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The Spanish government has reduced the VAT tax for buying a property from 8% to 4% and will be effective immediately. But it only applies to new properties and it is only a temporary reduction that will run until the end of 2011 which is intended to stimulate sales of new property and boost the Spanish economy.
It seems to be a desperate measure to increase the sales of properties and reduce the massive glut of properties for sale but it will only encourage the naive to buy into a falling market and will probably cause a slight rise in demand that will be followed by a sharp drop in demand soon after the end of 2011 when the VAT reduction has elapsed and the sales tax reverts back to 8%.
This measure does not affect buying property in the Canaries where the tax remains 5%.
“Faltenborg”, you could have saved 50,000 euros in transaction costs in buying that 900,000 euro property if only you had waited 😆
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@desolation wrote:
The Spanish government has reduced the VAT tax for buying a property…….But it only applies to new properties
“Faltenborg”, you could have saved 50,000 euros in transaction costs in buying that 900,000 euro property if only you had waited 😆If you stopped laughing long enough to read Faltenborg’s opening post properly, you will see he wrote:
“we eventually found an owner who really wanted to sell. We got the house at approx 40% less than it was valued at in 2005”.Maybe, despite being blinded by your (misguided) chance to have a laugh at Faltenborg’s expense, you should have considered Faltenborg possibly didn’t buy a new property?
P.S. As a rule, isn’t it rather crass to find any misfortune of others amusing? Have decided you belong in the ‘thoroughly unpleasant’ category.
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the problem is with alot of the new builds is the quality and location not even a 4% cut would tempt me.
Desalation you are a truely nasty person as you have no intrest in buying in spain why did you ever come on this site and as pointed out it wasn’t a new property that was purchased so no money would have been saved. -
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Hi desolation.
I read that this had been proposed, not that it had been implemented. Do you have a source?
Although the benefits of such a tax reduction will have a negligable effect on the market in general, at least it will benefit those who were planning a new build property.
EDIT
El mundo article http://www.elmundo.es/elmundo/2011/08/19/espana/1313754842.html -
As we do not know or will ever know what does new build means. I see the situation as follows:
a) Not many new developments will be commencing between now & 31/12/09.
b) Will a new build mean a new built that will be completed before 31st Dec11? or
c) All existing private contract for which the completion date had expired but had not been notarised be treated as new built ?
d) Will it include all private contracts for which the had over to the owners has been delayed to eternity for what ever reasons.I would not trust anything coming from the Spanish authorities and base my decesion on it. There has never been any clarity or sincerity attached to them.
The biggest issue in Spain is the lack of trust, governance & a sense of fair play. No reduction in taxes, price etc can resolve this for the Spanish Authorities
What Spain has to do is to openly & in a very public manner refund buyers moneis including any compensation from some kind of Central funds & resolve their internal issues with Banks, Junta, regional Government, fast track cases, sack all the corrupt Mayors, Judges, lawyers, planning indivuals make the Hacienda accountable & not allow it to act like some third world system of revenue collection.
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If all the property related taxes are abolished for the foreseable future. This will help the economy as injection of capital will stimulate economy & get rid of the unsold stock new or second hand.
As stated in my previous posting it not a question of taxation only. The question is of confidence. The French property has VAT of 19.6%. There prices had grown in some parts of South of France. This only proves that able & willing people can take a view on the taxation aspect of property purchase
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@shakeel wrote:
As we do not know or will ever know what does new build means. I see the situation as follows:
a) Not many new developments will be commencing between now & 31/12/09.
b) Will a new build mean a new built that will be completed before 31st Dec11? or
c) All existing private contract for which the completion date had expired but had not been notarised be treated as new built ?
d) Will it include all private contracts for which the had over to the owners has been delayed to eternity for what ever reasons.Similar to when the tax on new builds went up to 8%, it will be based on any signing of title deeds during that this ‘reductions’ runs. So until the 31st of December.
What people will have to be careful about, is bank reposessions. It could be argued that they are not ‘new’ properties as they have already already changed owners.
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@Fuengi wrote:
@shakeel wrote:
As we do not know or will ever know what does new build means. I see the situation as follows:
a) Not many new developments will be commencing between now & 31/12/09.
b) Will a new build mean a new built that will be completed before 31st Dec11? or
c) All existing private contract for which the completion date had expired but had not been notarised be treated as new built ?
d) Will it include all private contracts for which the had over to the owners has been delayed to eternity for what ever reasons.Similar to when the tax on new builds went up to 8%, it will be based on any signing of title deeds during that this ‘reductions’ runs. So until the 31st of December.
What people will have to be careful about, is bank reposessions. It could be argued that they are not ‘new’ properties as they have already already changed owners.
I guess you have to check whether you have to pay the IVA or the “transaction tax” when you purchase the property. I’m pretty sure that for repossesions you pay IVA so you’ll benefit from the reduction.
Regarding Shakeel’s questions, since we’re talking about a reduction in IVA, which is paid on completion, this reduction won’t apply to any properties that are currently in development but aren’t scheduled for completion until after 31 December. However I suspect many developerments due to finish early next year might might have their “licencias de primera ocupacion” pushed through early so they can be completed on before 31 December, with the “understanding” that they’ll be finished off afterwards. This is not unusual in Spain, as many people used to try to complete on unfinished properties before the end of the year so they could “desgravar” (claim an income tax rebate).
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IVA is paid along with all the agreed percentage payment as set out in the private contract. There could be building where say 60% is paid & the balance on notarisation. To me they are new built.
I would not trust any of the developers who agrees that the works can be carried out after the notarisation. I am aware that they do not even carry out the snagging after they have got the money. The Developer promise’s this & the fact that they will do everything under the sun not to do finish of snannging before hand.
If I was in this situation I will withhold the difference of 4%. In a normal Country the difference of 4% could be held by a lawyer or a Banks until such time that the work is finished off. In Spain I will not do this as despite of my instruction the Banks or lawyers would release the funds to the Developers.
New build to me is the first buyer i.e. first person who has the FLO & no one has lived in the property.
Fuengi: What you say make sense. But this is Spain !!!!!!!!!!!!!.
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@shakeel wrote:
IVA is paid along with all the agreed percentage payment as set out in the private contract. There could be building where say 60% is paid & the balance on notarisation. To me they are new built.
True – I’d forgotten about that. I happen to know someone who by complete fluke is going to complete in September, and she must have been paying the IVA with her letras, so I’ll try to find out if they’ll reimburse her.
@shakeel wrote:
I would not trust any of the developers who agrees that the works can be carried out after the notarisation. I am aware that they do not even carry out the snagging after they have got the money. The Developer promise’s this & the fact that they will do everything under the sun not to do finish of snannging before hand.
Yes it’s a bit risky – especially these days. I bought off plan 5 years ago and we completed early (before the building was completely finished) in order to beat a fiscal deadline. The developer was true to their word and completed the urbanización to a satisfactory standard afterwards, and in fact they were very good at fixing various other minor things in the years that followed since we had a 10 year guarantee. The problem these days is that even the most reputable developers are so broke that they might have to cut corners.
@shakeel wrote:
If I was in this situation I will withhold the difference of 4%. In a normal Country the difference of 4% could be held by a lawyer or a solicitor until such time that the work is finished off. In Spain I will not do this as despite of my instruction the Banks or lawyers would release the funds to the Developers.
New build to me is the first buyer i.e. first person who has the FLO & no one has lived in the property.
Fuengi: What you say make sense. But this is Spain !!!!!!!!!!!!!.
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“I happen to know someone who by complete fluke is going to complete in September,”
This is what they call “suerte” in Spain. Most things are done in Spain on the basis of “suerte” Only people in third world works on suerte. Things should be done by proper, clear & transparent laws & where there is an ambiguity the benefit should go to tax payer. Transactions of this nature should be done by way financial & other planning not on a suerte. ( This not finding a parking space in front of a bar as you arrive & some one is pulling out. Chopera living in Madrid you will know what I mean.)
“she must have been paying the IVA with her letras, so I’ll try to find out if they’ll reimburse her”
Dont make me laugh. Even if the legislation allows for it, they will pocket it -
@shakeel wrote:
“I happen to know someone who by complete fluke is going to complete in September,”
This is what they call “suerte” in Spain. Most things are done in Spain on the basis of “suerte” Only people in third world works on suerte. Things should be done by proper, clear & transparent laws & where there is an ambiguity the benefit should go to tax payer. Transactions of this nature should be done by way financial & other planning not on a suerte. ( This not finding a parking space in front of a bar as you arrive & some one is pulling out. Chopera living in Madrid you will know what I mean.)
“she must have been paying the IVA with her letras, so I’ll try to find out if they’ll reimburse her”
Dont make me laugh. Even if the legislation allows for it, they will pocket itIt looks like the PP are saying that if they win the election they will extend the 4% IVA until 2013, for residential properties only and within a certain price limit. So more suerte for for some…maybe
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