Nestled on the sun-drenched shores of southern Spain, La Costa del Sol has emerged as a magnet for international property buyers seeking their own slice of Mediterranean paradise. In this blog post, we will delve into the growing trend of foreign property ownership in this breathtaking region, explore the recent inheritance tax reforms that have made investing even more enticing, and understand why La Costa del Sol remains the optimal choice for property purchases.

Foreign Property Ownership in La Costa del Sol:

La Costa del Sol’s magnetic charm has lured a diverse global audience of property investors. The reasons for this burgeoning trend are numerous:

1. Natural Splendor: The region boasts a stunning coastline, pristine beaches, and majestic mountain vistas, making it an idyllic setting for nature enthusiasts and outdoor adventurers. With over 300 days of sunshine per year, La Costa del Sol offers a near-perfect Mediterranean climate. This is a significant draw for those looking for a second home, investment or retirement destination.
2. Lifestyle: The region boasts a rich cultural heritage, excellent cuisine, and a relaxed way of life. It’s a place where you can enjoy both the beach and the mountains, with a wide range of outdoor activities at your doorstep. The area is steeped in history, featuring charming villages, historic towns, and a vibrant cultural scene that appeals to those seeking an enriching and immersive experience.
3. Diverse Property Offerings: La Costa del Sol offers a wide variety of properties, from luxurious beachfront villas to charming countryside fincas. There’s something to suit every taste and budget. The property market in this region has proven to be a strong investment choice, with potential for capital appreciation and rental income.

Inheritance Tax Reforms:

Recent years have witnessed a series of critical reforms in Spanish inheritance tax laws, with specific implications for property inheritance in regions such as La Costa del Sol:

1. Increased Exemption Thresholds: Tax-free thresholds for property inheritance have been elevated, alleviating the tax burden on beneficiaries. The precise amount of exemption is determined by the relationship between the deceased and the inheritor.
2. Regional Variations: Inheritance tax regulations vary across Spain’s autonomous communities. In Andalusia, where La Costa del Sol is situated, there have been tax deductions introduced for both residents and non-residents, effectively reducing the overall tax liability.
3. Exemptions for Primary Residences: In Andalusia, there are also exemptions for primary residences up to a certain value, which can help reduce the tax liability for family members inheriting a loved one’s home.

Heirs will be exempt from paying inheritance tax if the inherited estate or assets are below the €1 million threshold. Those who inherit assets worth more than a million in Andalusia will be subject to a 1% inheritance tax (also known as “Inheritance and Gift Tax”) for both Andalusian resident or non-residents of Spain. As a matter of fact, inheritance tax applies to all types of property, shares and bank accounts located in the region of Andalusia. Andalusia now offers one of the best Inheritance tax systems in the world.

Examples:

• The owner of a villa worth €1,500,000 in Mijas dies. Under this new law, the heir will only be required to pay €4,742.60 in inheritance tax in Spain, although UK IHT may be applicable depending on the domiciled status of the individual who has passed away. Regardless, declaring these assets in Spain does not relieve you of the legal obligation to inform your home country’s tax authorities. Both countries must have a double taxation agreement in place to determine tax distribution. It is always wise to maintain transparency to avoid any formal requests from either country. This new tax law could be interpreted as a way of attracting foreign investment, therefore stopping capital outflow, and stimulating economic activity.

• An unmarried British couple living together in Andalusia makes a last will for the other. It is estimated that the inherited estate is worth €160,000. An heir will pay €46,281.68 if the couple isn’t listed at the Andalusian Registry, whereas a registered couple won’t have to pay anything. This allowance will only be accepted if the origin of the estate can be clearly demonstrated and is specifically mentioned in the will.

Why La Costa del Sol Reigns Supreme:

1. Steady Investment Potential: La Costa del Sol’s real estate market enjoys sustained demand, offering prospects for capital appreciation and rental income. Your investment is poised to maintain its value over time.
2. Accessibility: The region is well-connected through airports, road networks, and railways, with the Malaga-Costa del Sol Airport serving as a key international gateway.
3. Tourism and Rental Income: The area’s increasing popularity among tourists translates to a steady flow of potential renters, rendering vacation rentals a lucrative venture.
4. Foreigner-Friendly: Spain welcomes foreign property buyers with open arms, and the property acquisition process is transparent and uncomplicated.
5. Diverse Lifestyle Options: Whether you aspire to a serene countryside escape, a vibrant coastal town experience, or a golfing haven, La Costa del Sol caters to a diverse range of lifestyles to align with your preferences.

Conclusion

The surge in foreign property acquisitions in La Costa del Sol is a testament to its unrivaled natural beauty, year-round sunshine, cultural richness, and diverse property offerings. Recent inheritance tax reforms have further sweetened the deal, offering substantial financial advantages for property investors. With enduring appeal and one of the best Inheritance tax policies in the world, La Costa del Sol stands as the quintessential choice for those eyeing property investments along the sun-soaked shores of southern Spain. Don’t miss the opportunity to bask in the sun and embrace the myriad opportunities that this remarkable region has to offer. Contact us today to learn more about inheritance tax in Andalusia and how to find the best property for you.