets should be capable of generating income that is entitled to the application of the bonus (art. 49 LIS).  

Obviously there are significant monthly operating costs for having an S.L. (around 400 Euros in social security and accountancy fees) so you would need to do the math to make sure the tax savings exceeded the costs for maintaining the S.L.  The other thing is you have to pay corporate tax rate (fixed at 25%) and then potentially again depending how you withdraw money from the S.L. for instance tax on dividends.  Art. 21 talks about exemptions for tax on dividends but I´m still trying to decipher that one.  Either way, I´m sure that Juan Haro will have some clever ways to avoid this double taxation and get money out of the S.L!  If you withdraw it as wages, you don´t have to pay corporate tax as well (as wages are a deducible expense) but then you are paying progressive income tax rates.  

If you were to rent it out as a particular, the deduction would be up to 60% - so still not bad! 

The other important thing to consider is if you intend to move out of Spain at some point.  If you cease being a Spanish tax resident, as a particular you lose all ´bonifications´ as well the ability to deduct expenses.  As such, you will pay tax on revenue, not profit, meaning you could be making a net loss and still have to pay taxes.  

This is my understanding of the situation, but I am still trying to figure it all out myself, so please don´t take any of this as gospel. 

I´ll let you know anything else I learn.  

Hi everyone,

I understand that in Spain there are significant tax breaks (a deduction of 85%) for companies which rent 8 or more apartments under a special regime. I see that at least 55% of the company's revenue must come from the rentals, and that they must be rented as 'long term rentals'. Does anyone have any experience with this special regime in practice? It almost seems too good to be true. What's the catch?

Has anyone thought of grouping their rental properties together to make use of this tax break?

Thanks in advance!

P.S: I'm investing in Valencia, so happy to discuss and connect with other investors!

- Celia