The Spanish Government Slashes Capital Gains Tax By A Whopping 50%

There seems to be an awful lot of doom and gloom around in Spain at the moment as many people are lamenting the poor state of the Spanish economy, and for some strange reason, some Brits are packing their bags and heading back to Blighty. But you have to ask yourself why on earth they have decided to do so! It’s perfectly understandable if they’ve lost their livelihood here in Spain. But if that’s not the case, then in actual fact there has never been such a good time to be a British ex-pat in good old España for many a year.

Yes, of course the bottom has fallen out of the property market, so if you’re contemplating selling up and moving out, now’s a bad time to do so. But if you’re looking to buy or invest in property, it’s full steam ahead! Not only are prices at an all time low, with many properties losing as much as 50% of their face value, but the Spanish government has decided to slash the rate of Capital Gains Tax (CGT) by a mammoth 50%. Yes, it’s true! If you buy a property in Spain between now and the 31^st December, you’ll be exempted from 50% of any CGT (Impuesto Sobre la Plusvalía).

It’s a bold move by the government in an effort to breathe a little life back into the ailing Spanish property market.

The deal is open to residents and non residents, as well as Spanish businesses. At present the rates are as follows:

Residents

• Properties from 0 to 6,000 Euros – 21%

• Properties between 6,000 and 24,000 Euros – 25%

• Properties between 24,000 and above – 27%

Non-Residents

• A flat rate of 21% on all properties regardless of the purchase price.

In order to qualify for this 50% reduction, which will be realised whenever the property is sold, the following conditions have to be observed.

• The property must be bought between 31/5/12 and 31/12/12
• The property must be a second home, or an investment property
• The property must be an urban property not a Finca or countryside residence
• There must be no relationship (private or business) between the buyer and the seller
• The property must not be a commercial one

In general the reduction in Capital Gains Tax is being widely welcomed. It is being viewed as a very positive incentive towards encouraging potential buyers and investors to purchase property here in sunny Spain. The problem is that with hundreds of thousands of unsold properties on the market across Spain, (but especially in the Costas), the situation will continue to stagnate. But the combination of the all time low pricing, and this drastic cut in Capital Gains Tax, presents a tempting proposition. There’s never been a better time to buy property here in Spain, not for decades! Even the exchange rate is very favourable, with the £ buying more Euros than it has for the past 4/5 years.

One of the biggest potential sources of Spanish property buyers is people purchasing holiday homes. These people are more likely to sell in years to come, and it is then that anyone who buys their holiday home between now and December this year, will make a serious killing with the 50% reduction in the amount of capital gains tax that they would otherwise owe.

So if you you’re not one of the crowd, and you like to swim against the tide from time to time, this is a great opportunity to do so, and to save yourself a considerable sum of money into the bargain. Strike now while the iron’s hot!

Image courtesy of http://www.flickr.com/photos/76657755@N04/