BRITS TO BENEFIT FROM SPANISH CAPITAL GAINS REDUCTION

From 1 January 2007, Capital Gains Tax (CGT) in Spain for non-residents is set to drop from 35 per cent to 18 per cent, bringing the rate in line with the Spanish residents’ rate. This is great news for current and future investors, effectively halving the tax you have to pay on any gain in value of your home between its purchase and resale.

In addition, as a non-resident, currently five per cent of the property sale price is paid to the tax authorities and refunded upon payment of the CGT. This will be reduced to three per cent under the new proposals.

Further benefits come should you go down the route of applying for Spanish residency. As a resident over 65, you are not subject to CGT at all having lived in your property for three years – in fact, residents can claim back some CGT if they buy another principal residence in Spain within two years of the first.