A new rate of Spanish Capital Gains Tax came into force on January 1st 2007.

A much needed boost for the beleaguered Spanish property market, this drop in capital gains tax on property sales and personal income for non-residents in Spain which fell from 35% to 18% has been well received. Until yesterday only over 65-year-olds who have lived in Spain for the last three years could benefit from CGT exemption.

Head of European operations at Halifax, Ian Smith believes this is fantastic news for overseas residents living or working temporarily in Spain. This change by the Spanish Government follows a European Court ruling deeming the previous tax regime to be unfair to non-residents. Holiday home owners and property investors alike will benefit from thousands of pounds of savings as they will have to give up 50 per cent less to the Spanish tax authorities than they did previously and landlords too will be able to cling onto more of their rental yields. Furthermore sellers of property in Spain will also enjoy a reduction in the withholding provision that non-residents pay upon completion down from 5% to 3%.

A CGT rate of 18% markedly improves Spain’s housing market competitiveness respective to other popular overseas property hotspots such as France. The Spanish lifestyle and it’s sunnier climes continue to lure British buyers and it remains the second most popular destination in which to settle overseas accordingly to recent research published by the Institute for Public Policy Research in December, which said that 760,000 Brits have selected the Iberian peninsula as their home in the sun.

Already present in US real estate marketplace, the Reit model came into force yesterday.

This new tax efficient status has been welcomed by a number of property firms in the UK, such as British Land who have chosen to adopt the new status at a one off cost of 300m yet equivalent to just one year’s corporation tax bill. Ten of Britain’s largest listed commercial property companies converted into Real Estate Investment Trusts which means that as property-managing firms they pay little or no tax as long as most of their earnings are paid to shareholders as dividends.

Commercial property it seems, is the market to be in at the moment as positive reaction to the newly converted firms showed in strong share gains for the companies in question.

Do you plan on opening a Real Estate Investment Trust? If so email us with your thoughts/experiences.

With the start of a new year, Adam, Chintan and rest of the Nubricks.com team would like to wish every reader property investment success in 2007.

Having returned to the UK from our end of year property hotspots tour, over the next few weeks we will be reporting on our findings as well as continuing to keep you up to date on current off plan property news and launches. Our popular overseas property podcast series is back with brand new line up of international real estate professionals who offer you a real insider’s look at a variety of overseas property markets and let you know what’s really happening in these hotspots as we speak.

Keep an eye out for our new makeover which is due shortly and if you have any real estate questions you would like answered drop us an email here and we will try to help.
So here’s to 2007, property perfection and beyond…………………………………….