Buying a second home or investment property in Spain between now and the end of the year will allow you to benefit from a 50% reduction in capital gains taxes when you come to sell, thanks to a new measure announced on the 12th of May 2012 by Ana Pastor, head of the Ministry of Public Works, which also includes the Housing Department.
This reform in the law allows all those buying a property from the 12th of May 2012 till the 31st of December 2012 to pay taxes only on the 50% of the capital gains when subsequently selling the property, whether you sell in 1, 5 or 10 years, while the remaining 50% is free of charges.
The tax break applies to individuals and companies, but does not apply to sales between parents and their children. Also it does not affect primary residences, which already benefit from a reduction of 100% in the capital gains tax (which obviously only benefits residents).
This tax saving is not definitive in order to reach a decision whether to buy a property or not in Spain, as it is not possible to know whether prices may go down even more nor the gains resulting from the eventual property sale. However, this fact may be a helpful factor to take a decision for those considering buying a property, especially for those non-speculative potential buyers whose main purpose is to enjoy this property for many years; so the longer they own the property, the greater the capital gains may be when selling it.
The measure is clearly aimed also at investors and holiday home buyers, who will benefit from paying 50% less in capital gains when they come to sell, but only upon property purchased this year (2012).
As the Spanish government is continually introducing new measures to kick-start the property market, especially in the banking sector, this and other new reforms are always welcome.
- 4% VAT maintained by new government on new property purchase
- Extension of VAT reduction to apply to holiday homes
- Transfer Tax & Stamp Duty 2012