Spanish Property Tax Rebates

Overseas property investors who sold properties in the Costas in Spain in 2005 or 2006 may be entitled to a tax rebate.

The issue goes back to the two-tier tax system which was overhauled in 2007. Prior to the overhaul there were two levels of capital gains tax (CGT). Non-residents were forced to pay 35% CGT whereas Spanish residents paid just 15%. After the over-haul, everyone now pays 18% regardless of whether they are a Spanish resident or not.

All properties sold in Spain are subject to CGT if the property has risen in value between buying and selling the property, thus this issue could affect a lot of overseas property buyers.

A British couple took their tax case to the Spanish High Court of Justice arguing that the old CGT laws were discriminatory. The judge hearing the case agreed and many other buying foreign propertys in Spain are now seeking legal advice to seek if they too are eligible for a tax rebate.

Due to the Spanish statue of limitations, only properties sold in 2005 and 2006 will qualify although as soon as you make an application, the clock will stop ticking. 2006 saw prices in the Costas reach their highest point so a lot of overseas property buyers may be in for a large tax rebate if their applications are successful.

However, to complicate matters, CGT may have been paid in the property investor’s home country as well as in Spain. In countries such as the UK where CGT is higher than in Spain, property investors would have had to have paid the difference in the UK at the time. Until April 2008, UK CGT was tiered according to the length of time that the property had been owned for and CGT was up to 40%. These property sellers have no claim.

If you believe you are eligible for a rebate on the CGT you paid on your Spanish property you must make your application to the Spanish tax office where you paid the tax to.

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  1. From Expats Must Act Now to Claim Through Spanish Tax Rebate | Spanish Property News | Buying Foreign Property | May 17, 2010

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