Good news – Tax reductions

Filed under : Financial Planning, Property, Tax Planning - Inheritance

REDUCTION IN TAXES FOR NON RESIDENT PROPERTY OWNERS

We are very pleased to report a reduction in three important taxes for non-resident property owners in Spain. In moves to encourage property purchases and ownership the Spanish government has announced that from 1st January 2016 European citizens as well as those from Norway and Iceland will pay 19.50% instead of 24.75% for their non-resident property taxes. This will apply to the period from January to December 2015 with the declaration made in 2016 and is a reduction of 5.25%.

Capital Gains tax is also to be reduced. For sales made after 1st January 2016 CGT will be 19%. The tax in December 2014 was 21%. There is a gradual reduction implemented for sales during 2015 – from 1st January 2015 to 11th July from 21% to 20% and from 12th July 2015 to 31st December 2015 at 19.50%. If your property was sold before 1st January 2015 a calculation will be used based on the coefficients applicable to the year of purchase.

The other important reduction is on the tax paid on the rental of property. If you rent out a property in Spain EU citizens and those from Norway and Iceland will be able to declare the rental with a reduction of 5.25% from 24.75% to 19.50%. Deductions can be made for Community Fees, IBI local rates and some other expenses.

A good number of non-resident property owners are now receiving tax demands and checks are being carried out where property is rented out. Some property owners who have not been making tax declarations may be keen to take advantage of these reductions so it will pay to act quickly in updating your tax situation if you own Spanish property. If you need information or a review of your tax position please contact us on [email protected] All our clients are regularly updated on their tax obligations and our specialist tax partner Antonio Diaz will be pleased to advise you.