The Difference Between Residential and Non-Residential Property in Spain

When buying real estate in Spain, it’s important to understand the difference between residential and non-residential property. Both categories have different rules, tax benefits, and legal implications. In this blog, we explain what these differences are and what to consider when buying property in Spain.

What is a residential property?

Residential property in Spain refers to real estate used for residential purposes. This can range from apartments and villas to country houses and townhouses. Residential real estate is intended to serve as a primary or secondary residence.

• Examples: Apartments, villas, townhouses.
• Advantages: Residential real estate can be used as a primary residence or holiday home. There are certain tax benefits, such as deductions on mortgage interest.

What is a non-residential property?

Non-residential property includes all types of real estate that are not used for residential purposes. This can be commercial property, such as shops and offices, or agricultural land and industrial buildings.

• Examples: Office spaces, shops, factories, agricultural land.
• Advantages: Non-residential real estate can often generate higher rental income. However, there are also more rules and restrictions, especially in terms of permits and use.

Tax benefits and obligations

One of the main differences between residential and non-residential property in Spain lies in taxation. Residential real estate qualifies for certain tax benefits, such as the deduction of mortgage interest. Non-residential property is taxed differently, often with higher rates and fewer deductions.

• Residential: Receives tax benefits, such as mortgage interest deduction and lower capital gains tax.
• Non-residential: Higher tax rates and stricter regulations, especially in terms of commercial use.

Legal implications

The legal aspects of owning residential versus non-residential property in Spain differ significantly. Residential real estate is generally purchased for personal use, while non-residential real estate is purchased for commercial purposes. This means that stricter rules and permits may apply to non-residential real estate.

• Residential: Fewer permits required, easier to buy and sell.
• Non-residential: Often requires special permits and approvals, especially when commercially operated.

How to make the right choice?

Choosing between residential and non-residential real estate depends on your goals and needs. If you’re looking for a second home or a place to live, residential real estate is probably the best choice. However, if you’re looking for an investment that can generate income, non-residential real estate may be more interesting.

• Factors to consider: Goals, budget, location, and future plans.
• Advice: Always consult a real estate advisor or legal expert to determine which type of property is best for you.

Conclusion

The difference between residential and non-residential property in Spain is important to understand before making a purchase. Both categories have their own advantages and challenges, depending on your goals. Need help making the right choice? Contact us for expert advice and guidance.