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Change to capital gains tax for owners of properties in Spain

15th May 2007 Print
There has been a change in the tax laws in Spain which means that all property owners are now to be treated equally with capital gains tax at 18% of the declared gain.

If a resident is aged 65 years or over they are exempt from this tax, as long as they have lived in the property for three years. In addition the existing 5% retention will be reduced to 3% and this can be subtracted from any capital gains tax that has to be paid.

“Whilst this is not a tax that purchasers need make at the moment of purchase, it is nevertheless something that they should be aware of”, says Des Rowson of DLR Properties Overseas a member of FOPDAC (Federation of Overseas Property Developers, Agents and Consultants).

“It is also recommended that if purchasing a new property you discuss with your agent the arrangement of a bank guarantee, which is based on the amount of cover required and is a type of insurance against losing any monies paid prior to completion. This is arranged by the builder/developer and paid for by the purchaser.

“It is important to be aware of all money matters relating to buying abroad, before commitment”, says Steve Emmett, Chairman of FOPDAC “Seeking out a reputable company that has full knowledge of tax implications is crucial.

In the burgeoning overseas market there are numerous companies selling property abroad, and in an unregulated industry this can lead to amateurs offering little guidance.

Choosing a professional agency with years of experience, which takes into account everything that a buyer needs to know is literally worth its weight in gold!”

Concluded Des, “If you are considering investing in Spain it is also important to know that non residents buying property will be given a Fiscal Number (NIE). The solicitor acting on behalf of the purchaser will obtain this for the client and it must be in the hands of the purchaser before a completion can be made. This is part of new legislation which commenced in January of 2007.”

For further information, visit fopdac.com or dir-properties.co.uk.