Nestled along the picturesque coastline of Southern Spain, the Costa del Sol region has emerged as a magnet for real estate investors seeking not just a property, but a lifestyle. Among its shining gems, the city of Marbella stands out, offering a blend of opulence, natural beauty, and a thriving market that makes it an enticing prospect for investment. In this blog we will look at reasons to invest in Marbella and the wider Costa del Sol area, how to maximise your ROI and Tax benefits.
7 Reasons to invest in La Costa del Sol, particularly Marbella:
1. Location and Climate
Marbella’s strategic location on the Costa del Sol offers a Mediterranean climate that’s hard to beat. With over 300 days of sunshine annually, it’s a haven for those seeking a sun-soaked lifestyle year-round. The stunning beaches, panoramic views of the sea, and the majestic Sierra Blanca mountain backdrop create an idyllic setting.
2. Luxury Living and Lifestyle
Renowned for its glamorous lifestyle, Marbella has attracted high-profile residents and jet-setters for decades. The city boasts world-class amenities, including Michelin-starred restaurants, designer boutiques, prestigious golf courses, and exclusive beach clubs. The allure of this luxury lifestyle adds significant value to real estate in the area.
3. Robust Real Estate Market
Despite fluctuations in global real estate, Marbella has maintained a resilient property market. Demand for prime real estate remains high, driven not only by international buyers but also by Spanish nationals seeking second homes. The market diversity, offering everything from beachfront villas to contemporary apartments, caters to a broad spectrum of investors.
4. Investment Potential
Investing in Marbella’s real estate offers promising returns. The city’s popularity as a tourist destination ensures a steady stream of rental income, especially during the peak holiday seasons. Moreover, the value of properties in prime locations has shown a consistent upward trajectory, making it an attractive option for capital appreciation.
5. Infrastructure and Development
The continuous development and investment in infrastructure further enhance Marbella’s appeal. Improved transportation, modern amenities, and ongoing urban planning projects ensure sustained growth and add value to real estate investments.
6. Cultural and Recreational Offerings
Beyond its luxurious facade, Marbella retains its Spanish charm with a rich cultural heritage. The Old Town’s cobbled streets, historic buildings, and vibrant local markets provide a delightful contrast to the glitz of the modern city. Additionally, a plethora of recreational activities, from water sports to hiking in the nearby mountains, ensures there’s something for everyone.
7. Stable Legal Framework
Spain’s legal framework for real estate investment provides a sense of security for investors. The country has well-established property laws that protect the rights of buyers, ensuring transparency and a smooth process for property acquisition.
How to achieve a rentability of 10%
Marbella and the wider Costa del Sol area has a plethora of investment opportunities. With such an array of options, it can be a daunting task to research which invesments to pursue, where, how and better yet, WHY to pursue them. Optimum Marbella offers more than 25 years of real estate experience, with a rich industry knowledge and small team of dedicated professionals, it is our mission to partner with you to help find the best opportunities to receive a great ROI.
One of the best methods for good ROI in La Costa del Sol is short-term-rental. Please read our blog here to learn more about short-term-rental in La Costa del Sol.
A simple example is as follows: On a studio apartment worth 120.000€, between the months of October to May you can rent out this property for 600€ a month, for a total of 4.200€ for these 7 months. Between June, July, August and September (the summer months, as La Costa del Sol receives such a high demand for tourism) the monthly rent price during the low season, can be charged per week to holiday goers looking to rent a flat.
4 summer months is 16 weeks, at 600€ per week, we arrive at a total of 9.600€ . Total for the year comes to 13.800€ (A little more than 11% ROI). Depending on location and views, prices may very, this is where we at Optimum Marbella can offer the best guidance on which opportunities will offer you the greatest ROI.
Moreover, if you have a total budget of 300.000€, without the need for a mortgage, you may plan to invest in 2 or 3 studio apartments, generating 13.000€ to 15.000€ / per year. Alternatively, Optimum Marbella has great relationships with the best mortgage finance professionals in La Costa del Sol. Using the 300.000€ as the 30% to put down for a mortgage loan, we can increase the budget to 900.000€, with this, we open up the possibility to further grow our investment income, purchasing 6 studios apartments at 100.000€, or 3 apartments at 300.000€ (including taxes) following the same principles of short-term-rental, we diversify risk, and increase our income with good ROI at a higher price range, furthermore, this income can pay off the mortgage. To learn more about how we can get your the best mortgage finance, please read more here.
Tax benefits
Exuneration of Capital Gains Tax
As discussed, short-term-rentals are a great way to generate yearly income on your property investments. Over time, your properties are going to appreciate in value, Marbella has held strong through many economic downturns and has seen, and continues to see strong growth. Meaning, you will generate yearly income through short-term-rental, and on top of this, through appreciated value, you will sell for a profit. The great news is, in Spain, over the age of 65, no capital gains tax will be applied.
Simple example: You buy a studio at 120.000€, for 4 years your rent it out, generating a healthy 10%+ return every year. After 4 years, you look to sell, with some little renovations you have done with us over the years to make the property spectacular and increase rental profits, your property is now worth 200.000€. With an increase of 80.000€ on your studio flat, before the age of 65, the state will take 22% of your profit, 17.600€. After the age of 65, all of the 80.000€ will go in your pocket. Proving a sure method to create an investment portfolio now, saving it for your retirement in which you will save on 22% captial gains tax.
Inheritance Taxation
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:
- 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.
- 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.
- 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. For more indepth information, please read our inheritance tax blog here.
Conclusion
Investing in Marbella and the wider Costa del Sol region isn’t just about acquiring property; it’s about embracing a lifestyle and unlocking the potential for a prosperous future. The seven compelling reasons to invest here, from the unparalleled climate to the robust real estate market and cultural richness, showcase the multifaceted appeal of this region.
Moreover, optimizing your return on investment isn’t an arduous task when approached strategically. Leveraging short-term rentals and maximizing property portfolios can yield impressive returns, potentially reaching beyond 10%. The guidance and expertise offered by Optimum Marbella can illuminate the best investment paths, whether it’s diversifying across multiple properties or navigating mortgage finance for substantial growth.
The tax benefits further sweeten the deal. Exemptions from capital gains tax for individuals over 65 and reforms in inheritance taxation underscore the favorable environment for wealth creation and preservation in this vibrant region.
Marbella and Costa del Sol beckon not just as an investment destination but as a lifestyle choice that promises both financial rewards and a fulfilling Mediterranean way of life. Embracing this opportunity might just be the key to securing a prosperous present and a worry-free retirement amidst the sun-kissed splendor of Southern Spain. Contact us now to start your investment journey!
