Archive for the ‘Financial & Mortgages’ Category


May 12th, 2009

Many Britons who let out their second home in Spain could now be eligible for a tax rebate windfall from HM Revenue & Customs.

From 6 April, 2010, furnished holiday lets in the UK will no longer be treated as business assets, against which owners can offset losses against their other income and roll over capital gains tax to reduce their tax bill. The break was originally introduced in the 1980s as a way of encouraging British tourism.

The Government withdrew the concession after the European Union ruled that it breached EU law by discriminating against non UK owners of second homes in other European countries.

Although the most published elements of the recent Budget concentrated on tax increases, much less published is a new opportunity for owners of holiday lets in Spain, who have been given the chance to apply retrospectively for tax repayments going back up to a full five tax years. Property owners who thinks they may be eligible should act quickly, as the tax breaks will cease in April 2010.

This change in taxation is applicable where either of two circumstances has arisen:

  1. Where owners have incurred losses from the letting of the property since 6 April 2003
  2. Where a property used for holiday lets has been sold at a profit since 6 April 2003

Example 1

Mr Smith owns a Spanish villa that, apart from a couple of weeks’ private use, is let commercially throughout the year. Whilst Mr Smith tries to let the property all year round, the seasonal nature of the business means that, year on year, a loss of around £5,000 is incurred. Mr Smith may now be able to make a claim to offset this loss against UK income tax over the last five years. As a higher rate taxpayer, this would generate a tax repayment of around £10,000 (5 years x £5,000 x 40%).

Example 2

Mrs Jones acquired a holiday property in Portugal in 2001 for the equivalent of £100,000. The property was let out for five years, on a holiday-let basis, and sold in 2006 for £200,000. She paid capital gains tax in the UK of £30,000 on the sale, after all available tax reliefs. It may now be possible to go back and amend the calculation to include further reliefs, which would reduce the taxable gain to around £2,000. This would save Mrs Jones £28,000.

More than two million Britons currently own a property abroad, and a number may recently have become eligible for one of these tax breaks. Many owners who previously kept their homes for private use have been renting them out to holiday makers over the last couple of years, to generate an extra source of income during the economic downturn.

This is a one-off opportunity in the 2009/10 tax year to secure a unique tax rebate. In 2010/11 the set-off or carry back allowances which create the rebate will no longer apply. To be eligible for the allowance, properties must have been let for ten weeks a year and available to let for 140 days.

Target Chartered Accountants are offering a free tax consultation with a fee only chargeable if a successful tax refund or reduction is achieved.

Landlords who think they may be eligible and would like to take advantage of the free tax review should contact Target Accountants

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May 6th, 2009

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell from 1.909% in March to 1.771% in April, a percentage change of -7.2%. This is the lowest that Euribor has ever been, and is 63% lower than it was a year ago. Compared to July last year, when Euribor peaked at 5.393%, Euribor has fallen by 67%.

After the latest drop in Euribor, borrowers with annually resetting mortgages should see their annual mortgage repayments fall by between 3,000 and 5,800 Euros, in theory at least.

In reality, however, some borrowers complain that their payments haven’t fallen at all, and in some cases, have actually risen. This may be due to banks using a derivative of Euribor, such as a moving average, that lags the fall, or due to other malicious conditions buried in the small print (and so beloved by mortgage lenders), such as interests rate ‘floors’ below which mortgage rates cannot fall.

Euribor is derived from the European Central Bank (ECB) base rate, which is currently at 1.25%. The markets are expecting another interest rate cut in May, so that is already baked into the current Euribor rate. Experts expect Euribor to keep falling in the coming months to around 1.25% at the end of the year.

Story by: Mark Stucklin

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April 28th, 2009

For buyers with access to capital, this may be the best opportunity in decades to load up on property in Spain.

Everywhere you go in Madrid, For Sale signs on half-built apartment blocks dominate the Spanish capital. No surprise: The global recession has hit the country’s once-booming real estate market harder than most. Property prices from Barcelona to the Balearic Islands fell 6.5% in the first quarter of 2009 alone. They are expected to drop 35% or more from their 2007 peak by the end of this year.

The economic downturn—in Spain and dozens of other countries—has left many homeowners struggling to keep up with their mortgage payments. But for well-funded property buyers, the recession is opening up a bonanza of cut-price deals. When times were good, cheap credit fueled almost insatiable demand for second homes and investment properties. Now, financing is harder to come by, and developers are slashing prices to offload stock built for a dwindling number of buyers.

The power shift in property sales is gradually enticing investors back into the market. Double-digit price declines since 2007 and the renewed strength of the dollar against foreign currencies make buying overseas more affordable for Americans.

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March 8th, 2009

A British couple who took the Spanish tax authorities to court, have won £10,000 after they had been illegally charged more than twice the amount of capital gains tax than was charged to Spanish residents when they sold a property in 2004. After a battle lasting more than a year, they have successfully reclaimed their overpayment and the case now paves the way for thousands of other foreigners to make similar claims from the Spanish government.

Until recently, foreign nationals had to pay 35pc of any gains made on Spanish properties as tax. This compared to just 15pc paid by Spanish nationals. The European Union challenged the rules, claiming they were discriminatory, and since the start of 2007 the Spanish tax authorities have levied the same 15pc tax rate on Spanish and overseas property owners.

The Spanish court ruled that the initial case put forward by solicitors Costa, Alvarez, Manglano & Associates on behalf of Mr and Mrs Roy from the UK was so convincing that there was no need for it to be passed on to the European Courts of Justice (ECJ), which is the usual procedure.

“Anyone else who believes they have been affected should come forward now with their cases,” said Emilio Alvarez, from the law firm. Six hundred other British couples are now putting cases forward, and all the cases will be decided separately by the Spanish court.

Taxpayers are also entitled to claim a refund for missing interest at a rate of 6pc from the date the reclaim is presented, making the total reclaim even higher. You are eligible if you sold a property in Spain between July 2004 and December 31 2006 and were not a fiscal resident in Spain when you sold it. You also have to have paid capital gains tax on the property to claim and need to have sold the property as an individual rather than a company.

From: Telegraph

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December 15th, 2008

A Spanish property expert has given an encouraging assessment of future prospects for the country’s property sector.

Martin Dell of claims that, while buyers are likely to remain “very price conscious” over the next 12 months, there will be an increase in the number of people investing in Spain next year.

He believes the Spanish property market will be helped by a “more buoyant European economy” in 2009, resulting in an “improved flow of credit and renewed optimism in the property market”.

Mr Dell explains that recent events in Spain’s financial sector, such as the Metrovacesa debt for equity deal, demonstrate that financial analysts in the country envisage a turning point for the economy.

“Next year, I see an opportunity for European buyers to acquire Spanish property at bargain prices,” he comments.

The Sanahuja family, which controls over 80% of the capital in Metrovacesa, has agreed to give creditors a 54.75% holding in the company in exchange for the cancellation of debt worth 2.1 billion euros.

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November 12th, 2008

There have been a lot of stories in the press recently about how Brits and other EU citizens who sold a Spanish property between June 2004 and December 2006 could be entitled to reclaim part of their Spanish capital gains tax.

Thousands of Britons who sold a property in Spain during this period could be owed a 20 per cent tax rebate from the Spanish government.

Initial estimates put the total amount to be reclaimed by British citizens at £11,000 per person, totalling an estimated £37m.

However, over the last few months hundreds of Brits have registered average reclaims of more than £19,300 each – totalling more than an estimated £86m.

It has been estimated that somewhere in the region of 4,500 British people, plus thousands more residents in other European countries, may now be entitled to reclaim their tax.

For more information, see

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November 4th, 2008

Spain’s Socialist government on Monday announced a new round of emergency measures to soften the impact of the economic crisis, including the funding of a two-year, partial moratorium on mortgage payments by the unemployed.

In addition to the mortgage relief, José Luis Rodríguez Zapatero, the prime minister, unveiled tax benefits and financial incentives designed to help home-buyers and promote job creation, especially in industries such as alternative energy that the government wants to promote.

“The government is convinced that it has the capacity, strength and determination to ensure that the families in this country in the most difficulty are supported and helped,” Mr Zapatero said.

Read more at Financial Times

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November 2nd, 2008

The latest Spanish House Price Index from reflects average asking prices for Q3 2008 – and it contains some surprises.

Overall, the average house price in Spain appears to have increased from €240,000 to €245,300 – in just three months. In the current market conditions, how can an apparent increase in house prices be explained?

Digging a little further, the overall increase can be narrowed down to 10 provinces which have experienced sizable quarterly increases themselves.

In Malaga province, average property prices have increased 4.3 percent during the third quarter, while showing an average yearly increase of 1.4 percent. Especially properties with 2 to 5 bedrooms seem to enjoying increasing popularity among buyers.

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