The choice between a private or commercial purchase of real estate in Ibiza significantly impacts the tax benefits, flexibility, and management of your property. Here is a brief overview to help you choose the optimal route for your investment.
Opting for a private purchase is particularly appealing if you intend to use the property mainly for personal reasons. This option is straightforward, direct, and ideal for those looking for a home in Ibiza for their own use, without the intention of renting it out. Although this method lacks certain tax advantages that come with a commercial purchase, it offers a simple and personal investment approach.
For investors seeking rental income or managing multiple properties, buying through a company offers significant advantages. Using a Spanish business entity (SL) for the purchase allows you to save on property transfer. The primary benefit is the tax saving of about 25% achieved by avoiding the need to first transfer money to personal accounts before making a commercial purchase. This route is ideal for building a rental portfolio, with tax savings and deductions contributing to efficient tax planning.
Note: If you purchase the property privately from an individual, the tax will still apply. Often, buying a house through a company defers the tax.
It's important to consider the wealth tax for properties with a net value above €700,000, after mortgage deductions, regardless of the purchase method.
Your choice between buying real estate in Ibiza privately or commercially depends on your individual needs, financial goals, and plans for the property. Private purchases are suitable for personal use, while commercial buying offers better options for tax efficiency and generating rental income.
If you have questions and would like to contact a specialist, please get in touch with us.
