Overview of the Spanish Mortgage Market
Here's the new ruling! Even if you own property in Spain
but don't live in Spain you will have to pay taxes on your
property in Spain as if you were living there. This is just
one of the many tax rules that have come into play recently
and is causing the off shore owners of property in Spain to
consider whether it is lucrative to keep their property in
Spain. These rules came into effect as of January 1st 2007
and are proving to be a challenge to those property owners
who don't live in Spain.
While certain changes give the property owners who don't
live in Spain a little break on taxes owed at the close of
a sale, others are not quite as forgiving. There is a tax
increase of 25 to 30% for companies owning property in
Spain who would purchase and resell within a year, which
would make the most avid investor cringe. Here are some
items of importance concerning these new tax rules:
An amnesty/transition period for companies owning property
in Spain to close and acquire their assets is one solution
for dodging the tax bullet. Offshore companies who have
primary property in Spain will now be considered as a
resident and will be taxed accordingly. The CGT fell from
35% to 18% - a good thing for non residents If you plan to
purchase property in Spain simply purchase it in your name
rather than a company name While some taxes are increased,
others are decreased. Nobody likes to pay more taxes than
what is absolutely required. Taking into account the number
of wars and other violent acts that have been spawned by
over-taxation, these law makers will do their best to make
taxation as fair as it can be for both the very wealthy and
the less than fortunate property owner in Spain.
The desired result that the European Commission is seeking
with regard to the non-resident owner of property in Spain
is that they will have to pay the same tax upon the sale of
said property as a resident would.
Incentive to own property in Spain and live there as well:
One relief that residents have as property owners is that
they don't have to pay any tax on profits made from the
sale of their primary residence as long as the profits are
put towards their next primary residence. If property was
purchased after 12/31/1994 previously determined capital
gain will be reduced by 11.11% for each year after the
first two that the property in Spain is owned by the
resident in Spain. It is still the same idea that has held
true through time; the man who works hard will have
something to show for it in the end. This includes owning
property in Spain. Thus, do not let taxes deter you from
investing in this beautiful land.
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Steve Magill is the right source for more information on
the Spanish mortgage market. He is a partner in
http://www.buyspain.co.uk and a Fellow in the British
Association of Entrepreneurs (FBAE). He holds international
renown for having hands-on experience in this field.
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