February Newsletter

Everyone needs a roof over their heads and at times like this, when rental properties are scarce, the question is whether we have the option to buy our home.

 The first step will be to conduct a financial analysis to evaluate our ability to undertake financing with our savings and the income we can justify to the bank. In the case of an employee, the bank may lend up to 80% of the purchase price if it is the debtor's primary residence. Since the purchase involves paying taxes (VAT, Documented Legal Acts, or Transfer Tax), the debtor will need to provide these, in addition to the 20% that the bank does not finance.

With these figures, we ensure that we can pay the mortgage long-term and that our contribution is sufficient to purchase the home we need. For example, for the purchase of an apartment priced at €200,000, the buyer will need to have 20%, which is €40,000, plus taxes and fees, approximately €22,000, totaling €62,000. Afterward, the monthly payment for a €160,000 mortgage should not exceed one-third of their income. For those under 33 years old, there are options to benefit from a tax reduction and the government can guarantee loans for those under 35 and families with children making their first purchase.

Once the bank's approval is obtained, the next step will be to find a property that meets our needs and request an appraisal. It is important that the valuation is consistent with the purchase price, as if it is below, the bank will finance 80% of that amount and there will be a shortfall. On the other hand, if it is above, taxes will be paid on the higher value. For greater peace of mind, it is advisable to consult a specialist.

When we sell a property and unless there is an exemption for reinvestment in the first home, we have to pay tax to the treasury on the real estate profit, known as capital gains. This tax is calculated on the actual profit made between the day of purchase and the day of sale. That is, taxes and fees paid to buy and sell can be deducted. However, the loss of capital value due to inflation is not taken into account, meaning we pay taxes on wealth that does not exist.

For example, if I bought an apartment in 1999 for €100,000 and sold it for €250,000 in 2024, the profit is €150,000. However, if we adjust the €100,000 for inflation, it would today amount to €178,000, meaning that the real profit is the difference between €250,000 and €178,000, since with €178,000 in 2024, one can buy what €100,000 bought in 1999. The State charges us taxes on money that we have not earned.

House of the Month

How has the real estate market performed during the first three quarters of the last year in Baix Empordà?

Between January and September, 2311 real estate transactions were concluded in Baix Empordà: 549 new builds, 1759 second-hand homes, and 3 protected housing units. The average area was 111.6 m², with second-hand properties being slightly larger than new builds, which is explained by the fact that most new builds consist of building apartments, while the second-hand housing includes houses and chalets. The average price of transactions stands at €273,000, ranking Baix Empordà as the fifth most expensive area, behind Val d'Aran, Cerdanya, Barcelonès, and Garraf.