Buying Off Plan Property

As the name suggest this is speculatively buying a property from the architectural plans before construction begins, by doing the purchase this way you will secure the property at the lowest possible price therefore ensuring the capital return at point of sale is as great as possible. Choosing to buy 'off plan' property, in Spain can benefit you in three ways:

1st it is entirely possible to achieve returns in excess of 100% of your initial investment, within 24 months.

2nd your profit can legally be free of capital gains tax.

3rd holding on to the property for a longer term means you can benefit from the fastest growing property market in Europe (and have a great holiday destination while your investment is appreciating).

Buying off plan property Spain, is a popular option and remember the earlier you buy, the less expensive your total purchase price will be. One of the main concerns any investor may have is the stability of the property builder, to cover this risk all builders are required to take out a special bank guarantee that will compensate investors should things go wrong. Once you are sure the project is properly guaranteed, your main concern will be the payment schedule. Usually you are required to make a down payment with subsequent payments due, the initial reservation is usually 6,000 euros to secure the property in your name. Then there is various options with the payments throughout the term of construction for example the most common is:

Reservation deposit: 6,000 euros
Initial payments: 30% of purchase plus tax at 7%
On completion: the remaining funds will be due.

Therefore if the apartment costs 250,000 euros:

Reservation deposit: 6,000 euros
Initial payments: 74,250 euros (30% plus tax minus the 6K already paid)
On completion: 187,250 euros

However there is a wide range of variation on the above figures. The lower the initial payment the easier it will be to reach the 100% return on capital invested, which is the goal we all crave.

Assuming the purchase was purely an investment the ideal situation will be to sell the property for the current market value just before completion therefore maximising the return on your capital invested. Because you sold before the project was completed, you have zero liability for capital gains tax.

When buying your off plan property Spain and you may have to wait for you property to be completed, but your money will be working hard for you in that time. This is a conservative estimate of the potential gains available. With property prices increasing annually at a steady 15% in Spain, imagine the possibilities if you also 'buy low' in such a market. Additionally, many purchasers finance the 35% deposit by re mortgaging their UK property and so are able to achieve higher than average capital returns, with zero tax liability, and no cash liquidity. If the figures are adding up for you – do yourself a favour and 'buy' off plan property Spain.