Global Real Estate & Tax News from Propertyshowrooms.com

Malaysia's property price rises 'are healthy'

Wed, 11 Apr 2012 00:00:00 GMT

Double-digit price rises for real estate in Malaysia indicate a healthy market.

This is according to deputy finance minister Donald Lim, who said increases of ten to 15 per cent a year - and up to 20 per cent in the capital, Kuala Lumpur - are acceptable and are not yet indicators of a property bubble.

He claimed that measures such as real property gains tax will help manage the market if prices do get too high.

The comments came as Malaysia's valuation and property services department released the latest All House Price Index, which rose by 6.6 per cent to 156.9 points during the final three months of 2011.

Malaysia's average property values reached 217,297 ringgits (£44,625) in the final quarter, while Kuala Lumpur property prices hit an average of 487,219 ringgits during the same period.

There were 4.5 million residential properties in Malaysia as of the end of 2011, with two and three-storey terraced houses making up the largest proportion of these, according to further figures from the National Property Information Centre.

Suggestions made to improve Australian housing affordability

Wed, 11 Apr 2012 00:00:00 GMT

Steps need to be taken in order to make the Australian property market more accessible to young people.

This is the assertion of a new report from The McKell Institute, which revealed it now costs nine times the average annual salary to buy a home in Sydney.

Among the measures that should be taken are making changes to the planning system to enable the lack of supply of new properties to be addressed, introducing a land tax in place of stamp duty to deter speculative investment and encourage first-time buyers and to reform the social housing system in order to attract greater private investment in the sector.

Speaking to Australian Associated Press, co-author of the report Dr Tim Williams explained one of the biggest problems facing Sydney's housing market is the lack of supply.

"We're constraining supply, and shovelling up demand to people who already have money, and making it more difficult for their children to access homeownership," he stated.

Spanish property owners 'advised on tax'

Tue, 21 Feb 2012 00:00:00 GMT

People who own a property in Spain have been advised to ensure they meet their financial obligations with the nation's tax office.

In an article posted on Round Town News, lawyer Carlos Baos, of the White and Baos law firm, pointed out it is mandatory for those classed as non-resident in Spain to submit a non-resident tax return.

This applies even if no income is earned from any assets in the country, with Mr Baos explaining the Spanish tax office has recently indicated it will crack down on those who do not comply with this legislation.

He stressed the importance of contacting the relevant authorities and updating a tax status, as this can help avoid penalty charges or other fines being levied.

IberoSphere recently warned those buying real estate in Spain to make sure they are aware of complimentary tax, which can be collected up to five years after the purchase date.

The news provider suggested setting aside money to cover the cost, which is charged at seven per cent of the difference between what was paid for the property and the valuation provided by the Spanish authorities.

Rising number of homes for sale on the French Riviera

Thu, 2 Feb 2012 00:00:00 GMT

There has been a significant increase in the number of properties being put on the market in the French Riviera in the first month of this year.

EstateNetFrance revealed nearly 16 per cent more homes were for sale in January, compared to December.

This also represents a 12 per cent rise in comparison to the same month in 2010.

According to the organisation, many sellers were waiting until the new tax regulations relating to property in France came into force at the start of January to put their houses up for sale.

In addition, assets that had previously been taken off the market have been listed again, increasing the pool of available real estate.

The company pointed out it is a "buyer's market" in France, even in the luxury sector on the French Riviera, where the average price of a high-end home has fallen below €2 million (£1.7 million) for the first time.

Last month, EstateNetFrance asserted buyers still view property on the French Riviera as "a secure, long-term investment", which is why there was substantial growth in the number of real estate transactions recorded in the area during 2011.

Correction in Spanish house prices 'could slow due to new tax rules'

Tue, 17 Jan 2012 00:00:00 GMT

Changes to the Spanish personal income tax law 35/2006 introduced on December 31st 2011 may hold back a correction in the country's real estate prices, it has been claimed.

Fitch Ratings asserted that the extension of benefits to those purchasing a property in Spain for the first time and homeowners making improvements to their dwelling may have short-term advantages, but added this could support higher house prices in the long term.

Under the new law, a tax deduction of up to €1,350 per year (£1,115) can be made annually over the life of a mortgage for any first-time buyer or owner regardless of income.

Previously, only those earning less than €24,100 per year were eligible for the tax relief.

However, the firm stated it expects the value of residential real estate in Spain to continue to fall due to the "lack of credit in the economy, the significant property overhang and the weak state of the broader macroeconomic environment".

Figures published at the beginning of January by Sociedad de Tasacion revealed the value of Spanish homes dropped by four per cent over the course of 2011, with the organisation predicting further price falls in 2012.

Italian property market 'will remain buoyant into 2012'

Wed, 14 Dec 2011 00:00:00 GMT

The real estate market in Italy is expected to remain "buoyant" for the first half of 2012, one expert has claimed.

Linda Travella, who has been involved in the country's property sector for more than 20 years, predicted the high levels of interest experienced in the final three months of 2011 will carry over into next year.

"The last quarter of 2011 is the busiest it has been for four years, with a surprising amount of enquiries and sales of Italian property," she stated.

Ms Travella added interest is coming from a variety of sources, with buyers from the UK, Russia, Canada, Norway and Switzerland all keen to own a home in the nation.

She also revealed investors hoping to generate a reasonable return on their capital should keep a real estate asset for at least three years, although holding it for five years can be more beneficial when it comes to taxation.

Earlier in December, the Italian cabinet decided to reintroduce a property tax on first homes that was abolished by former prime minister Silvio Berlusconi. This may be something potential buyers want to bear in mind before committing to a purchase.

Cyprus property sales fall

Tue, 13 Dec 2011 00:00:00 GMT

Sales of property in Cyprus have dropped for the 16th month in a row in November, reaching their lowest level since January 2009, according to Department of Lands and Surveys figures.

Nicosia was the hardest hit, with sales declining by 55 per cent, while Larnaca saw a fall of 32 per cent, Famagusta 29 per cent, Limassol 24 per cent and Paphos 15 per cent, Cyprus Property News reported.

Throughout the month, the number of contracts deposited with the Land Registry fell by 35 per cent across Cyprus. In all, 485 were received, compared with the 741 that reached the organisation in 2010.

"Unfortunately, the market is unpredictable and may deteriorate further or improve at any time," business development director of Aristo Developers Iros Miltiadous remarked to the publication.

Earlier this month, property transfer fees in the country were revised, with those paying value-added tax (VAT) on purchases exempt from the levy. Those who do not pay VAT will see fees reduced by 50 per cent, with the changes due to remain in force for six months.

Changes to Cyprus property transfer fees agreed

Thu, 8 Dec 2011 00:00:00 GMT

The Cypriot government has agreed to change the regulations relating to property transfer fees on the island for a period of six months.

A report by Cyprus Property News explained that in some cases, no tax will be payable on a real estate transactions, while it will be reduced by half in other instances.

It only affects the first sale of a home, with the publication noting it is hoped the move will "stimulate sales of new property".

Under the new law, those who are required to pay value-added tax (VAT) on their real estate deal will not have to fork out for a property transfer fee.

For those who are exempt from VAT on such a purchase, the charge to transfer the home will be halved.

These regulations came into effect on December 2nd and will apply to the Cyprus property market for six months.

Meanwhile, a recent poll conducted by the newspaper among its readers found that the top concern for people buying a home on the island is title deeds.

According to those surveyed, these documents need to be "issued promptly" and taking steps to ensure this occurs could help boost the country's property sector.

Italian cabinet votes to reintroduce property tax

Wed, 7 Dec 2011 00:00:00 GMT

A tax on first homes is to be reintroduced in Italy, it has been revealed.

Following talks over the weekend about how best to reduce the country's budget deficit, a package of austerity measures has been finalised.

Among them is to bring back a levy charged on first home purchases that was abolished by the previous government under Silvio Berlusconi.

New prime minister Mario Monti, who was sworn in on November 16th, will now take the proposals to the country's parliament and if approved, it is thought the steps will save €30 billion (£25.79 billion).

Last month, a letter sent by former economy minister Giulio Tremonti to European Union authorities suggested that abolishing the Italian property tax may have cost the country as much as €3.5 billion in lost revenue each year.

In November, president of Istat Enrico Giovannini told Reuters that, as so much of Italians' wealth is tied up in real estate, a permanent tax on such assets would help produce income for the government.

New government 'will improve confidence in Spanish property'

Tue, 6 Dec 2011 00:00:00 GMT

An upturn in confidence in the Spanish real estate market is expected following the election of a new government in November, it has been claimed.

Director of Lucas Fox International Properties Alex Vaughan stated that his company is "hopeful" about the prospects for the sector now that the People's Party (PP) has come to power.

He added that because the PP holds a majority in parliament, it is in a position to "address the current financial crisis and its impact on the property market".

Mr Vaughan added that proposed tax breaks for the Spanish real estate sector, including an extension of the reduction to value-added tax (VAT) on the purchase of new-build homes, will "help to sustain and build on the healthy signs in the property market that we observed in the third quarter [of this year]".

The VAT cut on new houses - which saw the former eight per cent rate reduced to four per cent - was introduced by the outgoing government and is due to expire on December 31st 2011.

Suggestions made to boost Spanish property market

Mon, 28 Nov 2011 00:00:00 GMT

Several real estate experts in Spain have made suggestions about how the new government can boost the country's property sector.

Founding partner of Menorca-based agency Bonnin Sanso Colin Guanaria told A Place in the Sun that changes to taxation is the way forward.

In an interview with the publication, he recommended that the government should "dramatically reduce taxes for the building and housing sector, including the property sales tax".

Mr Guanaria added that stimulating tourism across the nation could also help its real estate market recover.

Chris Mercer, from Murcia-based estate agency Mercers, highlighted the need to embark on a public relations (PR) exercise to ease concerns about purchasing a Spanish property.

"What is needed is a major PR campaign to win back the doubters, which needs to show real figures for what is happening on the ground," he told the publication.

The previous government cut the value-added tax payable on new-build houses in the nation by 50 per cent in a bid to boost the real estate market.

Buyers can take advantage of the reduction until December 31st 2011, when the tax will revert back to its previous level of eight per cent.

Could Italy reintroduce property tax?

Fri, 25 Nov 2011 00:00:00 GMT

Italy's new prime minister Mario Monti was sworn in last Wednesday (November 16th) and has proposed a number of measures to help tackle the country's public debt.

Among the suggestions is the reintroduction of a property tax that was abolished under former leader Silvio Berlusconi in 2008.

Former economy minister Giulio Tremonti estimated that cutting the real estate tax has cost the Italian government around €3.5 billion (£3.02 billion) in lost revenue over the past three years, in a letter he sent to European Union authorities before leaving office.

According to Reuters, Mr Giovanni pointed out that much of the country's wealth is tied up in Italy's property sector.

"How do you get this wealth to produce income and growth? The first hypothesis is a property tax, not a one-off tax, but a permanent one," he suggested in this letter.

Earlier this month, Global Property Guide published figures from think-tank Nomisma, which showed that the value of real estate in Italy fell by 0.7 per cent during the year to June 2011.

New Spanish government 'to focus on property sector'

Wed, 23 Nov 2011 00:00:00 GMT

The newly-elected People's Party in Spain is reportedly intending to focus on kick starting the country's real estate industry.

According to Reuters, among the measures being proposed are a reduction in tax for those purchasing a property in Spain, as well as steps to improve the prospects of the rental sector.

Figures cited by the news provider revealed that Spain's housing has fallen in value by 24 per cent in real terms since hitting a peak in 2007.

The publication added that further price drops of between 35 and 40 per cent are anticipated over the coming decade.

Meanwhile, PropertyInSpain pointed out that before Spain's property bubble burst, almost 14 per cent of workers were employed in construction.

The website suggested that the new centre-right government is aiming to make the building industry the biggest driver of the economy once again.

In the elections held this weekend (November 20th), the People's Party beat the Socialists by 16 percentage points to achieve an absolute majority in parliament.

Level of Spanish banks' exposure to bad property debts revealed

Fri, 4 Nov 2011 00:00:00 GMT

The latest Financial Stability Report from the Banco de Espana has revealed the extent to which banks in Spain are tied to "troubled" assets in the real estate sector.

According to the central bank, financial institutions have been linked to €176 billion (£151.5 billion) worth of exposure to the Spanish property market, constituting 52 per cent of total loans received by the country's developers.

The report cautioned that the continuing economic instability in the eurozone region, coupled with a weak economic performance in Spain itself, "might result in increases in bad debts on top of those already seen".

Earlier this year, the Spanish government announced a 50 per cent reduction in the value-added tax charged on the purchase of new-build homes, cutting it to four per cent of the dwelling's worth.

The lower rate is due to expire on December 31st 2011, with officials hoping that the change will help Spain's developers shift some of the 700,000 empty holiday homes that were constructed before the market crashed.

More Brits turn to French property

Thu, 20 Oct 2011 00:00:00 GMT

Research has shown that more Brits bought properties in France during 2010 than in the previous year.

According to the study published by BNP Paribas, the number of purchases of dwellings made by British buyers last year was 23 per cent higher than in 2009.

Meanwhile, investors from the UK accounted for eleven per cent of all foreign property transactions in France, making them the second-largest group to plough their money into the country after the Portuguese.

In terms of the target locations for British buyers, south-west Aquitaine province proved the most popular - including Bordeaux and the Basque Coast - while the Rhones-Alps region and Provence Alps Cote de Azur also attracted attention from UK-based investors, the report revealed.

However, concerns have been raised recently about the introduction of a new capital gains tax regime, which will impact upon second homeowners in France.

Some industry experts have predicted that more properties will be placed on the market over the coming months as owners try to avoid paying additional duty when the tax comes into force in February next year.

Amendment to French CGT 'may benefit second homeowners'

Tue, 18 Oct 2011 00:00:00 GMT

There has been much talk in recent weeks about the effect the changes to the French capital gains tax (CGT) regime will have on the property market.

Some estate agents in the country have predicted a rise in the number of foreign owners selling their assets in the coming months in a bid to beat the introduction of the new tax rates in February next year.

However, the French parliament has now included an amendment to the bill which could benefit owners of properties in France, chief executive of Leggett Immobilier Trevor Leggett explained.

The new addition to the regulations could see the levy waived if the home has been owned for five years or longer and the investor has not had a principal residence in France for at least two years.

He stated: "The amendment is primarily aimed at providing relief to French expats, but could benefit hundreds, if not thousands, of UK owners of French houses who had been reluctant to put their properties on the market."

However, Mr Leggett cautioned that the exact nature of the changes may not yet have been set in stone and advised investors to keep an eye out for new developments.

Cut in Spanish property taxes 'is helping the market'

Fri, 14 Oct 2011 00:00:00 GMT

The reduction in sales tax on new-build properties announced by the Spanish government in August is helping to boost the country's real estate sector, it has been claimed.

In an interview with the BBC, David Davies, from Blue Flag Properties, explained that the cut in the tax from eight to four per cent until the end of this year is encouraging more buyers to look at Spanish properties.

He pointed out that on a home worth €100,000 (£87,211) a four per cent saving can amount to a large sum of money.

Mr Davies added that this may be able to cover the cost of furnishing a new apartment, for instance, or fund the purchase of a car, noting that the value-added tax on such items then goes to the Spanish government and "kick-starts the wider economy".

At the same time as unveiling the reduction in sales tax on properties, the Spanish government also revealed a raft of austerity measures aimed at saving the country €5 billion.

Among the steps were a temporary rise in taxes for large businesses and new regulations relating to the use of generic medicines.

New tax 'encouraging French property owners to sell'

Wed, 12 Oct 2011 00:00:00 GMT

The new capital gains tax regime due to come into force in France in February 2012 has resulted in more second home owners putting their properties up for sale, it has been claimed.

Fred Schiff, from the international team at Knight Frank, explained that the changes - which will see both domestic and overseas buyers pay capital gains tax for the first 30 years of ownership, as opposed to the first 15 years as things currently stand - are "unwelcome".

He stressed that this is a particularly difficult burden for those who have owned a property in France for between 15 and 30 years, as they will now have to start paying the new tax.

"Consequently, many have become more motivated to sell, which has been reflected in the significant number of price reductions," Mr Schiff stated.

Earlier this month, Estate Net France made a similar claim, noting that the new regulations will make the idea of selling a property in the country more appealing among non-resident owners.

Wall Street Fraud Watchdog calls for revamp of home buyer policy

Fri, 9 Sep 2011 00:00:00 GMT

The Wall Street Fraud Watchdog has urged the US congress to look again at the home buyer tax credits scheme and expand it significantly to boost the country's real estate sector.

According to the organisation, extending the incentive - which is currently only available to first-time buyers - to cover all purchasers, including investors, would have "an immediate positive impact on the ailing US economy".

In addition, the group noted that such a move could also help improve stability within US residential real estate markets.

But the watchdog stressed that should the scheme be extended, it must only be offered to those who can actually afford to make the payments towards owning a property.

The comments come as Clear Capital director of research and analytics Dr Alex Villacorta predicted that the housing market in the US could take a further dip after positive activity over the summer.

He noted that price rises are "clearly starting to level off" and highlighted that consumer confidence does not bode well for the performance of the sector during the autumn and winter months.

French tax changes 'may benefit property investors'

Tue, 6 Sep 2011 00:00:00 GMT

Property investors who plan to purchase real estate in France and sell it within five years look set to benefit from proposed changes to the country's capital gains tax scheme.

Speaking to PropertyWire, director of French Private Finance John Busby explained that those who sell their asset within the first five years of ownership are set to receive a lower capital gains tax bill than previously.

However, anyone who holds on to their property will be liable for a greater charge, because inflation will now be taken into account, rather than reducing the capital gains bill by ten per cent for every year of ownership after the first five.

Mr Busby told the publication that because inflation can now be offset against the amount of capital gains tax to be paid, investors who sell within the first five years will be the "main beneficiaries" of the new rules.

Last month, Paris was named as one of the top performing global cities in a Knight Frank index examining the second quarter of the year.

According to the organisation, the French capital experienced a year-on-year rise in real estate values of ten per cent during this period.

Spain cuts VAT on new homes

Wed, 24 Aug 2011 00:00:00 GMT

Spain unveiled a raft of austerity measures on Friday (August 19th) to help its ailing economy and among them were proposals to reduce the amount of value added tax (VAT) levied on new home purchases.

People looking for a property in Spain may decide that it is a good time to buy, with VAT on transactions for new-build houses and apartments set to fall to four per cent - half its normal level - from now until December 31st this year.

Government spokesman Jose Blanco explained in a statement that it is hoped the measure will help reduce the amount of unsold stock in the country.

House prices in Spain have been steadily falling, with the latest General Spanish Real Estate Market Index revealing a 6.4 per cent year-on-year decline in July.

According to the research, locations on the Mediterranean coast experienced the biggest falls of 9.5 per cent, while the Balearic and Canary Islands saw their property markets hold up relatively well, with values dropping by just 2.5 per cent in the same period.

Cyprus plans changes to immovable property tax

Wed, 17 Aug 2011 00:00:00 GMT

Concern has been expressed that changes made to the immovable property tax in Cyprus could further damage the country's real estate sector.

Last week, the Cypriot government announced that the threshold at which the tax becomes payable would be dropped from €170,000 to €120,000, although a new sliding scale to determine the percentage to be taken will be introduced at the same time, Cyprus Property News reported.

The publication revealed that the nation's Land and Building Developers Association has written to president Demetris Christofias urging a rethink of the policy amid fears that it could damage the real estate industry.

Before the changes to taxation were unveiled, the organisation had contacted president Christofias to warn against taking measures that would impact negatively on the property industry, the news provider noted.

More than 100 developers, construction firms and real estate companies are members of the Land and Building Developers Association in Cyprus.

Spain 'a preferred destination' for UK's wealthy

Wed, 20 Jul 2011 00:00:00 GMT

A study of high-net-worth individuals in the UK has discovered that over half have considered moving out of the country, with Spain cited as one of the most popular destinations among this group.

The Skandia Millionaire Monitor Report noted that eight per cent of those surveyed are in the process of moving away from Britain.

Better weather, more favourable taxation and the perception of a higher standard of living are the main reasons cited for such people to leave the UK.

And buying a property in Spain appears to be a popular choice among respondents.

Skandia representative Jo Rimmer commented: "Our survey seems to indicate that the UK's wealthiest really are saving for a rainy day and will seriously consider moving to sunnier climes if storm clouds gather in either economic or meteorological terms."

Last week, Tinsa published its monthly Spanish Property Market Index for June, which recorded a 6.6 per cent drop in real estate values compared to the same month in 2010.

Lower house prices in Spain may act as an added incentive for those thinking of making a property investment abroad.

Plans for second home tax in France scrapped

Wed, 22 Jun 2011 00:00:00 GMT

Proposals to introduce a tax on second homes in France have been dropped, with president Nicolas Sarkozy deciding to remove the levy after the move had been approved by the French parliament last week.

Under the tax scheme, owners would have been forced to pay 20 per cent of the theoretical annual rent that could be gained from the property to the government.

It was estimated that the move would affect around 360,000 residences, including those owned by French nationals who live abroad but have retained a property in their home country.

Joelle Garriaud-Maylam, one of the nine senators who was at the meeting with Sarkozy at the weekend, commented: "The president told us he had been convinced [the law was a bad idea] and has taken a decision [to scrap it]."

The announcement is likely to come as a relief to those with second homes in the country, as non-resident property owners already pay two taxes to the French government.

In the recent Knight Frank Global House Price Index, France was the best-performing European nation, reaching sixth position in the table of 50 countries after its property prices registered annual growth of 8.7 per cent.

Spanish property sales plummet in April

Fri, 17 Jun 2011 00:00:00 GMT

Just 20,997 homes were sold in Spain during April, with sales falling 32 per cent year-on-year, A Place in the Sun reports.

Analysts have claimed that the general consensus is that property prices will fall in the coming months, despite the fact that values have already plummeted by up to 70 per cent in some parts of the country, as a result of a slump in demand.

Data released by the National Institute of Statistics reveals that just over 20,000 homes were sold over the course of the month - 25 per cent down on March.

"The fall [in Spanish property sales] between December and January was dramatic - down 75 per cent," said Mark Stucklin of Spanish Property Insight.

"There is an obvious explanation for the drop in sales in the first quarter – the elimination of mortgage tax relief that brought forward sales into last quarter of 2010. This is likely to distort the market for at least the first four months of the year."

New French property tax to have 'minimal' impact

Thu, 16 Jun 2011 00:00:00 GMT

The impact of new French second home tax changes are likely to be "minimal", with investors not expected to be put off purchasing homes in the country.

This is according to Assetz International, which noted that the destination's proximity to the UK and appealing culture means that its status as one of the most popular countries for second home owners will not diminish.

However, the firm did claim that "less wealthy homeowners" will view the tax as an additional burden, adding that many already pay tax for local services, Overseas Property Professional reports.

"The additional tax looks like it will be minimal and will not discourage buyers from purchasing a holiday home in France," Assetz concludes.

Under the plans, second homeowners in France will incur a 20 per cent tax on their additional home. Something which Assetz believes will lead to an increase in the number of investors choosing to purchase leaseback property.

Top end of the property market performing well in Morocco

Fri, 4 Feb 2011 00:00:00 GMT

Property buyers in Morocco are looking at prime sites located just on the outskirts of Marrakesh, it has been claimed.

According to Philip Arnott, of Morocco Properties, the strongest growth in the country's real estate sector is within the top end of the market.

This in turn has fuelled the number of major developments which are taking place on the outskirts of the city, Mr Arnott told Overseas Property Professional.

"We are finding that the middle market, in which people were looking for a second home or a small riad has gone very flat since the financial crisis," he said.

"Our clients are looking at properties in the €2.3 million to €4.6 million bracket, particularly those which are further out in places like the Palmeraie."

Overseas property buyers benefit from low no property tax to be paid for five years; no inheritance tax and no capital gains tax after 10 years of ownership says Arnott.

Australia tops Brits relocation wish list

Thu, 20 Jan 2011 00:00:00 GMT

Australia is the destination that the majority of Brits would like to relocate to for a new start, new research has found.

According to a survey conducted by Moneycorp, 72 per cent of those questioned pinpointed the country as their favoured location to start afresh.

The news could lead to an increase in the number of people searching the web to find a new home in Australia, with 27 per cent of respondents claiming that they were keen to buy a property down under.

Other popular destinations highlighted by the survey are the US, Spain, Canada, France and New Zealand.

David Kerns, personal client dealing manager at Moneycorp, told Overseas Property Professional that government spending cuts, coupled with tax increases and bad weather has led to a number of people thinking about making the move abroad.

"As we move into what is thought of as being the most depressing time of year, we expect to see a rising number of enquiries to Moneycorp from those looking to make a new start in places such as Australia, the US and Spain," he said.

House prices to continue to fall in Spain

Wed, 5 Jan 2011 00:00:00 GMT

The Central Bank in Spain is predicting that prices in the country will continue to fall in the New Year thanks to a glut of unsold housing.

According to the financial body, there are between 700,000 and 1.1 million properties in Spain that remain unoccupied and on the market, Bloomberg reports.

Added to this, a spokesperson from the bank explained that coupled with changes to the tax system in Spain, home values are likely to continue on their downward spiral.

"We will see a process of gradual absorption of accumulated excess supply, which will be slow and mean that housing investment will not contribute to the growth of activity in the near future," the banking regulator said.

Official government statistics put the current drop in house prices at around 13 per cent from the market's peak in the first quarter of 2008.

Indeed, new-home construction has also fallen to just 137,000 in the 12 months through September compared to 750,000 units at the height of the market in 2007.

Homeowners reminded of tax laws in Spain

Fri, 12 Nov 2010 00:00:00 GMT

Individuals looking to sell their property in Spain have been reminded of the tax laws which exist in the country.

According to Carlos Paton, a lawyer in Spain, there are a number of complex measures which non-residents must go through when looking to offload their property.

Writing for Lawdit, Mr Paton explained that foreign buyers in the country can expect to receive 97 per cent of the sale price, with the remaining three per cent contributing toward the "Plus Valia capital gains".

"After the completion, the seller independently being resident or non-resident will have to declare before the revenue commission, the revenues obtained from the sale of their dwelling," the legal expert added.

Non-residents will then be required to submit an application within 30 days of the completion date to the Administration Tributaria, declaring the capital gains tax.

However, many property owners in the country may prefer to hold onto their residences for a while longer, with recent figures suggesting that prices are declining still.

France makes changes to CGT laws

Sat, 16 Oct 2010 00:00:00 GMT

Individuals with property in France may be interested to learn about the recent changes to the country’s capital gains tax (CGT) laws.

The rate of CGT on house sales in France is set to increase by one per cent next year.

It will mean that CGT on property sales will increase from 16 per cent to 17 per cent, in addition, social charges of 12.1 per cent are payable. The total rate of tax will, therefore, rise from 28.1 per cent to 29.1 per cent.

The news is likely to be of interest to those with Provence-Alpes-Cote d'Azur property for sale or individuals hoping to sell their Rhone-Alpes property

There remain exemptions from liability to the tax, notably the sale of your main home, which continues to be tax free.

In addition, CGT liability reduces by ten per cent a year after six years of ownership, with the sale completely free of tax after 15 years.

Cyprus government plans to increase property tax

Mon, 31 May 2010 00:00:00 GMT

Property investors in Cyprus should be aware that the government in the country is planning to increase property tax to combat the recession.

According to the Cyprus Property News website, the move will allow the government to collect an additional EUR10 to EUR20 million in fees.

The news provider reports that approximately 1,800 real estate owners in the country will be forced to pay more for their properties.

"Since the revaluation of the properties will take up to five years, we decided to take an interim measure in order to correct the distortions and to increase the state revenues in this critical period of recession," interior minister Neoclis Silikiotis told StockWatch yesterday (May 27th).

It may be of interest to those looking to find a home in Limassol, with the urban destination boasting lots of amenities for investors and attracting a number of tourists.

The Department of Land and Surveys in the country reported that real estate sales in Cyprus enjoyed a year-on-year rise of 11 per cent during April.

Inheritance tax ruling 'may help overseas property owners'

Tue, 28 Apr 2009 00:00:00 GMT

Britons who own property overseas could benefit from a change to inheritance tax law, accountants have suggested.

Experts have said a recent European Court of Justice ruling that the UK government cannot restrict relief on the tax to UK investments does not just apply to agricultural properties or areas of woodland in Europe, the Times reports.

Angela Beech of accountancy firm Blick Rothenberg told the paper: "Britons who own, say, a farmhouse in France or a farm cottage in Italy, could benefit hugely."

Such a situation may interest those thinking of buying property in France, as this could help them to build up an investment that can be passed on to the next generation.

Those considering purchasing in areas of France close to the English Channel may have been encouraged by news that ferry company LD Lines is shortly to launch a new high-speed ferry service.

Spokesman for the firm Nick Stevens said the new 112-metre long catamaran will provide a combination of low prices and short journey times that could help the firm to rival budget airlines.

EU in warning to Spain over property policies

Mon, 30 Mar 2009 00:00:00 GMT

Excessive urbanisation and the threat to legitimately owned property in Spain has been criticised by the European parliament.

Members voted by 349 to 110 to suspend aid from the EU to the country until it ends "extensive urbanisation" practices that include a lack of respect for the environment or those who already live in such locations - which may include Britons who have bought property there.

The parliament also criticised the "outrageously slow" process of compensating victims of illegal building practices in the country who were unaware that their homes had been constructed unlawfully.

Such legal changes may help protect the future prospects for those buying in Spain, ensuring they have better access to redress and less chance of being caught up in new urban sprawls.

Earlier this month a court case in Spain ruled that a nationality-based property inheritance tax law breached EU discrimination legislation.

The practice has hitherto seen Spanish nationals charged 15 per cent tax when they sold a property on, while foreigners had to pay 35 per cent.

The British IRS defers tax payments

Sun, 15 Feb 2009 00:00:00 GMT

UK’s IRS (Internal Revenue Service Board of Inland Revenue) has under special circumstances enabled extension on tax payment deadlines, aripaev.ee writes...

House Committee Approves Stimulus Bill

Mon, 26 Jan 2009 00:00:00 GMT

The much discussed US economic stimulus plan took a step closer to enactment on Thursday after the Ways and Means Committee of the House of Representatives voted in support of the legislation...

Tips on Taking the New First-Time Homebuyer Tax Credit

Mon, 26 Jan 2009 00:00:00 GMT

Under the Housing and Economic Recovery Act enacted in July 2008, a first-time homebuyer of a principal residence may claim a tax credit of 10 percent of the purchase price, up to $7,500. The IRS recently issued guidance on how purchasers who don’t file joint tax returns can allocate the credit...

Grassley Bemoans Lack Of AMT Patch In House Stimulus Bill

Thu, 22 Jan 2009 00:00:00 GMT

Senator Chuck Grassley, ranking Republican on the Senate Finance Committee, has criticized the version of the economic recovery legislation released by the House Ways and Means Committee last week for leaving out provisions that would curtail the reach of the alternative minimum tax for another year...

Guernsey Signs Tax Information Exchange Agreement With UK

Thu, 22 Jan 2009 00:00:00 GMT

A new tax information exchange agreement between the governments of the United Kingdom and Guernsey was signed in London on January 20, 2009 by Lord Bach, Parliamentary Under Secretary of State for Justice, and Lyndon Trott (pictured), Chief Minister of Guernsey...

Beware of CGT Sting if Selling Spanish Property

Mon, 19 Jan 2009 00:00:00 GMT

Owners of overseas property could be in for a two-fold tax hit due to the falling sterling and property prices, warns PKF Accountants & business advisers.

Matt Coward, director of personal tax, says UK tax laws stipulate any gains on overseas assets are calculated using the spot exchange rates on the given day assets are bought and sold.

He adds: "In our case study, a UK national buying a Spanish property in January 2007 for €1.25m (£854,818) sells in January 2009 for €1m (£966,744). Although there is a loss in euros, there is a profit in sterling of £111,926 on which he will need to pay UK CGT of at least £18,419 on 31 January 2010."

Coward warns this predicament could worsen whether homeowners decide to invest in a new overseas property with the profits, or leave the money in a foreign bank account.

"The position could be particularly difficult if owners now reinvest all their equity in a new overseas property as they may then have difficulty finding the cash to pay the UK tax liability when it becomes payable in January 2010. Even those who are aware they have a UK tax problem will often realise a smaller amount of post-tax equity from their properties than they may have expected.

"Worse still, if owners simply sell an overseas holiday home and leave their equity from it in a foreign currency bank account, they could face a double hit if the value of sterling recovers before the UK tax is payable on any gain. If they cannot pay the UK tax from UK funds, they would have to convert some of the original sale proceeds back to sterling at a disadvantageous rate. Of course, the value of sterling may yet fall further, which shows just how difficult these decisions can be."

He says homeowners should be aware of these various issues while undertaking a possible property sale, to best prepare for potential future tax payments.

Story from Investment Week

Overseas investors warned of tax implications

Wed, 14 Jan 2009 00:00:00 GMT

Investors who are looking to sell European property have been urged to take into account the UK tax implications that may arise from a completed sale.

Director of personal tax at accountancy firm PFK Matt Coward stated that while not everyone will be affected by the tax laws, those who are must not forget the potential financial consequences that come from selling a European home in the current economic climate.

"Broadly speaking, it will be everyone who has bought property in euro land probably in the last 18 months to two years," he explained, noting that long-term investors are unlikely to be affected.

Those who have been considering selling homes in countries such as Spain, France and Italy may wish to check to see if they will be affected following PKF's warning.

Cater Allen revealed last September that over three million people plan to purchase a foreign property in the next two years, with 42 per cent seeing doing so as an investment opportunity.

Non-resident owners of holiday homes in Spain should be inheritance tax aware

Wed, 14 Jan 2009 00:00:00 GMT

Non-resident holiday home owners in Spain need to be aware of the country's inheritance tax (IHT) regulations. Investors wishing to avoid leaving financial problems, rather than property, to their heirs could consider gifting their home to a UK Private Trading Limited Company, an expert has suggested.

"Non-domiciled property owners in Spain are sitting on a ticking IHT time bomb," March Roach of Wincham Investments told Overseas Property Professional (OPP). "Most owners do not understand that their heirs and their estate may pay IHT in two jurisdictions; Spain and their country of domicile."

Unlike in the UK, where the actual estate is taxed, in Spain the individual inheritor is taxed, Roach continued. Owners of holiday homes in Spain may not realise this and it could leave the owner's beneficiaries faced with a tax bill that could cancel out the Spanish inheritance. Investors also need to be aware that probate costs will need to be paid in both countries too.

In order to avoid such a situation, Roach suggests gifting the property to a UK Private Trading Limited Company. "This method may eradicate all taxes in Spain in the future in respect of the property, as a UK company...is only taxed in one jurisdiction, the UK, and no taxes are payable onwardly in Spain."

Shares in the company could be dealt with in a UK will and may be exempt from IHT in the UK, Roach explained. Furthermore, certain expenses can all be tax deductable by the company. These include mortgage interest, council tax, water, electricity, repairs and maintenance.

This story was brought to you by holidaylettings.co.uk, the UK's No.1 for holiday homes worldwide.

Owners of holiday homes in Spain should be inheritance tax aware

Wed, 14 Jan 2009 00:00:00 GMT

Holiday home owners in Spain need to be aware of the country's inheritance tax (IHT) regulations. Investors wishing to avoid leaving financial problems, rather than property, to their heirs could consider gifting their home to a UK Private Trading Limited Company, an expert has suggested.

"Non-domiciled property owners in Spain are sitting on a ticking IHT time bomb," Mark Roach of Wincham Investments told Overseas Property Professional (OPP). "Most owners do not understand that their heirs and their estate may pay IHT in two jurisdictions; Spain and their country of domicile."

Unlike in the UK, where the actual estate is taxed, in Spain the individual inheritor is taxed, Roach continued. Owners of holiday homes in Spain may not realise this and it could leave the owner's beneficiaries faced with a tax bill that could cancel out the Spanish inheritance. Investors also need to be aware that probate costs will need to be paid in both countries too.

In order to avoid such a situation, Roach suggests gifting the property to a UK Private Trading Limited Company. "This method may eradicate all taxes in Spain in the future in respect of the property, as a UK company...is only taxed in one jurisdiction, the UK, and no taxes are payable onwardly in Spain."

Shares in the company could be dealt with in a UK will and may be exempt from IHT in the UK, Roach explained. Furthermore, certain expenses can all be tax deductable by the company. These include mortgage interest, council tax, water, electricity, repairs and maintenance.

This story was brought to you by holidaylettings.co.uk, the UK's No.1 for holiday homes worldwide.

New Tax Break For China's Airlines

Tue, 13 Jan 2009 00:00:00 GMT

In a move to try and protect the country's aviation industry, the Chinese government has pledged to give those airlines hardest hit by the current economic downturn a CNY2.5bn (USD360m) tax concession...

Global Fiscal Stimulus Needed, IMF Officials Argue

Fri, 2 Jan 2009 00:00:00 GMT

In a recent interview conducted by the International Monetary Fund Survey Magazine, Fund officials Olivier Blanchard, Economic Counsellor, and Carlo Cottarelli, Director of the Fiscal Affairs Department, repeated a call for global fiscal stimulus action...

Property tax cuts in China near limit

Thu, 1 Jan 2009 00:00:00 GMT

Qin Hong, deputy research head at the Ministry of Housing and Urban-Rural Development said in an interview with the China Securities Journal that China is unlikely to cut property transaction taxes much further and will continue to curb housing purchases for the purpose of investment. The government has shortened the lock-up period during which home owners...

Obama Sticking To Guns On Tax

Wed, 31 Dec 2008 00:00:00 GMT

United States President-elect, Barack Obama, intends to follow through with his election campaign pledge to cut individual income tax for low- and middle-income Americans next year despite the deteriorating economy, according to his chief advisor...

'Shut Down Super-Rich Tax Havens'

Wed, 31 Dec 2008 00:00:00 GMT

Tax havens that allegedly deprive Britain of billions of pounds should be closed down, according to the nation's biggest union...

Real estate needs confidence-building

Tue, 30 Dec 2008 00:00:00 GMT

The Chinese government has launched a series of tax and fee cuts to boost the real estate sector. But what do real estate developers think about the new package? Chen Shun, president of China Sports Organization Group, a real estate development company, is in charge of more than 30 projects. He said business has fallen in the...

New Year Tax Planning in Spain

Mon, 22 Dec 2008 00:00:00 GMT

The tax year in Spain is 1st January to 31st December, whereas the UK tax year runs 6th April to 5th April. If you are planning on moving to Spain in 2009 you could time your departure from the UK and your arrival in Spain to lessen your tax liabilities.

You will become a tax resident in Spain if you spend more that 183 days there in the tax year. Note that the days do not have to be consecutive. So, providing you leave the UK by 5th April and arrange your movements so that you spend less than 183 days in Spain between departure and 31st December 2009, you could have become non-UK resident and yet postpone becoming a Spanish tax resident until 2010. This ‘window’ of non-residence can offer some useful tax planning opportunities.

Even if you do spend less than 183 days in Spain in your first tax year, you could be caught out and still be considered a tax resident if your “centre of vital interests” is in Spain, i.e. the base for your economic or professional activities is in Spain or your spouse lives in Spain and you are not legally separated, and/or your dependent minor children live in Spain. In this case you can be presumed Spanish resident, unless proven otherwise, even though you may spend less than 183 days per year in Spain. For obvious reasons this only tends to affect those already to some extent established in Spain.

As a Spanish resident you will be liable for Spanish taxes on your worldwide income. Non-residents of Spain are liable for tax on Spanish income only.

Income (including capital gains) is split into general income (renta general) and savings income (renta del ahorro). After being calculated according to the rules for each particular type of income within each category, the total of ‘general’ and ‘savings’ income is termed the base imponibile (or taxable base). After any deductions and allowances it is then known as the base liquidable (net taxable base).

Savings income is taxed at a fixed rate of 18% and basically consists of dividend income, interest, income derived from life assurance contracts, purchased annuity income, and capital gains on sale/transfer of assets.

General income is taxed at progressive scale rates from 24% to 43%. Anything not categorised as savings income is treated as general income, including all earned income (i.e. salary, self-employment and pension income), rental income and any imputed income and gains not made on the sale/transfer of assets such as from gambling, for example. Non-residents pay tax on general income at a flat rate of 24%.

Tax returns are submitted and payment made in the year following the tax year i.e. for the tax year 2008 declarations are made in 2009. The returns should be submitted some time during May or June and by 1st July at the latest. Tax due must also be paid by this date.

There are tax-free allowances called the ‘Minimo Personal y Familiar’. Any allowance not used against the general income can be set against the savings income.

The basic personal allowance for 2008 is €5,151 per person. However, for 2008 joint returns the allowance given to the first spouse is only €5,050 plus €3,400 for the second spouse. There are additional deductions based on age, dependants and incapacity.

Earned income (including pension income – but not, say, rental income) attracts an extra deduction for 2008 of up to €4,080. The maximum deduction applies to those on low earned income of up to €9,180, with a minimum deduction for those who earn more than €13,260 of €2,652. If earning some figure between €9,180 and €13,260, then the deduction is on a sliding scale between €2,652 and €4,080.

Residents of Spain are taxed on only 50% of the net rental income at the normal scale rates except for short-term lets (por temporada). Lets of 12 months or more would usually be considered not short-term.

The net rental income is the amount of rent due after deducting usual day-to–day running costs for the period(s) in question, including local taxes; repairs and maintenance (but not additions or functional improvements/enhancements that add to the value of the property); managing agents’ fees and commissions; interest on loans for purchase or improvement; and depreciation of 3% per year of the cost of the property (excluding the land value).

A non-resident is taxed in Spain on income arising from Spanish property at the rate of 24% on the gross income without any deductions for expenses or interest costs. It is the tenant who is meant to withhold 24% from the rents and file a tax return to submit the tax to the Spanish tax authorities, although in the case of short holiday lets the owner or agent would in practice take responsibility.

From 1st January 2008, you can deduct 10.05% of the rent paid if renting your main home, provided your taxable income is less than €24,020 per year.

Wealth tax is in the process of being abolished in Spain from 1st January 2008. Although the measure went before the legislature in September 2008 with a deadline for amendments set at 16th October, at the time of writing confirmation of final approval by the Spanish parliament has yet to be made. Providing the abolition becomes law wealth tax returns for 2008 due in 2009 should not be necessary.

Otherwise, Spanish wealth tax is payable by residents and non-residents based on assets held at 31st December each year. The tax rate ranges from 0.2% to 2.5%. Residents are taxed on their worldwide assets and receive deductions. Non-residents are taxed on their Spanish assets only without allowances.

Property owners have to pay local property taxes. IBI (Impuesto sobre Bienes Inmuebles) is equivalent to the local ‘rates’. In some areas rubbish collection charges (basura) are raised separately.

IBI is paid if you own a residential property and use it yourself or have it available for your use. It is paid by the person who occupied the property on 1st January in any year and is not usually apportioned if they later move.

A demand for payment is sent each year and must be paid by the specified date. Failure to do so incurs a penalty of 20%. It is probably simplest to arrange for payment from your bank by direct debit.

If you are planning on moving to Spain, or even if you have already made that move, a professional tax adviser can help you to legitimately lower your tax liabilities.

Article by Blevins Franks