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5 Common Mistakes When Buying Property in Lanzarote

5 Common Mistakes When Buying Property in Lanzarote

A must read for anyone thinking of buying a villa or apartment in Lanzarote.


1. Not adding in all the extras when calculating the total cost of buying a property in Lanzarote.


It is important to remember that on average, the total price of an apartment or villa in Lanzarote will be about 10% higher than the sales price due to taxes and legal fees, etc. Make sure you have calculated the true cost correctly.


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2. Succumbing to buyer fatigue. 

Don’t do it!  This is when you are looking around for a property to buy, and having done many viewings, maybe made some offers, you still haven’t closed a sale. You get tired of the process and decide, enough is enough, you are buying the next property you see. May sound crazy, but it is not uncommon.  Try avoid this by preparing a list of the features you are looking for in villa or apartment in Lanzarote at the start of the process and try not deviate too much from it, even if you get frustrated. Patience will be rewarded.


3. Failing to take advantage of low interest rates when getting a mortgage.


Interest rates are historically low at present but it will not be like this forever. Currently mortgage interest rates in Lanzarote are as low as 2%.  This compares to 3 to 4.5% in Ireland for example. Money is typically lent from a bank in Lanzarote for property sales in Lanzarote, so Irish, UK or other european buyers can take advantage of the low rates available in Lanzarote. These rates are often lower than what is available in other european countries. If you get a low mortgage interest rate, be sure to consider fixing it longterm,so that when rates inevitably rise, you are protected.

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4. Not using an independent Lawyer!


Never buy a property in Lanzarote without an independent lawyer.  Property transactions are high value and high cost and you must make sure you and your investment are protected. An independent lawyer will work for you, not the seller, and will reduce the risk of any underhand dealings.


5. Underdeclaring the value of your property sale in Lanzarote!


Don’t do it! This is when the seller/agent asks for part payment in cash.  Make sure this cash payment appears on the deed as part of the value of the villa or apartment. Otherwise, the value on the deed will be a lower price than you are paying.  This does not help you! In fact, on top of the legal issues related to not fully declaring the transaction value, when you come to sell your property in the future, you will have to pay a higher capital gains tax, based on the increase in value of your property with reference to the price on the deed when you purchased.  Current capital gains taxes in Spain are 19%.  If you buy a property for €300,000 and only €250,000 is declared, if you sell the property in the future for €300,000 you will have made no gain.  But, on the deed, their will be a gain of €50,000, taxed at 19%, which will cost you €9500 – Don’t do it. 

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