SPANISH PROPERTY TAXES

The purchase of a property in Spain involves - both for residents and non-residents - a series of fiscal obligations which must be met: TAXES ON CONVEYANCE OF ASSETS AND DOCUMENTED LEGAL PROCEDURES (ITP-AJD in its Spanish acronym) AND/OR IVA (Spanish equivalent to VAT): The IVA tax (equivalent to British VAT) is applicable to the purchase of newly built properties and urban plots which are immediately available for building. It amounts to 7% of the purchase price to the purchase of newly built properties, and 16% to purchase of urban plots which are immediately available for building. This tax must be paid on each instalment. In addition, the obtention of the title deed is also subject to Taxes on Conveyance of Assets and Documented Legal Procedures, 1%. It is necessary to pay the ITP-AJD taxes (taxes on Conveyance of Assets and Documented Legal Procedures), when IVA (Spanish VAT) is not applicable. The rate of ITP is 7% of the property purchase price. Remember the costs associated to a property sale transaction are normally 10% of the purchase price, and one of the mentioned taxes is included in this 10%. TAX ON REAL ESTATE (IBI in its Spanish acronym) The IBI tax must be paid every year, in one payment to be made between September 15 and November 15. Failure to pay this tax may result in the initiation of sanction procedures. We can ensure this payment is made by direct debit from your Spanish bank account, so you can rest assured you will not encounter any problems. WEALTH TAX If you are not resident in Spain, you must pay Wealth Tax (in Spanish, Impuesto sobre el Patrimonio), which is applicable to all the assets you have in Spain. Among these assets are real estate, bank accounts and other goods of a certain value. The rate of this tax is very low, usually around 0.20% (one fifth of a percentage point) of the total value of your assets. PROPERTY INCOME TAX Non-residents who own properties in Spain must file their tax return with the tax authorities. Spanish authorities are only interested in the amount earned by non-residents through their activities in Spain, rather than their global income. Non-residents must pay a single tax rate on any income generated in Spain. A typical example is the interests generated by deposits in accounts held in Spanish banks or the income obtained from renting properties. Any person who owns a property in Spain, but is not resident there the entire year, should designate a "fiscal representative" who will carry out all the procedures necessary before the tax authorities. We also offer this service. CAPITAL GAINS TAX Capital gains tax is payable based upon the increase between the original purchase price of a property and the selling price. This tax applies to the seller is levied at 18% to non-residents. Anyone purchasing a property from a non-resident must withhold 3% of the purchase price which is then paid to the tax authorities on account of any liability by the vendors. The vendor then has around two months in which to pay the Agencia Tributaria (spanish tax authorities) the rest of this tax. However, there are factors that can be taken into consideration to reduce the amount paid such as the costs incurred with the original purchase, and time elapsed between the initial purchase and the new sale etc. Source: Manzanares Abogados – Lawyers http://www.manzanares-es.com

50% REDUCTION ON VALUE ADDED TAX DERIVED FROM NEW PROPERTY PURCHASES

Starting from 23rd May 2012 until the end of the year, the Government shall apply a 50% reduction on all value added tax derived from the purchase of a property, according to the Council of Ministers. This measure was announced 4 days ago at a press conference by Ana Pastor, Public Works & Development Minister, following the Council of Ministers. This implies that whoever purchases a property starting from today will receive a 50% reward bonus for any eventual value added tax generated by the sale of the same. The reduction applies to both individuals and corporations. The tax cuts therefore affect both individual as well as corporate tax returns. However, purchases made between parents and children will not be entitled to benefit from this measure. The change in policy is focused on revitalizing the anemic Spanish housing market as well as facilitating the sale of stock accumulated in the banks’ balance sheets, which is currently eroding their profit and loss accounts. Anyone who purchases a property as a second home will be able to benefit from this measure. At present, individuals are subject to 100% exemption on value added tax upon selling their main home. This will therefore optimize a stock clearance of all second homes (apartments on the coast etc.) and will aid large investors, speculators or profit-seeking property purchase bonds. SOURCE: MARTINEZ ECHEVARRIA I PEREZ I FERRERO ABOGADOS www.martinezechevarria.com

SAYINGS AND THEIR STRANGE ORIGINS

Always a Bridesmaid, Never a Bride This phrase, surprisingly, was used to sell Listerine mouthwash! To promote their product, the manufacturers of Listerine employed the personal experience of girls at the time, who desperately wanted to settle down but seemed always to be left on the shelf. First used in the 1920’s, it portrays a situation and a possible explanation for the lack of success these girls had. Here is the transcript of the ad: Poor Edna was getting on for thirty and most of her girlfriends were either already married, or about to tie the knot. How she wished that, instead of being their bridesmaid, she could be the bride! However, any romance of hers invariably ended quickly. There was a reason. Unbeknownst to her, she suffered from bad breath and no one would tell her, not ever her closest friends. The advertisement sold millions of bottles of mouthwash and also gave the English language a new saying! Bark up the wrong tree Originating back when hunting was still a major sport, this phrase came from when animals were used to track, catch or retrieve prey. This applies, not least, to dogs. Dogs were used in the chasing of raccoons, which was chiefly undertaken at night and were trained to indicate the tree in which the animal had taken refuge by barking at it. Of course, even dogs can err and, at times, barked up the wrong tree. Be on a good footing A pleasant relationship with other people, not least those in a superior position, is portrayed as being ‘on a good footing’ with them. There are two thoughts as to where this saying came from. Some say the phrase goes back to a practice of early apprenticeships. It was the custom, on the first day at work, for apprentices to invite all their workmates for drinks. The new apprentice ‘footed the bill’. If proved a generous host, he made friends for keeps. The hospitality would never be forgotten. Recalling how much it had cost, it was said the novice gained ‘a good footing’. A second derivation links the phrase with an early and bizarre interpretation of human anatomy, the importance given to the length of one of a person’s digits. At one time, the dimension of the middle toes determined a person’s ‘standing’ in the community. Thus, the measurement of their foot decided their status in the eyes of others. Those whom nature and genes had endowed with large feet were lucky to be ‘on a good footing’. Draw your own conclusions on this one! Beat around the bush Someone who doesn’t get to the point is said to ‘beat around the bush’. The origin of this phrase is, undoubtedly, from hunting, and more specifically from the hunting of boars. A ferocious animal, it often hid in the undergrowth and beaters were employed and ordered to go straight in to chase it out. But very much aware, and afraid, of the animals’ sharp tusks, they much preferred to merely ‘beat around the bush’ a practice strongly disapproved of by their masters. Best foot forward When you are trying to make a good impression it is said that you should put your ‘best foot forward’. There are many options as to where this phrase came from, one being that it was believed that ‘the left’ was the realm of the devil, of evil and misfortune. After all the Latin word sinister means left, and in English sinister has kept its ominous meaning. Hence, it was advisable to keep the left foot behind and step forward with the best, the right, foot first. But this phrase seems to have come from the fashion world, rather than the occult. The saying can be traced to male vanity, particularly apparent in the late eighteenth century, the period of the dandy. His desire to attract people’s attention and admiration took strange and elaborate forms. At the time, people imagined that their two legs differed in shape and that ‘normally’ one was more becoming than the other. To draw attention to it they kept the worse one in the background, literally putting ‘their best foot forward’, and with it, of course, their leg. Bite the bullet A person who ‘bites the bullet’, without any sign of fear, acts with great courage in the face of adversity. The phrase recollects a dangerous army practice in the 1850s. Soldiers were then equipped with the British Enfield rifle. Prior to using it, they had to bite off the head of the cartridge to expose the explosive to the spark which would ignite it. The procedure was fraught with danger, particularly so in the heat of battle. It needed firmness and courage, as even the slightest deviation or hesitation would endanger the soldier. Blow Hot and Cold People who waver in their opinions and quickly change from being enthusiastic to showing disinterest are said to ‘blow hot and cold’. The saying can be traced to one of Aesop’s Fables. It was a cold winter’s day, and the freezing traveler was blowing on his stiff fingers. Mystified, a satyr wanted to know what he was doing. The man explained to him that, with his breath, he was warming his chilled fingers. Taking pity on him, the satyr invited the man to his home for a hot meal. This time, he watched him blowing on the food, which intrigued him all the more. Inquiring why he did so, his guest explained that he was blowing on the stew to cool it down. There and then the satyr told the traveler to leave at once. He was not prepared to entertain, or even mix with, someone who could ‘blow hot and cold from the same mouth’. Break a leg To wish an actor prior to his going on stage to ‘break a leg’ is a well-known practice. A pretty strange wish, actually it is meant magically to bring him luck and make sure that his performance will be a success. From the superstitious age it was thought that jealous forces, always present, are only too anxious to spoil any venture. A good luck wish would alert and provoke them to do their evil work, whilst a curse will make them turn their attention elsewhere. The underlying principle is the belief that if you wish evil, then good will come. I’m sure it’s called reverse psychology these days. Bury the hatchet To bury the hatchet means to create peace. With hostilities at an end, the hatchet was no longer needed, and therefore could be disposed of. Now a merely figurative expression, the phrase is based on an actual practice of North American Indians. When negotiating peace, they buried all their weapons; their tomahawks, scalping knives and clubs. Apart from showing their good faith, simultaneously it made it impossible for them to go on fighting. By hook or by crook The achievement of a goal with determination, by fair means or foul, is described as getting things done ‘by hook or by crook’. The origin of this phrase is linked with an early British practice, at a time when forests were still the exclusive property of royalty. For any unauthorized commoner, then, to gather firewood in them was a crime, poor people being the only exception. Though they were not permitted to cut or saw off branches, they were free to remove withered timber from the ground or even a tree, doing so by means of either a hook or a crook.

LAURO GOLF COURSE

Lauro 27 Golf can be found in the middle of beautiful pure nature in spectacular surroundings. The course counts with 27 holes that can be played in three different combinations, all par 72. From the beginning the design and function of the course has been based on respecting the nature and the environment that surrounds it by not only saving and caring for the already existing trees but also by planting thousands of new trees, most of them indigenous andalucian species. In Lauro Golf the nature is everywhere. Within the whole complex the direct contact with the nature is constant and whether you are playing golf, living in the residential or just enjoying a stroll in the surroundings you can see that we are not the only visitors at Lauro Golf. You can often see rabbits, ducks, partridges, herons and even eagles on and around the golf course, our friendly neighbours who are enjoying the micro-climate of the course created by the thousands of trees and the fourteen lakes of the golf course. The course was designed by the late Folco Nardi and the idea was to create a course that was technically challenging yet not too difficult. With a good concentration and the correct election of the clubs the player can end up with a good score in one of the 50 competitions played every year at Lauro Golf. The extension of the course with the holes 19-27 designed by Mariano Benitez follows the same line and equally requires concentration and skills. The course is moderately flat and can be played by foot though there are two holes located on the side of the mountain and from which we can enjoy some spectacular views over the valley of Guadalhorce and the Mediterranean. The club house is located in an old Andalucian building, Cortijo el paredón, where you can find the restaurant, changing and locker rooms, pro shop and the caddy master office. On our premises and the surroundings you can also find a swimming pool, a padel tennis club, lawn bowls club and an equestrian centre. In the middle of the cortijo there is a fabulous patio, with an enormous rubber plant in the middle which offers shade to the players enjoying their food and drinks after a game of golf. http://www.laurogolf.com/

PROTECTION OF MORTGAGE DEBTORS

We have received this information from MARTINEZ ECHEVARRIA I PEREZ I FERRERO ABOGADOS and thought we would share it with you.
If you would like further clarification of this information please contact david.perez@martinezechevarria.com

Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage holders out of resources.

Object.

- Establish measures to ensure the restructuring of mortgage debt of those with special difficulties in meeting its payment;
- Relax the foreclosure proceedings.

To whom it applies:

- As a general rule, debtors located on the threshold of exclusion loan or credit agreements secured by real estate mortgage
- Will be generally applicable measures contained in Articles 12 (extrajudicial execution procedure) and 13 (preference for access to aid for tenants).

Threshold. Shall be considered located at the threshold of exclusion those debtors of credit or loan secured by mortgage on your primary residence, when they concur in all of the following:

- Must be the only house owned by the debtor
- Loan / credit granted for purchase without collateral or inadequate personal
- All members of the household must have no earned income or economic activities;
- Higher mortgage payment to 60 per 100 in net income of the household;
- Members of the family unit must lack of assets to meet debt and Mode accreditation requirements. It develops in the art. 3

Moderation of default interest. From the time that the debtor prove that is located on the threshold of exclusion, the applicable penalty interest shall not exceed the result of adding a remunerative interest on the loan agreed a 2.5 per cent on capital outstanding loan. This measure applies, though the financial institution has not signed the Code of Good Practice, as Article 4 that includes the regulation is independent of the Code.

Code of Practice.

Features:

- May voluntarily subscribe to credit institutions or any other entity, professionally, carries out the loans or mortgages;
- Published as an annex to RDL;
- Once signed, compliance is mandatory;
- Either party may compel the other to grant deed of novation of the contract, applying the provisions contained in the Code of Good Practice, with the costs borne by the applicant, the innovation will have the effects specified in Article 4.3 of the Law 2/1994, (no change in range of the mortgage, except increased responsibility or term);
- May be invoked before the courts by the affected party;
- Stay in the Code shall be for a minimum of two years, automatically renewable from year to year;
- The acquisition value of the home being financed must be less than the following limits:
- Cities of more than one million people: 200,000€.
- Over 500,000 or in metropolitan areas of over a million: 180,000€
- Over 100,000 people: 150,000€.
- Other: 120,000€.
- Will be applicable only to the member institutions, debtors and contracts referred to this Royal Decree, not walking its length, as a matter of policy or interpretation, to any other area, although, of course, the member institutions may matter purely discretionary implement the provisions of the Code of Practice to debtors or improve various provisions contained therein.

Procedure:
- Financial institutions should communicate their inclusion in the General Secretariat of Treasury and Finance, who shall publish the quarterly list in Electronic Office and the BOE.
- Monitoring will be conducted by a Commission of Control which is a representation of the Spanish Mortgage Association, the Bank of Spain, the National Stock Exchange and the Ministry of Economy who will chair the committee and have a casting vote .
- The Control Commission shall publish a yearly report on their compliance.
- May be introduced to the Bank of Spain claims arising out of any alleged failure by the banks of the Code of Good Practice, which will receive the same treatment as other claims processing and resolution which corresponds to said Bank of Spain.

Misapplication. The debtor would have benefited both the reduced penalty interest as the provisions of the Code of Practice without qualifying for it, or who willfully and deliberately, seek placed or kept on the threshold, will affect at least the following consequences:

- Be liable for damages that may have occurred for an amount not less than the benefit improperly obtained;
- Pay all costs arising from the implementation of these measures of flexibility.

Fiscal

- ITPYAJD. A new article 45.IB number 23) of the revised text:
"23. The writings of formalization of contractual innovations and mortgage lending to occur pursuant to Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage borrowers without resources, shall be exempt from the quota phase- the notarial stamp mode of this tax. "
- Increase in Value of Urban Land. A new paragraph 3 to Article 106 of the Act Regulating Local Tax:
"3. In transfers made by debtors within the scope of Article 2 of Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage holders out of resources, on the occasion of the payment in your housing provided for in paragraph 3 of Annex of that rule will be considered a substitute for the taxpayer taxable entity acquires the property without the substitute may require the taxpayer the amount of tax obligations met. "
- Income tax. It adds an additional provision to Law 35/2006 of 28 November:
"Thirty-Sixth additional provision. Foreclosed housing. Shall be exempt from this tax the capital gains that could be generated in the debtors within the scope of Article 2 of Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage borrowers without resources, occasion of the payment in your home under paragraph 3 of Annex of this standard. "

Tariffs. The notary and registration duties arising from the cancellation of real rights in cases of mortgage foreclosed mortgaged debtor located in the threshold for exclusion of this Royal Decree-law, give a bonus by 50 percent. The debtor shall not bear any additional cost of the financial institution that purchases mortgage free of charge, ownership of the property mortgaged before.

Extrajudicial execution procedure. This reform is of general application and not only to debtors included in the threshold of exclusion, but only affects cases where the procedure taken against a debtor's residence:

1. The realization of the value of the property will take place through a single auction for that type will be that agreed in the memorandum of mortgage. However, if you submit a bid for an amount not less than 70 percent of the amount by which the good would come to auction, means the property awarded to whoever presents the best position.
2. When submitted the highest bid is less than 70 percent of the type referred to the auction, the debtor may file, within ten days, the third to improve posture, offering more than the 70 percent of the appraised value or, even less than this amount is sufficient to achieve complete satisfaction of the right of the performer.
3. After the said period expires without the debtor of good conduct as provided in the preceding paragraph, the creditor may, within a period of five days, the award of the property or properties for an amount not less than 60 percent of the appraised value .
4. If the creditor not to make use of that authority, means the property awarded to who has submitted the highest bid, provided that the amount you have offered over 50 percent of the appraised value or, still less, cover at least the amount claimed for all items.
5. If the act of the auction no bidder has not, the creditor may, within twenty days, request the award in the amount not less than 60 percent of the appraised value.
6. If the creditor fails to make use of the option referred to above, shall be governed by the provisions of Article 236 n. Regulation of Mortgage (if there should remain deserted auctions held and the creditor fails to do the right goods procured executed, the Notary will terminate execution and close and formally registered the minutes, which opened to the courts that apply).

The reform is to adapt this procedure a set of rules (Articles 234 et seq of the Mortgage Regulations, which refers to art. 129 LH) to the reforms of the Civil Procedure Act that affected their Article 670, 671 and later additions Sixth Additional Provision.

Now, the possibility of three auctions now limited to cases where the property is not the debtor's residence.

But even after this reform, it awards for bids to cover the amount claimed, but this was ridiculous (paragraph 4), also by the creditor, if he acted as a bidder.

Alhaurin el Grande - Living life to the full in a typically Spanish town

Having spent a third of my life living in Alhaurin el Grande I am obviously qualified to talk about this amazing market town, so strategically positioned that by car anyone can be in Malaga, Marbella, Fuengirola, or Torremolinos in less than half an hour. Check it out on Google if you don’t believe me!

Off course it was not always like this. In 1988 when I bought my first home in Alhaurin el Grande it used to take me one hour fifteen minutes to get to the airport, and yes I did have a good car.

The views of the Guadalahorce valley from almost anywhere in Alhaurin are breathtaking and if one is lucky enough to live on the east side at the foot of the forest the views stretch as far as Malaga bay. On clear winter days one can see the cruise ships sailing in and out of the harbour.

The history of Alhaurin can be traced back to Roman times when the hills (Sierra de Mijas) were populated by huge oak trees, highly valued by the Romans for their boat building industry.

The total population is around 25,000 of which 20% are foreigners, British, Dutch, and Scandinavian. In fact most of Europe is represented, as well as a good proportion of South American states.

There is no shop, bar, restaurant or house for that matter where a foreigner is not made welcome. The Alhaurinos hospitality is legendary and at first it may seem overwhelming until one realises that every visitor is treated the same. The exception to this rule is when a foreign visitor tries to change what the locals see as important aspects of their culture like bullfighting, personal questions about the civil war, questioning the need for their religious processions etc. These things and many others are considered sacrosanct and not worth talking about with someone who does not see it the way they do. Having said that his year the Mayor has banned the traditional ‘cattle race’ through the town’s streets during the Feria (local celebrations). The Mayor made this decision because he deems it to cruel to the animals. This is a real progressive decision which seems to have been accepted without to much protest.

My very first meal in Alhaurin was a dinner at Casa Paco and it’s still there serving good fish six days a week. In 1988 it was one of three restaurants. Today there are more than thirty restaurants including an Indian, Chinese, Italian and even a traditional English fish and chip shop.

My favourite place is Finca la Mota a 12 bedroom hotel with a lovely restaurant. The hotel is only a few kilometres from the town centre and well worth a visit. It is Dutch owned with a German chef who can cook just about any dish in the world better than they would in the country of origin. Yes even Paella! www.fincalamota.com.

There is enough nightlife in Alhaurin to satisfy the most demanding ‘ravers.’ I am told that the fashion this year is Music bars from techno to country and anything else in between. When the night is over you can have breakfast in ‘Bar Dany’ another institution open 24 hours per day for 11 months of the year.

For those seeking sports facilities, Alhaurin is second to none. The Municipal Sports Centre boasts indoor and outdoor swimming pools, tennis courts, paddle, football 7, basketball and much much more. From 7:30 until 22:30 the centre is a bee hive of activities.

For golf lovers like me there are two great courses only 4km from the town centre and 52 more within half an hours drive in almost any directions. www.alhauringolfresort.com. www.laurogolf.com.

Alhaurin el Grande is not immune to the present economic crisis effecting most of the western world, but its people, friendliness, the great weather and peaceful surroundings make this particular difficult period more bearable.

Of course for anyone wishing to buy a property now is the time. Prices are rock bottom and people (those affected most by the crisis) are willing to negotiate. Others would not sell their property for anything in the world because they could not find another place like Alhaurin el Grande anywhere in the world.

Spanish Property Update

After 30 years of indiscriminative building in the countryside and hundreds of thousands of properties being sold mainly to foreign buyers who contracted lawyers to ensure that their investments were guaranteed by the correct paperwork, only to discover that a law that came into effect retrospectively in 2002 made their homes illegal and therefore unsellable.
Owners of these “illegal” properties in Axarquia and Guadalahorce Valley were promised a quick and fair solution by the Regional Government of Andalucia in 2005 when it proceeded to carry out an inventory of the affected properties town by town, village by village in alphabetical order. As it was to be expected the inventory was never finished and it only served to prosecute dozens of Mayors and officials for corruption and negligence, thus creating an even bigger problem of credibility as far as would-be investors in this region are concerned.
Six weeks ago the news that the Regional Government was going to legalise 60,000 country properties was leaked to the media only to be rectified by the Government this week who said that the new decree will legalise 10% of these rural homes. This will leave 80% in limbo although they would be subject to IBI (rates) which the majority of them already pay. The remaining 10% to be demolished.
This decision is an insult to the citizens of the Costa del Sol and Andalucia in general. I am personally outraged at the way these inept politicians have dealt with this problem of their own making and totally echo the statement of the president of SOHA, Philip Smalley when he said to the press “we do not know what to do next except wait for a change of Government (which hopefully will be on the 25th of March 2012) because the present one has demonstrated after six years of talking we now realise that they have not listened to anything we said.”
To summarise we live in Paradise, fantastic beaches, great countryside, beautiful and hospitable people, good infrastructure and of course the best climate in Europe. All we need is a few good laws which we can all abide by and a new Government made up of politicians who work for the people and not what we have now which is a band of corrupt, inept and proponent imbeciles. If on the 25th of March we get rid of this lot it will be the beginning of a new and more prosperous and happy Andalucia.

Good Deals to be had for Spanish Property

Do you want a holiday home, or a permanent home in Spain? If you do then now is the time to start your search as there are a great number of properties for sale, approximately 1 million and the expectation is that prices will continue to drop this year.

Good news for those looking to buy, not so good news for those selling private homes or developers.


The Spanish National Institute of Statistics show that house prices are dropping. In the third quarter of 2010 residential properties fell 2.2 percent compared to figures from 2009. Also new property prices and re-sales are also on the decline with a 2.6 and 1.8 percent decrease year on year.


In view of the economic crisis it would appear that sellers now know that they have to be more realistic when putting a value on their properties. Many more owners are willing to enter into negotiations as the want a quick sale.


The prediction is that house prices in Spain may continue to fall for another two years, so investors locally and abroad are watching what is happening in Spain and some have already made some key investments already.

http://www.propertysearchspain.com/en_benalmadena-costa-spain-apartment-2-bedrooms-1-bathrooms-131000_prop_525.html