Spanish Property Tax Reductions, Half-truths And Hype - Get All The Facts! By John Hill At Isnare.com Ezine Articles

There is a lot of talk just now in Spanish property circles about the recent reduction in Spanish Capital Gains Tax. Many Spanish property developers and, more importantly, the property agents who service the UK market, are quick to point this out and often use it to entice UK buyers to the Spanish market.

Kingdom-Homes believe this is the most recent example of the misleading half-truths and hype all-too-common in the Spanish property sector. The company points out that for the majority of UK resident buyers, the total Capital Gains Tax payable on the sale of Spanish property is unlikely to be very different than it was previously.

The sale of Spanish property by a UK resident will now give rise to a Spanish CGT liability of 18%, compared to 35% prior to the new law taking effect on 1 January. It is important to realise, however, that this same gain will also give rise to a CGT liability back in the UK, which net of the lower Spanish tax, per the Double Taxation Treaty between Spain and the UK, will now be correspondingly higher. Kingdom-Homes believe the most significant impact of this change will in fact be a higher taxation liability for Spanish residents, who will now pay 18%, instead of 15% previously.

Kingdom-Homes encourages UK buyers of Spanish property to ensure that they fully understand all the implications of buying, subsequently owning, and eventually selling a Spanish property, and not to be over-influenced by the partial favourable information too often advanced by those with a vested interest. The company believes that a major investment of this kind calls for substantial due diligence on the part of the British buyer prior to visiting properties in Spain and the help of a property agent in Spain that can be trusted to put the buyers interests before their own.

It is insightful perhaps to appreciate why this change to Spanish capital gains taxes was enacted in the first place. It was not to improve the Spanish property market, but in response to a European Union ruling forcing Spain to remove its tax discrimination against non-residents.

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