Should I buy a new property or a house to renovate?
If you are looking to buy a property in Spain you have probably made yourself the question whether you should buy a new or reformed property or an unreformed property. In this post we will go through all the pros and cons of each one to help you take the right decision.
When you start looking for properties for sale in Costa del Sol, you can be overwhelmed by the amount of houses available in the market. Some of them are brand new and others are a bit older but with great potential. The choice should be made depending on your interests. We have created a list with the main questions you should ask yourself before buying a property:
When do you want to move?
It will depend if you want to relocate immediately or you can wait until your house is ready to move in. Unreformed properties tend to be old units that needs a severe restoration before moving in meanwhile new ones are ready-to-move and with a clean modern look.
Do you want a centric location?
If you are seeking a centric location, there are more chances for you to find a house that needs restoration than a flaming brand new apartment. Therefore take into account: how important is for you to have a property in the town center?
Consider added costs
Once you find an unreformed property you like, you are ready for the next step: Ask for a budget. If you picture yourself within that property, you need to see if the reformation you will have to make is viable or not. Notice that many times some changes are not allowed by law (ex. Raise the building, changing the façade…). In this step an architect can always clarify your ideas.
Do you want to design your home?
It Is also a good idea to buy an unreformed property if you would like to make your home as tailored made as possible. New developments give some margin to slight changes as tiling or kitchen fittings, but not as much as an unreformed property.
Are you going to sell the property after?
However, taxes between buying an unreformed property and a new or reformed one are very different. If you plan to sell your house in the future, it can happen that the money you spent on the refurbishment will not be accounted for to reduce your Capital Gain Tax. Therefore you will be paying more than in the other two options.
If we go a bit deepen within this matter we can say that only improvements are considered to be a legal restoration, which will increase the acquisition price. Therefore enlarging the property, adding rooms, creating a pool, adding central heating, etc can be added to the Capital Gain Tax. However, replacing existing parts of the property like floors, kitchen units, doors, or painting will not be accounted to reduce your CGT.
Let’s clarify this with an example:
We are going to compare a new property for 200.000 (taxes and expenses inc.) with a property to reform for 160.000 with a 40.000€ budget to change kitchen fittings, floors, paint walls, change doors… The selling price of both of them a few years later is 230.000
|EXAMPLE||New Property||Property to reform|
|Capital Gain from the sale||30.000||70.000|
|Capital gains tax*||6.180||14.980|
*19% tax for the first 6.000€, 21% for the next 44.000€ and 23% for the remainder.
Therefore you will have to consider all this aspects in order to choose your ideal home. From Andalucia Realty we can help you with the search of your ideal property. We have a wide selection of brand new properties, and second hand. We will guide you through all the process, advising you in all matters that concerns the purchase of a property.
Take the test and find out which is the perfect home for you!