Here's the new ruling! Even if you own property in Spain but don't live in Spain you will have to pay taxes on your property in Spain as if you were living there. This is just one of the many tax rules that have come into play recently and is causing the off shore owners of property in Spain to consider whether it is lucrative to keep their property in Spain. These rules came into effect as of January 1st 2007 and are proving to be a challenge to those property owners who don't live in Spain.
While certain changes give the property owners who don't live in Spain a little break on taxes owed at the close of a sale, others are not quite as forgiving. There is a tax increase of 25 to 30% for companies owning property in Spain who would purchase and resell within a year, which would make the most avid investor cringe. Here are some items of importance concerning these new tax rules:
An amnesty/transition period for companies owning property in Spain to close and acquire their assets is one solution for dodging the tax bullet. Offshore companies who have primary property in Spain will now be considered as a resident and will be taxed accordingly. The CGT fell from 35% to 18% - a good thing for non residents If you plan to purchase property in Spain simply purchase it in your name rather than a company name While some taxes are increased, others are decreased. Nobody likes to pay more taxes than what is absolutely required. Taking into account the number of wars and other violent acts that have been spawned by over-taxation, these law makers will do their best to make taxation as fair as it can be for both the very wealthy and the less than fortunate property owner in Spain.
The desired result that the European Commission is seeking with regard to the non-resident owner of property in Spain is that they will have to pay the same tax upon the sale of said property as a resident would.
Incentive to own property in Spain and live there as well:
One relief that residents have as property owners is that they don't have to pay any tax on profits made from the sale of their primary residence as long as the profits are put towards their next primary residence. If property was purchased after 12/31/1994 previously determined capital gain will be reduced by 11.11% for each year after the first two that the property in Spain is owned by the resident in Spain. It is still the same idea that has held true through time; the man who works hard will have something to show for it in the end. This includes owning property in Spain. Thus, do not let taxes deter you from investing in this beautiful land.
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