Taxation

We can provide broad guidelines on the tax implications (VAT, CGT and IHT) implications of foreign property ownership but for more in-depth analysis we would put clients in contact with a tax expert for the country concerned. Regarding the on-going tax implications of owning property abroad (eg income tax/property tax, wealth tax, rubbish tax etc. in Spain), you will need to appoint a local fiscal representative. Again we can help source this advice if desired.

Caribbean

Our Caribbean properties lie on Margarita Island. Margarita is a tax free island therefore there are no associated tax costs for purchasing a property there.

Portugal

Property Taxes

Property Transfer Tax (IMT) is applied by a sliding scale of bands and credits which rise in line with the price paid. for example, no tax or credit is applied to purchases below €80,000. Properties bought between €80,000 and €110,000 are liable to IMT at 2% but attract a tax credit of €1,600.

In addition to IMT and similar to UK stamp duty you will have to pay Acquisition Stamp Duty at 0.8% of the purchase price. Where a mortgage is attached to the property, there will be a Mortgage Stamp Duty at 0.04% of mortgage advance in the first year, followed by 0.5% in the next three years, followed by 0.6% of the sum outstanding in ear five and afterwards.

Spain

Property Taxes

It is probably the last thing you want to do but one of the first things you should do after buying a property in Spain is to prepare to pay tax there. The reason is that, just as conveyancing law differs overseas, so do the fiscal statutes. Ignorance is no defense when determining how much tax must be paid and by whom. Failure to plan ahead could result in you paying more tax than necessary.

It makes sense to consult a professional adviser who speaks both Spanish and English. We at Location+ can recommend a range of tax advisers for you to choose from who can guide you through the Spanish tax system.

The UK tax implication of your property purchase abroad are best dealt with via your UK tax adviser (if you have one). Note, however, that the UK and Spain have a double-taxation treaty, so if you have paid CGT in Spain, this will be allowed for in the UK tax consumption.

In summary, allow for up to 10% of the purchase price in taxes and other costs (3% for conveyancing costs and legal fees and 7% IVA).

Income Tax

A new Income Tax Law will be implemented for the resident taxpayers in Spain from the 01/01/07. This law also introduces some important changes to the Income Tax Law for non-residents, to the corporation Tax returns and the Wealth Tax Returns.