Up to 90,000 foreigners who have sold a holiday home in Spain in the past 12 years could be owed thousands of pounds by the Spanish tax authority.
During that time, the price of holiday homes in Spain enjoyed a huge boom, with prices peaking in 2007.
But while the locals paid just 15% in capital gains tax (CGT) on their profits when they sold, Britons and other non-residents were charged a hefty 35%.
Experts estimate the homeowners who sold since 1997 could be due an average £13,500 tax refund.
The European Court of Justice has opened the door to this huge tax rebate for non-residents by ruling that the tax regime was 'unlawful and discriminatory' to other EU citizens.
This latest ruling paves the way for tax rebates totalling £283m, according to calculations by foreign currency specialists HiFX.
The ruling applies to homes sold after 1986, when Spain joined the European Community, but the differences in the level of CGT charged to Spanish and UK nationals mean that rebates are only due to those who sold from 1997 onwards.
Someone making €100,000 profit on the sale of their holiday home, for example, would pay €35,000 in tax if they were British, but only €15,000 if they were Spanish residents - a massive 133% difference. So they would be entitled to a rebate of €20,000 (£17,680).
In addition, they can claim interest on the amount of 6% a year. Spain's two-tier CGT system was changed to a single rate of 18% for all in 2007, after the Spanish High Court found in favour of a British couple who argued that they shouldn't have been charged more for selling their holiday home.
But at that time the tax authorities allowed only claims for tax rebates going back to 2004. Now the limit for claims has been extended.
The amounts owed will be boosted by the exchange rate as the euro has soared 27% against the pound in the past two years.
However, it is not easy to calculate exactly how much you will receive as you still have to allow for CGT in Britain. Under UK tax rules, if you are taxed less overseas than you would have paid here, then you have to pay our taxman the difference.
So once you receive your refund from the Spanish you may have to hand some back to HM Revenue & Customs.
Until April 2008, the top rate of CGT was 40% but rates were tiered - the longer you'd held the property, the less tax you had to pay. Everyone has an annual exemption from CGT which they can set against their gain before tax has to be paid. This amount rises every year.
Those most likely to gain are basic-rate taxpayers and those who owned their property for more than five years. Contact us for more information.
Tuesday, 1 December 2009
Monday, 30 November 2009
London to be just 8 hours away from Madrid in 2012
As reported by The Times, Spain and France have agreed to launch a rail company which will go on to build the train which will link Madrid and Paris. It would take five hours to reach Paris from Madrid via the new rail link, and a further three hour journey on the Eurostar to reach London in a combined time of eight hours.
The Times has reported that Spain’s Prime Minister, José Luis Rodríguez Zapatero, and François Fillon, the Prime Minister of France, have given their approval to the proposal. The new rail company will be jointly run by the Spanish RENFE and France’s SNCF with a 50/50 stake. The headquarters of the new company will be in Spain. RENFE has said that 300 million dollars are likely to be invested for purchasing new trains for the new link.
The plan might be delayed though, as the construction at the AVE high speed link from Figueras on the French border to Barcelona, is still incomplete.
The Times has reported that Spain’s Prime Minister, José Luis Rodríguez Zapatero, and François Fillon, the Prime Minister of France, have given their approval to the proposal. The new rail company will be jointly run by the Spanish RENFE and France’s SNCF with a 50/50 stake. The headquarters of the new company will be in Spain. RENFE has said that 300 million dollars are likely to be invested for purchasing new trains for the new link.
The plan might be delayed though, as the construction at the AVE high speed link from Figueras on the French border to Barcelona, is still incomplete.
Friday, 27 November 2009
Alicante airport traffic
Alicante airport is now the fifth busiest in Spain and it is bucking the national trend. More than 8 million people have used the airport so far this year.
One of the reasons for the success has been Ryanair. Everyone's favourite airline (hic) now flies to 50 cities in Europe from Alicante. Visitors from Northern Europe have also boosted numbers. October was the fourth consecutive month to see a rise in numbers. They have beaten the Canary Islands by over 800,000 for the month of October.
The Costa Blanca still keeps the title of being one of the favourite places to go in Spain. Alicante is such an easy destination for most cities in Europe......so what are you waiting for!
One of the reasons for the success has been Ryanair. Everyone's favourite airline (hic) now flies to 50 cities in Europe from Alicante. Visitors from Northern Europe have also boosted numbers. October was the fourth consecutive month to see a rise in numbers. They have beaten the Canary Islands by over 800,000 for the month of October.
The Costa Blanca still keeps the title of being one of the favourite places to go in Spain. Alicante is such an easy destination for most cities in Europe......so what are you waiting for!
Tuesday, 24 November 2009
Spanish property recovery is underway and prices will start to rise by 10pc per year says expert
I subscribe to various news sources, mostly about the Spanish property market, some more interationally orientated. One useful source, Idealista.com recently conducted an interview with Mikel Echavarren, head of Irea, a Spanish real estate consultancy, talking about the state of the real estate sector in Spain. As an experienced professional in touch with many different companies in the sector it is worth listening to what he has to say. Here is a selection of comments from his Q&A with Idealista News, the news section of the property portal Idealista.
Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.
So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.
Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.
What’s wrong with the official statistics?
They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.
Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.
Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.
How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.
Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.
So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.
Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.
What’s wrong with the official statistics?
They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.
Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.
Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.
How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.
Monday, 23 November 2009
Spanish developers say market is recovering
The market for new homes is on the road to a mild recovery, claims the G-14 group of Spain’s leading developers. Sales of newly built homes will continue “consolidating in the coming months” said Pedro Pérez, head of the G-14. And figures do actually suggest that it's not just wishful thinking by developers desperate for the market to start mopping up the properties they built.
The latest sales figures from the National Institute of Statistics show that sales of newly built properties increased by 7.6% from August to September, though on an annualised basis sales were down 20%, so there is some basis for the optimism.
“It’s been comforting to see sales rise for the 5th consecutive month, something that means we can say that the sector is recovering since it touched bottom in April,” Pérez told the Spanish press.
Sales are bouncing back thanks to lower prices and more selective mortgage lending by banks, argue the developers.
The recovery in sales will continue in the months ahead, says Pérez, in part because developers will make “every effort possible” to make prices more attractive, something that we have noted here.
The latest sales figures from the National Institute of Statistics show that sales of newly built properties increased by 7.6% from August to September, though on an annualised basis sales were down 20%, so there is some basis for the optimism.
“It’s been comforting to see sales rise for the 5th consecutive month, something that means we can say that the sector is recovering since it touched bottom in April,” Pérez told the Spanish press.
Sales are bouncing back thanks to lower prices and more selective mortgage lending by banks, argue the developers.
The recovery in sales will continue in the months ahead, says Pérez, in part because developers will make “every effort possible” to make prices more attractive, something that we have noted here.
Tuesday, 10 November 2009
Derivatives point to housing slowdown
LONDON (Reuters) - Housebuyers may still have a chance to secure a bargain home between 2010 and 2011, with annual house price growth seen at about half the 5.5 percent expected by end-2009, indicative derivatives data shows.
Participants in Britain's junior property derivatives sector said the recovery of the supply starved residential market remained on solid footing, but price rises were set to slow as housebuilders upped construction in an effort to meet demand.
"Physical house prices in the UK have continued to increase despite worries that unemployment, restrictive lending and an increase in taxation would prevent recovery," Peter Sceats, a broker at Tradition Property told Reuters.
"Some traders are focusing heavily on the core fundamental of supply and demand and believe the rate at which new homes are being (and have been) built is severely insufficient for the UK's future housing needs," he said.
Average UK house prices are seen rising by nearly 12 percent over the next five years, the data shows, against September projections of an 8.5 percent rise for the same period.
On November 3, Halifax Building Society, one of the UK's largest mortgage providers, said house prices had risen 1.2 percent in October, squeezing the annual decline to its smallest in one-and-a-half years as higher demand and a lack of homes for sale buoyed prices.
Last week, housebuilders Redrow and Taylor Wimpey added to the rising tide of optimism in the UK housing market, after reporting stabilising sales and shrinking inventories.
"Despite Taylor Wimpey reporting strong results in a market they described as significantly better than last year, the property derivative market is still slightly cautious about 2010 and 2011," said Michel Heller, a trader at CB Richard Ellis/GFI.
Notwithstanding this caution, Heller said derivative prices are pointing to a brighter longer-term, with an average expected house price rise of around 25 percent over the next 10 years.
Average UK house prices, as measured by the non-seasonally adjusted Halifax House price index, stood at 165,430 pounds in October, from a peak of 201,081 pounds in August 2007.
Below are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax House Price Index derivatives.
The young market provides investors with an opportunity to adjust or hedge exposure to the UK housing market synthetically -- in a cheaper and more efficient way than buying or selling bricks and mortar.
(Reporting by Sinead Cruise; Editing by Andrew Macdonald)
Participants in Britain's junior property derivatives sector said the recovery of the supply starved residential market remained on solid footing, but price rises were set to slow as housebuilders upped construction in an effort to meet demand.
"Physical house prices in the UK have continued to increase despite worries that unemployment, restrictive lending and an increase in taxation would prevent recovery," Peter Sceats, a broker at Tradition Property told Reuters.
"Some traders are focusing heavily on the core fundamental of supply and demand and believe the rate at which new homes are being (and have been) built is severely insufficient for the UK's future housing needs," he said.
Average UK house prices are seen rising by nearly 12 percent over the next five years, the data shows, against September projections of an 8.5 percent rise for the same period.
On November 3, Halifax Building Society, one of the UK's largest mortgage providers, said house prices had risen 1.2 percent in October, squeezing the annual decline to its smallest in one-and-a-half years as higher demand and a lack of homes for sale buoyed prices.
Last week, housebuilders Redrow
"Despite Taylor Wimpey reporting strong results in a market they described as significantly better than last year, the property derivative market is still slightly cautious about 2010 and 2011," said Michel Heller, a trader at CB Richard Ellis/GFI.
Notwithstanding this caution, Heller said derivative prices are pointing to a brighter longer-term, with an average expected house price rise of around 25 percent over the next 10 years.
Average UK house prices, as measured by the non-seasonally adjusted Halifax House price index, stood at 165,430 pounds in October, from a peak of 201,081 pounds in August 2007.
Below are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax House Price Index derivatives.
The young market provides investors with an opportunity to adjust or hedge exposure to the UK housing market synthetically -- in a cheaper and more efficient way than buying or selling bricks and mortar.
(Reporting by Sinead Cruise; Editing by Andrew Macdonald)
Wednesday, 4 November 2009
Spanish car sales leap in October
Sales of motor vehicles in Spain jumped by over 26% for the month of October, when compared to the same month in 2008. The main cause of this leap is said to be the Spanish government subsidy, which is seemingly doing what it was intended, and propping up the weak Spanish car industry.
The 26.5% increase was reported by the Spanish car manufacturers association, ANFAC, September was also buoyant, up 18%. This is a big turnaround from the beginning of the year when sales were down by nearly 25%, in reality making this a 50% increase, when compared to the early months of 2009.
Nearly 100,000 units were sold in October, as sales continue to climb since the government announced a 2000 euro subsidy in May.
The 26.5% increase was reported by the Spanish car manufacturers association, ANFAC, September was also buoyant, up 18%. This is a big turnaround from the beginning of the year when sales were down by nearly 25%, in reality making this a 50% increase, when compared to the early months of 2009.
Nearly 100,000 units were sold in October, as sales continue to climb since the government announced a 2000 euro subsidy in May.
Un-registered mobile phones will be cut off next week
From November 9th all mobile phone prepaid card users, i.e. those without a contract, must be registered with the phone company, and must prove their identity.
The government has stated that a rumoured extension will not happen, and any unregistered phones will be disconnected on the ninth.
Phone operators had strongly requested a transition period, during which users could register their phones, but the Ministry of Interior has decided that the mandatory cut offs will happen on the ninth.
The government has stated that a rumoured extension will not happen, and any unregistered phones will be disconnected on the ninth.
Phone operators had strongly requested a transition period, during which users could register their phones, but the Ministry of Interior has decided that the mandatory cut offs will happen on the ninth.
Tuesday, 20 October 2009
Benidorm cares
I read today that a 10 year old girl in Pamplona in the north of Spain requires experimental cancer treatment and as tends to be the case experimental treatment costs a lot of money. Therefore how nice to see hundreds of people turn up to take part in a walk the past Sunday to raise funds for the family, in Benidorm.
The walk was organised by the local sports centre in collaboration with the Associacion Anemona. The walk started on Paseo Tamarindos in La Cala and to ended at the town hall after crossing the Poniente and Levante promenades. Each participant paid 5 euros to take part with the money raised going towards the costs of treatment.
For their efforts those that took part receive a T-shirt and refreshments at various establishments along the way including McDonalds in the Rincon de Loix. Well done everyone!!
The walk was organised by the local sports centre in collaboration with the Associacion Anemona. The walk started on Paseo Tamarindos in La Cala and to ended at the town hall after crossing the Poniente and Levante promenades. Each participant paid 5 euros to take part with the money raised going towards the costs of treatment.
For their efforts those that took part receive a T-shirt and refreshments at various establishments along the way including McDonalds in the Rincon de Loix. Well done everyone!!
Monday, 19 October 2009
Spain: The worst is over says Ministry of Housing
Despite price falls of 8% this year, the market is beginning to stabilize and now is the time to buy according to Spain’s Ministry of Housing.
"Talk of a slump (in prices) is no longer fitting” said an official from the Housing Ministry during a press conference for the Ministry’s latest quarterly housing market figures. National average prices have fallen 8% over 12 months although the pace of the price falls has eased in the past few months.
Not everyone agrees that the worst is over. A Reuters housing poll of Spanish and foreign-based economists found that on average prices were expected to fall 32 percent from their 2007 peak. So far they have fallen just 7% in nominal terms, according to the Ministry of Housing’s figures.
"Talk of a slump (in prices) is no longer fitting” said an official from the Housing Ministry during a press conference for the Ministry’s latest quarterly housing market figures. National average prices have fallen 8% over 12 months although the pace of the price falls has eased in the past few months.
Not everyone agrees that the worst is over. A Reuters housing poll of Spanish and foreign-based economists found that on average prices were expected to fall 32 percent from their 2007 peak. So far they have fallen just 7% in nominal terms, according to the Ministry of Housing’s figures.
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