When you are considering investing in a property (whether to live in, rent out or as an asset), one of the most important questions is: is it better to buy in your own name or in the name of a company? This is not just a technical issue, but also a strategic and tax issue, and choosing wisely can make a big difference.
The current tax landscape: what has changed?
In recent years, the Spanish regulatory framework has evolved considerably. Housing Law 12/2023 and Law 1/2025 on urgent measures have introduced important changes that affect both individuals and companies.
BUYING AS AN INDIVIDUAL: SIMPLICITY WHEN THE PROPERTY IS FOR YOU.
Buying as an individual remains the most common option, especially when the property is for you or your family, or when you are not going to have a large number of properties.
- Main advantages:
- If it is your primary residence, you may be eligible for tax exemptions: for example, exemption for reinvestment when selling.
- Less administrative complexity: you do not need to keep accounting records or file corporation tax returns.
- Simpler sale: when you sell, the profits are taxed under personal income tax (or non-resident income tax if you are a non-resident), with progressive rates (for example, between 19% and above, depending on your situation).
- Limitations:
- If you are going to rent and your rental income is high, paying personal income tax may be more expensive than doing so through a company.
- Asset exposure: as an individual, the property may be more exposed to personal or professional risks if you do not have a structure in place to protect it.
BUYING THROUGH A COMPANY: THE SMART WAY TO INVEST IN REAL ESTATE.
Buying through a company (for example, a property company) can have many benefits if the property is not just going to be your home, but an investment for rental or capital gains. Here are the most important points:
- Favourable taxation
Rental income or property profits are taxed at 25% in corporation tax, which can be much more efficient than paying income tax if your income is high.
- Expense deductions
If the company manages the property, many more costs can be deducted: property tax, community fees, utilities, mortgage interest, renovations, maintenance… This reduces your tax base.
- VAT deduction
If you buy a new home through the company, you can deduct part of the VAT (something you would not be able to do if you bought as an individual).
- Asset protection
Owning the property through a company can protect it from certain personal risks: if you are an entrepreneur or in business, that property will not be as exposed to seizures or personal claims.
- Long-term planning
If you intend to invest in more properties, a company gives you the structure to reinvest, distribute dividends, and manage your assets professionally.
DISADVANTAGES AND RISKS OF PURCHASING THROUGH A COMPANY.
Of course, it’s not all advantages. There are also disadvantages and costs that you need to weigh up:
- Maintenance and management: A company requires bookkeeping, filing tax returns and administrative costs.
- Taxed personal use: if you are going to use the property for personal use (not just for business), the tax authorities may take notice. You cannot simply use it without declaring a market-rate rental, if necessary.
- No 60% reduction: Unlike an individual who rents out a property, property companies do not benefit from the 60% reduction on the net income from residential rentals.
- Set-up costs: setting up and maintaining a company is not free, so you need to assess whether the corporate structure justifies the tax savings.
THE MOST COMMON MISTAKE: CHOOSING WITHOUT PRIOR ANALYSIS
Many buyers decide ‘because it was recommended to them’, ‘because they saw it on the internet’ or ‘because a friend does it that way’.
X And that’s how you end up paying more tax than you should.
X Or you complicate a transaction that could be simple.
X Or you create an unnecessary company that will never yield real profits.
The reality is that:
- Buying a home to live in does NOT require a company.
- Setting up a project or investment CAN benefit greatly from one.
KEY RECOMMENDATIONS (AND WHY YOU NEED CPG ABOGADOS)
- Conduct a personalised analysis
There is no universal formula. At CPG Abogados, we can model different scenarios (purchase, rental, sale, reinvestment) to see which structure is best for you from a tax and asset perspective.
- Take recent legislation into account
Regulations change: for example, rental subsidies in high-demand areas or recent incentives may alter the suitability of a corporate structure.
- Assess hidden costs
It’s not just about tax: you also need to consider the incorporation of the company, accounting, legal fees, property management, tax obligations, etc.
- Plan for the long term
If you are buying to invest, think beyond the first few years: are you going to reinvest in more properties? Do you want the company to help you transfer assets to your heirs? What is the time horizon?
- Comply strictly
If you buy with a company and then use it for personal use, you need to do so with appropriate contracts (e.g. lease between company and partner) and declare everything correctly to avoid problems.
CONCLUSION: WHAT IS THE BEST OPTION FOR YOU?
The short answer is: it depends. Buying as an individual is ideal if you are looking for simplicity, use the property as your primary residence, or do not plan to own a large number of properties. On the other hand, if your goal is to invest, build wealth through rental income, or create a portfolio, a company can offer clear tax and operational advantages.
At CPG Abogados, we specialise in structuring efficient, secure, and tax-efficient transactions. If you would like us to guide you in deciding which structure is best for you or even in setting up that property company, we can help you every step of the way.
