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Spanish opportunists need to be mindful of pitfalls

3rd November 2005 | back to article listings BACK    print this article PRINT

As the Spanish property market continues to grow, with more investment opportunities than ever, investors are being urged not to be over-enthusiastic when buying a property.

Property investors considering buying property in Spain have been issued with a warning over the potential dangers of tax loopholes.

The National Association of Estate Agents (NAEA) has claimed that ancient practices could drop the less experienced investor into serious financial trouble unless they are wise to the Spanish market. Ian Tonge, chair of the NAEA International Working group, has warned that the pratice of misquoting property prices so as to avoid high tax payments can come as a massive surprise to the less savvy investor.

As the Spanish market becomes increasingly popular with British investors, there is an increasing onus on bodies such as the NAEA to make people fully aware of what they are getting into before investing.

The Spanish market can offer potential investors large returns and fantastic opportunities, but Mr Tonge is worried that there is currently too little knowledge among those investing in the market. As the opportunity to invest in overseas property becomes easier and – as a result – increasingly common, there is a danger that many people will be wooed into snapping up properties before they have fully realised the implications of their purchases.

"Historically, people have been reluctant to put in the full price on their documents because that would force them to pay more tax than the gain they had made on the property," explains Mr Tonge.

Properties in Malaga and the Andalucia region of Spain look set to become increasingly popular over the next few years, following the announcement of plans to build a major motorway connecting the two areas.

It is thought that the new motorway will have a large impact on the investment potential of the region, because it will provide much easier access to Andalucia and Malaga. Within three years, Malaga is to have a completely revolutionised road network that will link it to all the other major towns and cities in the region, meaning that getting to any part of Andalucia will never have been easier for thousands of Brits flying in to Malaga's airport.

Estimated to cost in the region of €1.8 million, the development is sure to attract many foreign nationals looking to invest and the region's authorities are pinning much on the new roads system, hoping that the investment they have laid out will help to fuel a property boom that has threatened to peter out in recent months.

But while the interest in investing in the region looks to continue in the future, Mr Tonge of the NAEA has highlighted an important area of the legal system to point out the danger of rushing in when faced with a Spanish investment opportunity.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2302.html. Alternatively, please see our full press release archive.

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