Real Estate & Tax News in Spain from Propertyshowrooms.com

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.

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.

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.

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.

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.

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.

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.

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."

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.

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.

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

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 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

Update on Spanish Wealth Tax

Thu, 11 Dec 2008 00:00:00 GMT

Good news for Spanish residents and anyone owning property in Spain – as we move into 2009 there is no longer any requirement to pay Spanish wealth tax or even file a wealth tax return.

The abolition of wealth tax in Spain from 1st January 2008 was approved by the Council of Ministers on 18th April 2008, although approval by the Spanish parliament has yet to be confirmed. The liability to pay wealth tax was eliminated through a 100% wealth tax relief. The measure will apply for the Spanish tax year 2008 for which returns are due in 2009.

Wealth tax is a tax on assets held as at 31st December each year. Residents are taxed on worldwide assets and receive deductions. Non-residents are taxed on Spanish assets without allowances. The tax rate ranges from 0.2% to 2.5%.

Of course there are still various other taxes due on Spanish property.

When purchasing a property in Spain you can expect to pay 6% transfer tax (ITP) (7% in Andalucia). If the property is a new build or a resold unregistered property there will be 7% Spanish VAT (IVA) to pay.

Annual local property tax will range from £100 to £400 depending on the size of the property. There may be additional taxes in some areas for rubbish collection and special projects.

If you let the property there will be a tax on the rental income. Only 50% of the net rental income of a Spanish resident is taxable at the normal scale rates from 24% to 43%. Non-residents pay 24% on gross income.

On disposal of the property you will be liable for capital gains tax at 18% for residents and non-residents plus a tax on the gain on the land called Plusvalia of 20%-30%.

Information from Blevins Franks Tax Advisory Service

Longhaul flight tax to boost Spanish tourism market

Wed, 3 Dec 2008 00:00:00 GMT

Alistair Darling's decision to increase flight passenger duty rates is likely to boost the popularity of Spain and other European countries as holiday destinations.

Under the new measures unveiled by the chancellor last week, flying to long-haul destinations is set to get much more expensive while tax rates for shorter flights will see only minor increases.

The Telegraph reports that travelling to south-east Asia by plane will incur tax of £85 in 2 years' time, up from the current rate of £40.

As a result, destinations closer to home are expected to grow in popularity among British holidaymakers and property investors.

Victor Sague, sales and marketing director for the Spanish arm of construction firm Taylor Woodrow, said that Spain is likely to be one of the main beneficiaries of the tax change.

"Despite the continued competition from newer emerging markets such as the Far East, Spain has and continues to be one of the most popular choices for holidaymakers and those looking to buy a home abroad," he commented.

Visit our off-plan property Spain page.

Holiday home owners receive tax exemption

Tue, 7 Oct 2008 00:00:00 GMT

UK residents who own holiday homes that they bought through their company are to receive exemption from a "living accommodation" tax charge.The Finance Act 2008 means that those with overseas property will not face fees if they have bought property through their firm, reports STM Fidecs.Those who can show that they have paid income tax...

Property market in Spain ‘will benefit from tax reforms’

Tue, 7 Oct 2008 00:00:00 GMT

An expert in the sector has stated that the property market in Spain is likely to receive help through a number of tax reforms.Steve Laird, head of Carrington Wealth Management, told CityWire that overseas buyers were likely to find the country’s property more appealing due to plans to end inheritance tax.He said that while the...

Tax reforms to boost Spanish property market

Sat, 13 Sep 2008 00:00:00 GMT

Spain's property market could be boosted by upcoming reforms to the country's tax regime, an expert has said.

According to Steve Laird, head of Carrington Wealth Management, government plans to scrap inheritance tax could help stimulate the Spanish housing sector.

Speaking to CityWire, he said this could help it become more attractive to overseas property buyers from places such as the UK.

Mr Laird commented: "Spain has been hit by the credit crunch the same as the rest of Europe, particularly in housing because around 30% of the country’s GDP is from construction."

He stated that factors such as the weakness of the pound against the euro have led to fewer British buyers investing in Spanish property in recent months.

This comes after finance minister Pedro Solbes told the Financial Times that Spain can emerge from the current economic downturn in a strong position.

Visit our off-plan property Spain page.

Non-Resident Brits in Spain Need Tax ID

Thu, 11 Sep 2008 00:00:00 GMT

Owners of Spanish property could lose their homes if they fail to produce new identification documents proving their non-resident status,

Britons who use their overseas accounts to pay for their Spanish mortgages and essentials such as utility services and council taxes, have been required by Spanish banks to produce a residence certificate or “Residencia” since March last year.

Failure to produce the new documents could result in bank accounts being frozen and mortgage repayments stopped.

However, some Spanish banks have failed to contact homeowners or given short notice to produce the papers.

One reader, Simon Wells, 52, from Walthamstow, east London, said that on August 15 he was told by his Spanish bank, Cajamar, to produce the documents by September 15.

“This is not easy to do as you have to register in person at a Spanish police station and then have it stamped by a town hall official. We were warned our account could be frozen.”

The requirement is part of an EU initiative to crack down on tax dodgers. Spanish residents are taxed at source, so to avoid paying tax there you have to prove non-residence status.

Britons — there are about 145,000 with bank accounts and properties in Spain, said broker Savills Private Finance — have to declare gains made in Spanish bank accounts to the UK taxman.

You qualify for non-resident status in Spain if you spend fewer than 180 days a year in the country and are able to produce the new document.

Anyone who bought a property before the new rules came into effect may be asked by their Spanish bank to produce the Residencia. Those who bought property after they were introduced will have been told of the requirement.

Residence certificates include your name, address, nationality, date of registration and the “Numero de Identificacion de Extranjeros”, a tax number for foreigners in Spain.

The Spanish Tourism Office said: “If you have a Spanish property, and have not been asked to produce this document, I suggest you contact your bank directly.”

Homeowners can contact the Spanish Ministry of the Interior’s immigration directorate helpline for more advice on 00 34 91 363 9071.

To apply for the non-residency certificate you usually need to go in person to the Oficina de Extranjeros or police station in your province of residence.

The document costs about €10-€13, although if you go through a lawyer you may have to pay more than ¤120 (£97.20).

Story from The Times Online

Offshore Tax Rate Rises

Tue, 1 Jul 2008 00:00:00 GMT

On 1st July, the EU Savings Tax Directive turned three years old. Also on 1st July, the withholding tax rate applied under the terms of the Directive jumped from 15% to 20% - an unwelcome reminder that keeping savings offshore is no longer effective tax planning.

At the launch of the Directive, the withholding tax rates were scheduled as follows:

1st July 2005 – 30th June 2008 – 15%

1st July 2008 – 30th June 2010 – 20%

1st July 2011 onwards – 35%

The increase from 15% to 20% means that anyone paying the withholding tax is now paying 33% more tax than a month ago. When it hits 35%, it will be a 133% increase from the launch rate. To make it even worse, most of those affected will remember the days when no tax at all was deducted from their offshore accounts.

It is important to point out what while no tax was deducted at source prior to 2005, anyone earning interest from an offshore bank account was still legally obliged to declare them on their Spain tax return - under local laws their worldwide income should be declared for tax purposes. The same rules apply in the UK for UK resident domiciles. So these interest earnings were never actually tax free… though that did not stop some people ‘forgetting’ to declare them.

This is precisely why the EU set up the Savings Tax Directive (STD). EU countries lose tens of billions of Euros each year to tax evasion. The STD was conceived a means of ensuring that an EU resident paid tax on their interest income, regardless of where the interest was generated and regardless of whether they actually declared it or not.

The STD is one part of a major tax package launched by the European Commission in 1997. Its original intention was for a uniform “information exchange” regime to apply across the EU, with all countries agreeing to report interest on savings paid to the citizens of other Member States to those States’ tax authorities – thus making it impossible for EU residents to hide their offshore savings income from their local taxman. The plan was also for EU Member States to impose the same rules on their dependent territories, which make up a substantial portion of the world’s tax havens.

A long battle followed, however, with various objections raised regarding automatic exchange of information which would effectively end banking secrecy within the EU.

Opposition came from within the EU itself and not just the dependent territories. In the end, a compromise was reached and under the terms of the STD, the withholding tax is applied by Andorra, Austria, Belgium, British Virgin Islands, Guernsey, Isle of Man, Jersey, Liechtenstein, Luxembourg, Monaco, Switzerland and Turks & Caicos Islands. All other EU Member States, plus Anguilla, Aruba, Gibraltar, Madeira, Montserrat, Netherland Antilles and San Marino apply automatic exchange of information, as will any future EU members. Bermuda and the Bahamas are currently not covered by the STD.

The withholding tax regime is only meant to be a “transitional arrangement”. The EU’s “ultimate aim” is for all participating jurisdictions to automatically exchange information on the interest earnings of EU residents in future. While there will obviously be strong resistance to this from some countries, the EU will fight every step of the way to eventually achieve this.

The European commission is also escalating efforts to persuade other jurisdictions to abide by the terms of the deal, including Hong Kong, Macao and Singapore. EU officials are negotiating with all three on a double-taxation agreement, giving the Europeans some leverage.

In the Isle of Man, Jersey and Guernsey, the withholding tax is referred to as “retention tax” (but it is exactly the same thing), and clients can authorise their banks to automatically exchange of information rather than pay withholding tax.

This gives you the option to pay tax in Spain instead of having tax deducted at source.

Since the start of 2007 interest income is taxed at a flat rate of 18% in Spain. This means that if your bank account has withholding tax deducted you are now effectively opting to pay extra tax (11% more). From July 2011 you’d pay 94% more tax!

It’s important to note that even if withholding tax is deducted, you are actually still obliged to declare the interest earnings in Spain since it forms part of worldwide income.

Anyone who has not previously declared this income in Spain should probably seek advice from a financial adviser before switching to the exchange of information system to benefit from the lower Spanish tax rate – your local tax authority may make enquiries as to why you had not previously declared this account – which would have been liable for wealth tax until this year as well as income tax on the interest income.

It’s often worth a chat with a financial adviser in any case, to establish if you can legitimately reduce your tax rate further. While 18% is lower than 20%, you may be able to pay less than this using appropriate structures.

Full story from Blevins Franks

Spain Owes Brits £86M

Fri, 27 Jun 2008 00:00:00 GMT

Hundreds of Brits have joined forces to bring a class action against the Spanish Government in a bid to reclaim an estimated £86m in overpaid capital gains tax (CGT).

This is Money reported back in April that Britons who sold a Spanish property between between June 2004 and December 2006 could be owed cash as a result of a Spanish Government's capital gains tax 'scam'.

So far a plethora of UK citizens who sold a property in Spain have joined the fight to reclaim money from the Spanish government, who overcharged them Capital Gains Tax by 20%.

However, where as initial conservative estimates put the total amount to be reclaimed at £11,000 per person – over the past three months hundreds of Brits have registered average reclaims of more than £19,300 each – totaling more than an estimated £86m.

The tax loophole, originally exposed by currency exchange brokers HiFX and Spanish lawyers, Costa, Alvarez, Manglano & Associates – came about after British non residents paid a Spanish Non Residents' Income Tax rate of 35% on any capital gains, compared to a rate of 15% paid by Spanish nationals.

The 20% overpayment not only totals a profit somewhere in the region of an estimated £86m, but also contravenes European Community Treaty rules on discrimination and therefore was unduly charged by the Spanish Government.

British people applying for a refund are also set to add on missing interest at a compound rate of 6% to their reclaims, meaning payouts could be on average 26% larger than first thought. But while hundreds have already joined forces in a bid to reclaim their tax, thousands more are still to come forward.

But those who sold property previous to June 2004 have already missed out on being able to make a reclaim on their overpaid tax, as under Spanish law claims can only be made dating back over a four year period, meaning millions more have become victim to this tax trap.

Spanish lawyer, Emilio Alvarez, says: 'If anyone believes they have been affected by this they need to move quickly, due to stringent legal restrictions some people have already missed out but thousands of Brits can still join forces and fight to get the Spanish tax authorities to pay back the money owed.

'In some cases potential claimants are being put off by the lawyers who acted for them during the sale as they are being told that they will not be able to get hold of the necessary forms (Form 212) or that this consumer campaign will not succeed. As a result, we are offering to speak to the Spanish Tax Office on behalf of any clients who have doubts to ascertain whether or not they are eligible and get the forms they need.'

For more information, and details of how to register your interest, visit spanishtaxreclaim.co.uk, call the helpline on 0845 680 3849 or email: info@spanishtaxreclaim.co.uk

Expats urged to consider financial matters

Tue, 6 May 2008 00:00:00 GMT

People who are thinking of relocating to Spain have been urged to consider various financial issues such as tax.

According to ShelterOffshore.com, this is essential for expatriates who wish to at least maintain the quality of life they are used to.

The online portal stated that expatriates need to work out what their tax liability and outgoings will be.

This, it said, means they will be able to budget for their move to the sun and see whether they can avoid compromising on their living standards.

ShelterOffshore.com remarked: "Determine if you can afford to retire to Spain and reside in the manner to which you would like to become accustomed."

The website added that Spain is currently very popular with expatriates from the UK, especially older people who want to spend their retirement in sunny climes.

This comes after a recent poll of expatriates by NatWest revealed that the vast majority believe they are financially better off now that they live abroad.

Lifestyle grievances 'prompt Britons to move abroad'

Tue, 8 Jan 2008 00:00:00 GMT

Many people are choosing to move abroad as they are unhappy with their lifestyle in the UK.

Issues such as high property values and tax payments were cited by Paul Beasley, editor of Emigrate magazine, as two of the main reasons for people opting to live overseas.

Speaking to Homes Worldwide, Mr Beasley added that other countries were also widely seen to offer a number of other lifestyle benefits, such as better weather and natural surroundings.

He commented: "People just feel that life in Britain is becoming more stressful, more difficult."

Mr Beasley went on to highlight the effect that moving to a foreign country could have on a person's social standing.

He said that experiencing life in a different culture gave people a sense of "social kudos".

The comments follow a study by UKForex which revealed that Spain was a very popular destination among emigrating Britons.

Research by the organisation found that the country was highly rated by expatriates who had set up home there on a permanent basis.

Investors urged to consider IHT

Tue, 24 Jul 2007 00:00:00 GMT

New overseas homeowners are failing to take into account the impact of inheritance tax (IHT) and are advised to check the rules wherever they own are considering buying a property, experts have said.

Although many people assume that a tax cannot be charged on overseas property, if you are UK-domiciled then your worldwide assets will be included in the calculation of your inheritance tax liability, according to the Telegraph.

With the number of British overseas homebuyers expected to double within the next few years, consumers are warned that Spanish authorities can charge up to 82 per cent tax on foreign-owned property with some overseas property liable to taxation both in the UK and abroad.

With many people overlooking aspects concerning inheritance tax, Grant Thorton accountant Ian Luder said: "The risks that people take when it comes to buying property abroad never cease to amaze me."

With various trust structures not recognised in continental Europe, Way Group spokesperson Paul Wilcox said: "It is vital people take steps before moving, as their options will be seriously curtailed once they have left the UK".

Spain is currently the number one destination for Brits buying abroad, according to the latest HiFX Monthly Global Property Hotspots Report, despite recent fears of a potential Spanish property market crash and a slow down in some areas of the country.

Spanish investors 'could be due a refund'

Fri, 13 Apr 2007 00:00:00 GMT

British investors who have paid money towards capital gains tax for a property that they sold in Spain could be in a position to receive a refund should the move collapse, one firm has said.

Property vendor Valuvillas has welcomed news that the Spanish government has significantly reduced the levels of capital gains on property sales conducted by foreign investors.

Until now, non-resident foreigners selling property have been subject to a 35 per cent capital gains tax on their gain when they sell property in Spain. At the same time, Spanish residents had to contend with a more lenient 15 per cent capital gains tax.

Since the start of 2007, the figure has been reduced to 18 per cent, while the rate for residents has moved up from 15 per cent to 18 per cent.

This has led to Valuvillas posing the question: "Are you due a refund?"

Under current conditions, the amount is refundable if the sale falls through, but sellers will still pay the full 18 per cent should the deal is sealed successfully.

Good news on the tax front for property investors in Spain

Thu, 26 Jan 2006 00:00:00 GMT

It appears that the discriminatory property tax in Spain will finally be addressed after the European Commission announced it is to refer the Spanish government to the Court of Justice.

The current complaint is that official Spanish residents are only required to pay 15 per cent tax on gains from property sales, while non-residents are taxed at an astounding rate of 35 per cent.

Figures from Sociedad de Tasacion recently showed that property prices in Spain's provincial capitals increased by 10.1 per cent last year, indicating that the impact of the unfair taxation system has not managed to damage the country's property market beyond repair.

Nevertheless, there has been a slowdown in growth over the last few years and an increasing number of UK property investors have complained that the system is simply stifling investment projects.

If, as expected, the Court of Justice rules that Spain has been flouting European law, the government will have to reform the entire system and reduce tax rates for non-residents.

The impact on property investment in Spain is likely to be immense, as UK residents in particular return to their favourite investment location, safe in the knowledge that they will not be taxed extortionate amounts when they decide to sell a property.

The news comes just a week after Standard & Poor's chief European economist Jean-Michel Six tipped the property market in Spain to enjoy a strong 2006 and so a prospective alteration to the taxation system can only add to the optimism. Mr Six has predicted "healthy growth" throughout 2006 and believes Spain to be "certainly a market to watch".

A number of experts have recently highlighted the Costa del Azahar as a particular area of growth and those looking to make significant gains may make the most of the prospective tax alterations by snapping up property at competitive prices in the coming months.

The area will also be boosted if the Valencia 'land grab' law is changed although the Spanish government has been slow on reacting to advice from the European Union on this issue too. Currently, property investors and holiday homeowners are often charged for local developments without any prior warning while others are forced to forego sections of their land without compensation.

Meanwhile, this year's Homebuyer Show will include a Spanish auction house alongside traditional property agents for the first time. Inez Rix, director and auctioneer at Direct Auctions, has observed a rising trend in this type of transaction.

"We have seen many British buyers using our service because they recognise that buying a property at auction can save them money and time," said Ms Rix.

"When you buy a property at auction you know you are paying its market value based on what it is worth to the people bidding, and not what an estate agent or owner would like it to be worth, and our fees are just an open commission rate of 2.5 per cent compared to regular estate agents' fees which can be three times that."

There are clearly risks involved in this method, however, and experts at the Homebuyer Show have advised buyers to be especially careful in their research and preparation.

Source: Assetz News

UK Treasury announces SIPP U-turn

Tue, 6 Dec 2005 16:56:00 GMT

A pensions tax break which was due to be introduced in April will now not go ahead, the government has said.

The chancellor has decided that Self Invested Personal Pensions (Sipp) will not be given immediate tax relief for investments in residential property.

The proposal had been widely described as a tax break for the rich, who could use a Sipp to buy a second home or items such as fine wine.

The plan was first announced in last year's Budget.

It would have been introduced next April as part of a radical overhaul of all tax rules surrounding pension funds, known as A-day.

A Treasury spokeswoman described the new policy as "a proportionate response to an unintended consequence of simplification."

New tax arrangements

The original rules would have meant that high earners - who are subject to the top rate of tax at 40% - could have expected to be given a 40% rebate on the value of property (up to a maximum of £215,000) bought with their own cash using a Sipp.

The new tax rules for residential property bought through a Sipp will be rather different, although not totally prohibitive of using the pension to buy residential property.

A Treasury spokesman explained that money put into a Sipp would still attract tax relief.

But if the cash was used to buy a house or flat then a 40% tax bill would be slapped on it.

In additon, once in the Sipp the 'prohibited asset' could be in line for further tax penalties eqivalent to 30% of its value.

The Treasury said the aim of the new policy was to ensure that tax reliefs would only given to people genuinely using the Sipp to provide themselves with a pension.

The new policy will also apply to investments that are deemed to be "tangible moveable property" such as classic cars, fine wines, or works of art.

Tax drain

Last June, the Liberal Democrats claimed the proposed tax break would drain the Treasury of £2bn a year.

On Monday, the Liberal Democrat Work and Pensions Spokesman, Danny Alexander MP, said: "The chancellor has left it to the last minute, but at last he has seen sense by preventing second homes being purchased with Self-Invested Personal Pensions.

"The idea that the government should give tax breaks for second home ownership always was absurd."

The market research firm Datamonitor had gone further and estimated that the cost in tax relief handed out would rise to £4.6 bn a year by 2009.

Indirect investment in residential property will still gain tax relief.

The government made it clear that it will encourage and allow investment in a new type of investment vehicle, called a Real Estate Investment Trust or Reit.

News provided by BBC

Good times ahead for foreign property buyers in Spain

Mon, 18 Jul 2005 00:00:00 GMT

British property buyers could be in line to save £millions in capital gains tax when they sell their family holiday home or investment property in Spain after the EC ruled they were being “discriminated against” compared with Spanish-resident property owners. The Spanish Government grabs capital gains tax at a flat 35% of the profit – difference of registered purchase price to selling price – from British and other ex-pat owners, but charges Spanish owners only 15% CGT if they have owned a property for at least one year. The European Commission has sent Spain a formal request to amend its discriminatory legislation. It considers that the “difference in the tax treatment of the two categories of taxpayers, in so far as it results in a higher tax burden on non-resident individuals in situations objectively similar to those of residents, constitutes indirect discrimination on the grounds of nationality prohibited by the Treaty.” EC officials claim the higher tax burden on non-residents may dissuade individuals from taking up employment or buying immovable property in Spain while remaining resident for tax purposes in another Member State. It also makes it less attractive for Spanish employers to recruit labour from other Member States rather than locally. If the Spanish Government amends its tax rules following the EC ruling, British and other non resident property owners would pay only 15% capital gains tax when selling after a year and enjoy the same progressive discounts on CGT as Spanish residents if they sold within the first year. news from propertnetspain

Currency deals can greatly cut cost of foreign homes

Thu, 14 Jul 2005 00:00:00 GMT

By Hundreds of thousands of Britons leave the country every year to set up homes in foreign countries far away from the damp and the UK taxman. But whether fleeing to a retirement home in the sun or fulfilling a long-term dream to renovate a rustic ruin, buying a property abroad can be fraught with risks - not least from fluctuations in the currency markets.

The strong pound and ludicrous UK house prices have influenced many to pack their bags over the past few years. For a fraction of the cost of an average UK home, anyone with some sizeable savings can afford a comfortable property on the Continent.

Not surprisingly, one of the last things that most people consider when emigrating or buying abroad is where to get the best deal when switching sterling into foreign currency. A survey by Moneycorp, the foreign exchange provider, found that 80pc of overseas property buyers do not take this into account.

Even modest exchange rate movements can add thousands of pounds to the purchase price of an overseas property. A growing number of people also want their UK pensions or mortgage paid in a foreign currency and face the same risks.

Alexander Wright, director of private client services at foreign exchange provider Hifx, said: "To show just how much currency movements can affect the cost of actual buying abroad, we saw a property in Florida recently, priced at $250,000. It would have cost £131,000 on May 5 but by May 10, due to a strengthening in the dollar, it would have cost £133,333. That's an increase of £2,333 in just five days, or almost 2pc."

Whether converting a lump sum for a deposit on a house, or making several staggered payments to acquire a new- build home, most people still rely on their bank or building society to look after foreign exchange transactions. But for those who shop around and consult a specialist, significant savings can be made in lower charges and more competitive exchange rates.

Most people rely on banks for foreign exchange but significant savings can be made by shopping around

Typically, the high street banks charge £20 to £40 for an overseas transfer and some still charge commission for the currency exchange. HSBC charges existing customers a £9 transfer fee on transactions less than £2,000 or £21 for "priority payments" - most of the larger transactions - over that level, but no commission. Customers transacting through a bank rarely receive the most competitive exchange rate. Banks usually offer a "tourist" exchange rate, which is significantly less competitive than the inter-bank borrowing rate - the rate at which banks lend to each other - which many specialist currency providers track more closely.

Specialist foreign currency houses offer more commercial rates, do not charge commission and levy a much lower fee for electronic transfers.

Travelex, the foreign exchange provider best known for its high street bureaux de change outlets, also offers currency services for property purchases, emigration, buying antiques or even bloodstock such as racehorses abroad. It does not levy a transfer charge on exchange transactions.

Dino Leo, of Travelex, said: "Our rates are most competitive for transactions of £5,000 to £10,000 and upwards. For smaller sums, the rates are slightly less competitive. We are also about to launch a 'Regular Payments' service for pension or mortgage payments made abroad, which will cost £10 per transaction."

Moneycorp, another large foreign exchange provider, charges a £15 transfer fee for large transactions or £4 per transaction for smaller regular payments of no less than £250. Neither charges commission.

Mr Leo said the process of transferring sterling abroad is straightforward: "Our customers complete a registration form, which can be printed off from our website, and post or fax it back. We then request a copy of a passport and utility bill from the customer. One of our dealers then calls back to talk through the exchange rate options, a rate is settled on and we send out a confirmation letter.

"The client then sends the money to a Travelex holding account, from where it is transferred to the foreign bank. It usually takes 48 hours to transfer the money from the holding account, but it can be done on the same day in emergencies." The process is similar for small, regular transactions, although people often fix the exchange rate for a year, or even two.

Fixing an exchange rate for a year or more can be useful for those setting up a mortgage in euros, to ensure the buyer knows exactly what their euro payments will cost in sterling terms.

Transfer charges for regular payments typically range from about £4 to £10 across the industry. Some currencies - such as the South African Rand - are more volatile than others and as it can take several weeks between sending a deposit and completing on a property, currency movements are important.

Mr Wright said: "This type of currency risk can be avoided by fixing an exchange rate at the outset - known as a forward contract. It is especially useful for anyone buying 'off-plan' where they are required to send staged payments to a developer."

Customers usually have to pay a deposit of 5pc to 10pc to secure a forward contract. Martin Briggs, a senior consultant at Hifx, advises anyone making sterling to dollar or euro transactions to hold off a few months because both currencies are expected to weaken against the pound.

"Over the next two to three months we expect the dollar, which has been trading at around $1.83 against the pound, to settle at around $1.95 and the euro, which is trading within an €1.42 to €1.52 range against the pound, to settle at around €1.50. There will be good buying opportunities in a few months, although that will change later in the year."

The Federation of Overseas Property Developers, Agents and Consultants can advise on companies specialising in currency transactions.

New Spanish government to get tough

Thu, 14 Apr 2005 00:00:00 GMT

The recently installed socialist government in Spain has announced that it plans to clamp down on tax cheats and money launderers within the country's property industry. Many Spanish property purchasers commonly break the law by under-declaring the actual price paid for a property, which consequently allows for lower tax gains. "In the short term you can save money by under-declaring because of the transfer tax," suggests Mr Blasco. "But you run a very real risk of losing in the long term. That is why I cannot advise my clients to do that." Article from Property Investor News.

SIPP Self Invested Personal Pension - Overseas Residential Property now can be Included

Tue, 4 Jan 2005 00:00:00 GMT

Property really is the new pension.

From April 2006, a UK approved pension plan will be able to invest in residential property. This is the first time that UK taxpayers will be able to place residential investment property (including buy-to-lets and overseas homes) into a self-invested personal pension (SIPP). The new rules will be highly attractive to many UK individuals as it offers both tax advantages and the resources to financing the purchase.

Looking ahead to the new rule changes, Erna Low Property, the UK representative and agent for Intrawest, the specialist ski and spa resort developer, has formed an alliance with independent financial advisors Cavendish Ware. Erna Low has an extensive portfolio of off-plan developments in already well-established destinations in Europe, North America and the Caribbean.

The rule changes coming into force in April 2006 enables a pension fund to buy property that may have residential use. This has previously not been acceptable. The new rules will enable the pension to borrow up to 50% of the value of the fund to buy property, so, for example you will need a fund of £100,000 to buy a £150,000 property. Any rental from a buy-to-let or holiday home must be reinvested in the fund but it will be free from income tax up to 40% and any capital gains tax on any gains made in the value of the property when you sell (for properties based in the UK only). Investors should however, seek professional advice and guidance on local tax laws for any overseas property invested in their SIPP. In some countries a SIPP may not be exempt from overseas taxes or local capital gains tax (CGT) on the sale of the property. In addition, although investors will be able to put holiday homes into their SIPP, they would have to pay rent for the privilege as it is owned by the pension fund.

The attraction of the new rules is clear. Many individuals may want to purchase a holiday home, but may not necessarily have the financial resources to do so. By using existing pension assets, they can achieve their aim as personal pension plans can be converted into a SIPP in order to invest directly in residential property. From 2006, an individual can pay 100% of their salary (un-taxed) or up to £215,000 into their SIPP (up to a maximum of £1.5m). In addition a company can contribute any amount on behalf of the individual employee, although there may be tax issues on the individual if the contribution exceeds £215,000. Lastly, there are no restrictions on separate SIPP's purchasing one property, so a husband and wife could combine their pensions to purchase a property.

According to Adrian Ware, managing director at Cavendish Ware: "The whole aspect of using pension schemes to purchase residential, overseas property is very new to all of the SIPP providers. The legislation still requires clarity in certain areas. However, in principal, an individual can agree to exchange off-plan personally now, and then complete through the pension plan post 2005. A key aspect of the Intrawest properties (available through Erna Low) is that there is significant opportunity for capital growth in the value of the property, and the pension scheme, and therefore the client will benefit from this."

Joanna Yellowlees-Bound, CEO of Erna Low says: "There are likely to be two main categories of client who will take advantage of the new rules. The first is likely to be the largest group who wish to purchase property and are looking for both the right property, in the right location with the method to finance the purchase - this is the emotional investor. The second are those clients who now see the purchase of an off-plan Intrawest property as an attractive investment opportunity that could fit well into their Pension Fund - this is the financial investor."

Click here for more information regarding Self Invested Pension Plans.

Above Article from: http://www.newskys.co.uk/property_news/money_corner/719/article.html