We are all familiar with the old saying ‘buyer beware’. Certainly, many prospective purchasers of property in the UK know to proceed with their transaction with extreme caution. By enlisting the services of surveyors and solicitors a buyer can avoid spending money on a defective property or one without good title.
If there is one thing that sticks in the throat more than taxes, it is retrospective taxes. In the seven years since the economic crisis gripped Europe by the purse strings, property prices have taken a downward trajectory. No country knows this better than Spain, where properties are being sold at prices sometimes less than 50 per cent of the value they achieved in 2008. In the past few years, there has been an alarming increase in the number of claims made by the tax agencies of the different Spanish autonomous communities for unpaid purchase tax against homeowners who have acquired property, whether by purchase, gift, or inheritance, on the basis that the acquisition value declared in the transaction was too low.
Buying a property is never easy. It is especially more complicated if you are attempting to buy a property in Spain, and you are unfamiliar with its property laws and language.
That is why it is important to enlist the help of an independent Spanish property lawyer to ensure that you are aware of the pitfalls and obligations associated with purchasing a property in Spain. Failure to do so could have serious consequences for you and your family.
When an individual inherits assets located in Spain they are required to pay inheritance tax on the amount they have inherited. Up until very recently non-residents of Spain often found themselves paying more in Spanish inheritance tax than those who were resident in the country – even if the amount they were inheriting was the same.
The good news is that due to recent changes to Spanish inheritance tax law, if you have paid Spanish inheritance tax in the past four years and either you, or the person from whom you inherited, were non-residents of Spain at the time you inherited, then you could be eligible for a full or partial refund from the Spanish tax authorities.
It is said that there are two things certain in life: death and taxes. Up until the last few years those taxes appeared especially high for non-residents in Spain who were inheriting property in the country.
The European Court of Justice has recognised the unfairness of Spain’s different rates of inheritance tax for residents and non-residents, which ultimately led to the Spanish authorities streamlining the tax liabilities faced by residents and non-residents alike. But the hangover of getting a raw deal in terms of inheritance tax still lingers for many expats and foreign investors in Spain.
A warm climate, beautiful views, great food and a steady source of income to support your lifestyle are things that many of us aspire to. A potentially viable means of achieving all of the above in one fell swoop is to open a business on the Spanish coast. During the ‘80s and ‘90s opening a bar was considered a likely route to success. As we begin to recover from the economic crisis we have noticed that the Bed and Breakfast is the business that many Brits are favouring.
As with most economic downturns there are always winners and losers. When it comes to real estate in Spain, those who experienced financial uncertainty during the economic downturn were often faced with the prospect of losing their homes. Ironically, and despite claims of financial mismanagement, it was the banking sector that was able to make a series of gains through property repossessions during the Eurozone crisis.
So what does this mean for the Spanish real estate sector? Well, it would now appear that banks have a substantial stake in the property market. Those banks are also keen to sell on those properties to recoup recession-era losses. Bank repossessed properties have become an attractive purchase prospect for those seeking to invest in a property in Spain.
For many investing in Spanish real estate, the urge to build your home from scratch or pick a property in need of TLC is all too great a challenge to resist.
But developing properties on non-urban land, that is to say land that is neither urban nor authorised for development by the local authorities, could leave you open to so-called ‘land-grabs’
The free movement of people may be one of the fundamental rights of the European Union, but it has arguably caused the greatest difficulties for EU nationals in matters of probate.
Laws across Member States are rarely uniform for succession purposes. In cases where the deceased was a national of one Member State but domiciled in another, careful consideration will need to be taken as to which laws will govern their estate. The national of a deceased person, where he or she was domiciled, and where his or her assets are located will all play a part in determining what laws should apply.
The Spanish government has taken steps to bring its inheritance tax rules into line with a recent European Court of Justice (ECJ) ruling.
On 3 September 2014, the ECJ held that Spain was not acting in the spirit of the European Union by charging different rates of inheritance tax for residents and non-residents.
A new inheritance tax law amending the Spanish law 29/1987, passed on 27 November 2014, makes clear the tax liabilities now faced by residents and non-residents alike.
E&G Solicitors in Spain handled our matter very efficiently. Their communication was excellent, professional and timely and I was very happy with the service provided.
