Great news for spanish property investments due to the 50% reduction in Capital Gains Tax in 2012

The Spanish government have announced a very welcome reduction in capital gains tax (Plusvalia) on second homes or investment properties purchased between May 11th and Dec 31st 2012. The reduction will be applied when the property is sold.

In order to encourage real estate property investments, the Spanish Government has approved a Royal Decree to be effective as from 11th May.

Here is an overview of the new provisions. For details as to how it might affect you please contact your financial advisor.

The main measure is a reduction of 50% in the Capital Gains Tax on sale proceeds for properties bought between 12th May and 31st December 2012. This is regardless the future sale date.

The tax remission benefits both natural persons (residents and non-residents) and legal entities, under the following conditions:

–         The property must have been purchased between 12th May and 31st December 2012
–         It must be an urban property (residential or commercial)
–         The buyer and seller should not have any connection, either corporate or family
–         The property should not be considered a commercial development or venture.

The tax reduction will be applied in the annual Income Tax declaration or in the company tax of the fiscal year in which the capital gain was generated.

Provided that the applicant meets all necessary requirements, the capital gain to a non-Spanish tax resident on sale of a Spanish property is taxed as follows:

Sale in 2012-2013              Before:  21 %
Now:      10,5 %

Sale in 2014 or after:          Before:  19%
Now:      9,5 %

The tax on capital gain to a Spanish tax resident is as follows:

Sale in 2012-2013              Before: until 27% (depending on Gain)
Now:     until 13,5 %

Sale from 2014 on              Before: until 21%
Now:    until 10,5 %

In the case of companies, the Capital Gain is taxed at approximately 15%.

We would like to remind you that the tax for newly constructed properties remains at 4 % until 31st December 2012.

If you have any queries please contact us.

Balearic Properties Real Estate Mallorca

Phone ; +34 971 532 221


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