New Taxes On Property

Capital Gains Tax

We are still getting used to the tax changes for 2007 with regards to Capital Gain Tax. In this year, both residents and non-residents paid 18%. Previously non residents paid at 35% and residents paid at 15%. Now we have to get used to some more changes.

On January 1, 2010, Spain raised its capital gains tax from 18% to 19% on profits up to 6.000 Euros made in one year. The rate now jumps to 21% on profits over 6.000 euros.

However, as of June, 2010, the tax increase is frozen at 19% for non-resident property sellers, meaning they pay only 1% extra tax instead of 3%. Most observers feel that this is an error on the part of the lawmakers which will be corrected in the near future.

Property transfer tax rises for properties over 400.000 Euros

Spain's ITP, the tax charged on private re-sales of property between individuals, also rises from 7% to 8% on transactions over 400.000 Euros. This leaves out the majority of private sales in today's property market. This property transfer tax is paid by the buyer.

European Court Extends CGT refund to 1997

It was manifestly unfair that residents paid only 15% capital gains tax while non residents paid 35% up to 2007, especially when the non-resident sellers were EU citizens.European Court of Justice has ruled that non-resident sellers all the way back to 1997 can claim a refund. The ECJ over-ruled Spain's claim to a four-year statute of limitation of the claims.

Visit our website and view a selection of Spanish property bargains and distressed sales in the Costa del Sol www.propertyoverseasgroup.com