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

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.