THESE MISTAKES RUIN MANY REAL ESTATE INVESTORS IN THE CANARY ISLANDS скачать в хорошем качестве

THESE MISTAKES RUIN MANY REAL ESTATE INVESTORS IN THE CANARY ISLANDS

THESE MISTAKES RUIN MANY REAL ESTATE INVESTORS IN THE CANARY ISLANDS Most people believe the biggest risks when investing in real estate in the Canary Islands are politics, foreign buyer restrictions, or high prices. They’re wrong. The real problem appears five or ten years later — when the portfolio has grown and restructuring is no longer simple. Every year we see investors with profitable properties and stable rental income who are fiscally blocked because of one early decision. Not because they did anything illegal. But because they bought without structure. They focused on financial return, not tax architecture or asset protection. And they assumed they could fix it later. In real estate, that assumption is often the most expensive mistake. If you already own property in the Canary Islands — or are planning to invest — this may save you from being structurally trapped in the future. Case 1: The Individual With 1–2 Properties An individual buys one or two rental properties, usually with bank financing, and purchases personally. Is that wrong? No. At this stage, financing matters more than tax optimization. Banks prefer simplicity. Creating a company just to save small amounts of tax often adds complexity, costs, and financing obstacles. With one or two properties, the system is relatively tolerant. The problem begins when growth continues without structural planning. Case 2: Growth to 3–5 Properties Now rental income becomes significant. The marginal income tax rate increases. Taxation starts to hurt. This is when many investors say: “I’ll create a company to pay less tax.” That’s where serious mistakes begin. A company is not a tax switch you activate when income rises. Many attempt to contribute their properties into a company later. But in Spain — including the Canary Islands — tax-neutral contributions are only possible if the properties qualify as a genuine economic activity. Here is the key point: Owning one, two, or even three long-term rentals is often considered passive asset holding, not economic activity. If it’s not an economic activity, contributing properties can trigger: Capital gains taxation Transfer taxes Loss of tax neutrality Restructuring becomes expensive — sometimes unviable. The mistake was not the first property. The mistake was assuming growth would not change the rules. Case 3: The Entrepreneur Investing Profits An entrepreneur with recurring profits wants to invest in Canary Islands real estate. Three common paths appear. First: distribute dividends and buy personally. Corporate tax is paid. Then dividend tax. Nearly half the profit can disappear before investment. Second: buy through the operating company. Efficient at first glance — but risky. If the company faces lawsuits, audits, or commercial issues, the property is exposed. A fundamental principle of wealth structuring is simple: Never mix operating risk with asset holding. Third: structured separation. A holding company receives profits. A separate asset company acquires real estate. This is not tax magic. It is risk engineering. It allows capital to move efficiently, preserves flexibility, and separates operational exposure from assets. It’s not about paying less this year. It’s about not being trapped for the next ten. The Core Principle The problem is rarely the first apartment. The problem is continuing to buy as if nothing will change. Most structural tax issues are not caused by wrongdoing. They are caused by delayed questions. The only question that matters is: What if this works? If income grows… If properties multiply… If capital accumulates… Will your structure support that growth? Or will it freeze you? In real estate investment in the Canary Islands, what looks simple at the beginning often becomes the most expensive decision later. The difference between improvising and building wealth is structural thinking before signing — not after growth. And in this market, improvisation is the real risk.