Capital Gains less taxing in Spain

So the dreaded Capital Gains Tax remains at 18% for most Brits, but the UK Budget added an extra 10% for high earners who want to sell second homes in the UK or Spain.

The tax clicks in only after the owner’s basic UK profit allowance of £10,000 has been applied along with the cost of any improvements and running costs (if renting it out).

This change is likely to encourage more Brits to buy a second home in Spain, where the capital gains tax is the same as the UK basic of 18%, but this can be offset by taking away taxes paid and other costs on acquisition and on selling and then working a multiplier based on the number of years in ownership. In Spain there is no extra percentage penalty for being a wealthier owner.

However, for official ex-Pat residents there is no CGT (Impuesto sobre Incremento de Patrimonio de la Venta de un Bien Inmeuble) payable in Spain if, within two years, you reinvest the proceeds of the permanent house sale in a replacement property and you get to deduct the buying costs from the profits when you come to sell the replacement house. Likewise for all residents over 65s.

More good news for resident house sellers in Spain is that any CGT paid can be offset against any personal income tax due for the year of sale.

Because the countries have a Double Taxation Agreement, whatever CGT a property seller who remains a UK resident has paid in Spain can be offset against what might otherwise be due in the UK, again minus the personal allowance.

Conclusion: With the abolition last year of Spain’s Wealth Tax, it is more likely property owners –resident and non resident - will pay far less CGT in Spain, but better to use a local accountant or gestor to do the sum and agree the amount with the Hacienda. They will ensure you understand your own personal obligations and liabilities and help mitigate the CGT handed over.

For serious buyers, there are many Spanish bank repossessions at bargain prices, Sterling has regained the 20% lost against the Euro since 2008, low cost mortgages of up to 90% and helpful sources like PropertyInSpain.Net who specialise in bank-owned bargains and no-hassle purchase of fully legal property in Spain.

Euro boosters for property in Spain

Britain's new coalition government has got off to a quick and appreciated start with national budget savings and waste-avoidance supposed to save £6 billion this year and this seems also to have boosted Sterling against the much troubled Euro.

The pound is approaching its highest level against the Euro since it slumped to near parity in November 2008 and that is enough for many prospective Spanish property buyers to make a positive move to grab one of the many villa and apartment bargains for themselves in 2010.

Others are waiting for the meat of the upcoming UK budget that pundits are confident will begin to sort out the McBroon fiscal failures and command the confidence of investors and credit rating agencies.

Either way, it seems it will cost Brits less to buy a bargain home in Spain, whether for family holidays, over-50s investment or fulltime retirement living. With all-time low interest on Spanish mortgages – typically around 2% - many would-be buyers are looking keenly at Spanish bank repossessions and other bargains that come with guaranteed 90% mortgages.

It makes sense to many people to go for the maximum Spanish mortgage and put their cash on deposit in the UK on interest rates that are twice what their mortgage is costing them. There can be further savings in acquisition costs in paying off part of the mortgage if sterling continues its upward rate in the years to come?

Euroland is displaying all the worst traits of a currency union that applies a one-size-fits-all interest rate to a group of 16 different countries. Britain, meanwhile, seems to have elected a coalition government with the ability and commitment to set right a national debt that will have doubled in the next year or so.

There’s a greater air of confidence in the Cameron Government as it makes a succession of “sensible decisions” to remedy 10 years of Labour fiscal foul-ups. With this new-found market confidence sterling is sure to win out against the Euro?

Low mortgages, prices 16%-50% below valuation, wide property choice in beach and golf resorts from specialists PropertyInSpain.Net and ownership costs only one third of the UK’s… Now is the time to buy a bargain property in Spain.

Bonanza for Spanish timeshare buyers

There could be a double your money bonanza for people who have purchased a timeshare property in Spain, as a new court ruling looks set to spark-off an avalanche of timeshare compensation claims against developers.

The new Spanish court ruling can now be used by up to 400,000 European timeshare owners to seek compensation from illegal contracts signed after 1996 in Spain and industry experts believe that timeshare compensation claims could reach two billion Euros.

As property buyers already realise, under Spanish law, even if a property is sold on all debts and encumberments are passed to the new owners. If a timeshare property has changed its ownership, the new owners will still be liable for new compensation claims.

Magistrate D. Juan Carlos Socorro Marrero has ruled that a timeshare developer in Gran Canaria must pay back double the amount of the timeshare deposit taken within the cooling off period.

In a case brought against Anfi Sales SL, part of the Anfi Del Mar Group in Gran Canaria, the Magistrate commented:” The case of paying an advance instalment is in opposition to what is dictated in the law 42/1998, article 11, the second section of this mentioned rule permits the acquirer “at any time” to get back double the stated amount.”

Anfi Del Mar reportedly one of the most largest and luxurious timeshare developments in Europe, is now set for up to 10,000 new claims for timeshare miss-selling under the 1994 European timeshare directive. Anfi Del Mar was once owned by TUI, the largest travel agent in the world. The company, who own and operate several of the best known UK high street tour operators including Thomson, were also responsible for taking illegal timeshare deposits at Anfi from 2001 to 2004.

At present there are over 200 live claims for timeshare mis-selling against Anfi Del Mar in the Spanish court system and with fresh claims coming in at a rate of 10 a week before this ruling, it is not known what affect this will have on the stability of Anfi Del Mar.

Under Spanish law, even if a property is sold on, all debts and encumberments are passed to the new owners or if a timeshare property has changed its ownership, the new owners will still be liable for new compensation claims.

This timeshare ruling does not apply to straightforward property sales where Brits and other foreign buyers have acquired the freehold of the apartment or villa. In the case of Spanish bank repossessions, sold by specialists like PropertyInSpain.Net, all unpaid mortgage amounts and other debt is wiped clean and a new mortgage deal offered.

In other new and resale deals, using an independent Spanish solicitor ensures all other debts lodged against the property are paid off before registering the new deeds.

Spain digs into their debt mountain

If you thought the new British coalition government was off to a flying start to cut the growing debt mountain and save the nation, better look at what the Spanish Government has been up to in the same period.

Two countries trading on over-priced properties and suffering from the fact the affordability level has been reached; two countries suffering from their highest unemployment levels; two countries pole-axed by Left-wing Socialist public sector overspending; two countries sharing the biggest tourism market in Europe as Brits continue their three decades relationship - and the Spanish get the lolly and the jobs.

Now the UK has seen the light and a new Government is promising to turn things around and the Spanish Government, with a general election due within the year, has seen what has happened to fellow impoverished travellers Greece and to the UK's failed Labour Government and decided enough is enough.

So there’s to be a new wealth tax on people with “high-economic capacity” as a sop to the less well off, who like their UK counterparts, are likely to be hammered under new austerity measures designed to reduce the Spanish deficit from 11.2% to 3% by 2013. Likely revenue is around EUR 2 billion, based on similar wealth tax abandoned in 2008.

The Spanish Government has got approval for a EUR 15 billion austerity package that includes wage cuts of 5% for civil servants just when the economy, like that of the UK, is just crawling out of the red. With the third largest deficit in Euroland Spain is hoping the move with have a calming effect…

Spanish banks, feeling the pain of their excessive lending in the property sector for the last decade made their first big move as four Spanish regional savings banks, led by Caja de Ahorros de Mediterraneo, reached a preliminary agreement to merge some of their operations.

The agreement, which also includes Cajastur, Caja de Extremadura and Caja Cantabria, would aim to create a joint banking group that seeks to “strengthen solvency and assets of the participating banks”. The move followed the Bank of Spain taking control of another savings bank Cajasur after trade unions blocked a planned merger with Unicaja.

Finally, there is to be a massive clampdown on motorist lawbreakers with increased on the spot fines and non payment collection extended to four years because 40% of traffic fines have never been paid in Spain. The Interior Minister said: This doesn’t mean that we think that we are going to make more money out of fines”. Where have we heard that before?

The property market is strengthening as increasing numbers of bargain hunters fly to buy in Spain and find Spanish bank repossessions at discounts of up to 50% and such outstanding loan to values that 90% mortgages are on offer.