Spanish property tax cut for new builds

Last Friday the Spanish government announced a temporary reductions in the value added tax (IVA), lowering it from eight percent to four percent for any purchase of a new property. The government’s aim is to rekindle Spanish property sales and help reduce Spain’s stock of unsold new homes, which amount to approximately 687.000 properties in Spain, and just over 20.000 in the province of Malaga.

This gives buyers an incentive to finalise their purchase within the next four months. On an average property worth 200.000€ the cut means that buyers will save themselves some 8.000€. the majority of the 20.000 unsold brand new homes in the province of Malaga are in the hands of developers or the banks.

This tax deduction is of course welcomed, but if banks are still unwilling to relax their criteria regarding lending, the effects will more than likely be subdued.

So the properties that will benefit the most are those that have developer’s mortgages in place. The questions though, how does this apply to new build properties that have come under the banks control? Are these ‘new builds’ or have they been transmitted once and are thus resale’s? This question has yet to be answered.

Along the Costa del Sol, the areas that should benefit the most from this tax cut are Marbella and Estepona. These areas saw a high concentration of building works in the last few years due to the property boom.

Although this tax cut should not really benefit the property market in the long run, as it will only motivate existing buys to go to completion slightly sooner, it does benefit two groups. The first group will be the developers, who will get to shift some of the stock sooner, second the buyer, who stands to save several thousand euros.

There are also rumours that if the Partido Popular win the next elections, this tax cut might be extended further, but like all political promises, we will just have to wait and see…

Regards
Andrew Bellés

Original article

Fuengirola apartment for sale with pool in the center of town

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200m to the beach, this 2 bedroom apartment in one of the main avenues in Fuengirola, Costa del Sol enjoys a south facing terrace with pool and garden views. The apartment has been renovated with a new kitchen, floors and new bathroom and stays furnished. Because of its location near beach it has a huge rental potential. Enclosed urbanization with pool and garden close to all amenities. We recommend the viewing it is ideal for a holiday home.

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Spacious 1 bed duplex penthouse with stunning views in Rivera del Sol, Costa del Sol. Amazing views to the Mediterranean, from a south west facing terrace. Only 10 minutes to the beach, this secure urbanization is in a peaceful location. It offers 2 swimming pools, mature gardens, tennis court and communal parking, all in an enclosed resort. Ideal for a holiday home or for permanent living. Just reduced to 99.000€!

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British expats takes on Danish Bank

Tempted by the offer of a salary for life and an inheritance tax reduction for his two daughters, Euan Armstrong, 73, signed up to an equity release plan in 2004 with Denmark’s biggest bank using his €2 million home in Spain as collateral.

Six years on, Mr Armstrong is forced to live with one of his daughters as he prepares to take on the bank that promised so much yet threatens to leave him penniless.

His lawyer is filing eight similar complaints against various Nordic banks on behalf of expats who bought into equity release plans in the false hope that they could avoid inheritance tax and enjoy a salary for life. He believes the true number of victims could run into the hundreds.

Scottish-born Mr Armstrong, aware that his daughters would eventually be liable to pay Spain’s top rate of 34 per cent inheritance tax on the €2 million Costa del Sol property he owned outright in Malaga, sought the advice of an independent financial advisor known to advise British expat pensioners living on the coast.

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June Spanish property market still weak

Home sales in June were the lowest since the property crash began, show the latest figures from the Statistics Institute (INE).

There were 24,699 home sales in June (excluding social housing), down 26pc on the same time last year, below even June 2009, when the crash was thought to be at its nadir. The graph above makes it clear that, after a deceptively promising start, 2011 (in red) is turning out to be the worst year yet.

Compared to June 2007, sales were down 60pc – a teeth-jarring fall by any measure.

Year-to-date, transactions are down 11pc compared to last year, 3pc compared to 2009, and 55pc compared to 2007, as illustrated by this table.

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