NEWS

CGT for non-residents in Spain drops from 35% to 18%

EU force cuts to Spanish Capital Gains Tax

Britons living in Spain set to save thousands of pounds | Britons living or working temporarily in Spain are set to save thousands of pounds following cuts to Spanish Capital Gains Tax, says Banco Halifax Hispania.

From 1st January 2007, Capital Gains Tax on property sales and personal income for non-residents in Spain will drop from 35% to 18%. This change was ordered following the European Courts upholding a complaint that is was unfair for the tax to be charged at 35% for non-residents, but only 18% for Spanish residents.

Recent research from Mintel states that 800,000 Britons now own a second home abroad. Spain is the most popular location amongst more than four in ten respondents who have either already bought or who are looking to buy abroad. The change in taxation will benefit those Britons who live temporarily in or who work for short periods in Spain and are therefore not registered with the Spanish authorities as residents.

Ian Smith, head of European Operations at Halifax plc said: "This is fantastic news for Britons living or working temporarily in Spain."

Over sixty five year olds who have lived in their home in Spain for the last three years are currently exempt from Spanish Capital Gains Tax.

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Published 2nd Mar 2006

'Return of the long-term investor'

Investors are making a confident return to the housing market this spring as yields stay strong and house prices begin to climb again, according to Linden Homes. The housebuilder said in a report that the market is vibrant compared with last year, driven by high levels of consumer demand and opportunities for investors to borrow money relatively cheaply. However, Linden Homes said that the continued health of the market would depend largely on static or falling interest rates. A further drop in rates over the coming months, as widely anticipated, would provide a further boost and convince remaining investors who have held their nerve throughout 2005 to return to the market with a long term view.
First time buyers too are making a noticeable return, said Linden Homes, underpinning prices and generating confidence at the lower end of the market, which is also good news for investors.

Philip Davies, chief executive of Linden Homes commented: "I am encouraged by the number of professional investors making reservations this January and February, who have chosen not to expand their portfolios until now.

"They are investing for the long term and are expecting steady house price inflation of 3 – 5% rather than a return to the growth levels of previous years."
Linden Homes expect the buy-to-let market to grow at a healthy pace throughout 2006, spurred on by factors such as increasing numbers of household break ups, growing student populations and increased immigration.

The firm expects the housing market to remain price sensitive through 2006 with asking prices remaining considerably more realistic than during 2005. "We can look forward to the market continuing to gather momentum in the first half of the year," said Mr Davies.

By Laurie Osborne, Editor
in2perspective