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Your Essential Weekly Read
Tuesday, September 30th 2014 - Edition 551
SPANISH PROPERTY TAX SHOCK! If you can answer “yes” to the following pair of questions, then this article is going to be of great interest to you. Did you buy your house in Spain BEFORE 1994 and are you planning to sell it AFTER 1st January 2015? If you want to save yourself a significant amount of tax and sell your house for a price near to what you’re looking for, then you’ll need to find a buyer for your home BEFORE 31st December 2014! According to one of Spain’s leading property experts, Fernando Encinar, if a planned Government reform of Capital Gains Tax is passed into law then there’s about to be a rush in house sales in the final 3 months of this year, which could also result in the selling price for these properties being significantly reduced to enable this deadline to be reached. So what’s about to change? From 1st January, the abatement tax that was applied to properties purchased before 1994 will be abolished and the Treasury will be calculating Capital Gains in a different way, and will mean that the seller will have to pay a much higher amount of tax. Up until now, a reduction coefficient was applied when calculating tax due; this reform will now be made on the difference of purchase and sale price. That means sales that fit the
above criteria will now face an increase of 55% in tax – unless a sale is closed before the last day of the year. As an example, say you bought an 80m sq property in 1990 for the equivalent of 75,000 Euro (933 Euro / sq m). At today’s values (1,459 Euro / sq m), the property would be worth 116,000 Euro, making a gain of 41,000 in 24 years. Using the current calculations, the taxable amount would be reduced to 10,459 Euro, and after applying the 21% VAT on patrimonial gains, the final amount to pay in tax would be 2,375 Euro. However, if the same property were to be sold in 2015, the seller would be taxed on the full 41,000 Euro gain, leaving a tax bill of 8,900 Euro – almost 4 times the previous amount! Should the law be changed – and we’ll let you know as soon as it is – it will no doubt jump start the housing market, giving Estate Agents an unexpected bonus before Christmas, the government some much needed tax revenues and perhaps allowing people that have been desperate to sell their house – at any price – a chance to do so. The down side to the policy will surely have an immediate effect in January 2015 with a slowdown in the market and putting the ideas of those planning to sell and perhaps return to the U.K. next year in abeyance or causing a rethink.
EBOLA CLAIMS ANOTHER GOOD HEARTED SPANIARD... The second Spaniard infected by the Ebola virus was unable to overcome his serious illness and died last Thursday after spending the previous four days being treated in at the La Paz Carlos Hospital in Madrid. García Viejo, 70, from Folgoso de la Ribera (Leon), who was a specialist in internal medicine and a diploma in tropical medicine, contracted the contagious virus in Sierra Leone, where he’s worked for 30 years and for the last 12 was medical director of the Hospital
Order of San Juan de Dios. From there, a special Military plane chartered by the Spanish government, landed on Monday September 22 at Torrejon de Ardoz Airport. In August a 75-year-old Spanish priest became the first European to die from Ebola in the current outbreak, the worst since the disease was discovered four decades ago. That missionary, Miguel Pajares, also a member of the Order of San Juan, was infected in Liberia, where he worked with Ebola patients.