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Tax on Non EU Citizen Housing.

Posted: Mon Jan 13, 2025 6:15pm
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marcliff

marcliff

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I didn't press the enter buttons and this didn't post earlier, Sorry.

Well, anyone seen the new proposals for buying property in Spain? 

Prime Minister Sanchez has come up with a 12 point plan to make property readily available for Spanish citizens. 

These proposals are.

  1. Transfer of 3,300 homes and two million square metres of residential land to the new public housing company.
  2. Providing the public housing company with a “legal mechanism to give it priority in the purchase of housing and land”
  3. Protection of state-subsidised housing “to ensure that all housing built” with public funds “maintains public ownership”. 
  4. Launch of a Perte to “modernize and innovate in the construction sector.”
  5. Creation of a “system of public guarantees that protect both owners and tenants who participate in affordable rentals.”
  6. A programme to rehabilitate vacant housing units that will be rented out at affordable prices for at least five years.
  7. Propose to Congress the approval of a 100% tax exemption on personal income tax for those owners who rent out their property according to the reference index.
  8. A tax reform will also be proposed to Congress so that tourist apartments “are taxed as what they are, a business.”
  9. A fund for regional and municipal governments to strengthen the prosecution of fraud in seasonal rentals.
  10. Commitment to “change the tax benefits regime for REITs so that they only apply to the affordable rental regime.”
  11. Limitation on home purchases by non-resident non-EU foreigners, increasing the tax burden to 100% of the value of the property.
  12. New State Housing Plan 2026, with more aid programs and special attention to young people, the elderly, people with disabilities and those who live in degraded areas.

I draw your attention to proposal number 11 which is, would your believe, upping the tax for non EU citizens buying property in Spain to 100% of the value. So that looks like nobody will buy in Spain in future as, of course, when property is sold it cannot include the taxex.

If you want to sell an existing property, the buyer will have to pay double unless they are EU citizens.

Sanchez stated Spain is turning into two types of people "rich owners and poor tenants". 

Obviously a lot to think about. For example, if you rent for a year as a resident in Spain, would you escape the tax if you then bought a property? Maybe you would have to wait 5 years until the residency is permanent or maybe you will have to pay it regardless as he was talking about Spanish "citizens" not "residents".

He also talked about foreigners buying property not to live in but for speculation. Would this mean the 100% tax proposal is just for second home owners who may or may not use it for rentals? 

Full details are to be found in the Spanish press and El Diario has a good article including a link in that article to the new proposals.


marcliff

Posted: Mon Jan 13, 2025 6:21pm

marcliff

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Posted: Mon Jan 13, 2025 6:21pm

And, further to the above, El Mundo amplifies the points.

More inspections on rental properties. Making rental properties a business therefore those renting it will be subject to VAT on the rental as well as normal rental taxation.

Those foreigners (non EU) who buy but do not become residents will be liable to 100% tax on the purchase. So it seems only those who buy as a holiday home or for the purposes of renting will pay this. 

RonTT

Posted: Mon Jan 13, 2025 6:25pm

RonTT

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Posted: Mon Jan 13, 2025 6:25pm

Sounds like another own goal to me.

marcliff

Posted: Mon Jan 13, 2025 6:35pm

marcliff

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Posted: Mon Jan 13, 2025 6:35pm

RonTT wrote on Mon Jan 13, 2025 6:25pm:

Sounds like another own goal to me.

Why? The Spanish government appears to be looking after their own people who can't afford the soaring rents due to amount of property being bought by speculators. Barcelona, Valencia and Alicante are already seeing most people unable to afford the soaring rents and having to move out of the places they work and paying loads in commuting costs.

It will impact on holiday home owners from outside the EU unfortunately but will hit those, like Air BnB, who buy up properties for holidays. Holiday makers won't think twice about paying 500 euro a so every week in the Summer but the young who live here just cannot afford the thousand euro a month an apartment full time. 

These taxes are already paid in Canada and Sweden, for example, and UK has many places that are going to double or treble the council taxes with UK considering a tourist tax. 

Seems like a government which is listening to its people and trying to alleviate the problems the (especially) young are having in affording to purchase or rent a property. Hence why so many 30 somethings are moving back in with their parents. 

If you want to come and live in Spain it won't affect you. 

RonTT

Posted: Mon Jan 13, 2025 7:18pm

RonTT

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Posted: Mon Jan 13, 2025 7:18pm

marcliff wrote on Mon Jan 13, 2025 6:35pm:

Why? The Spanish government appears to be looking after their own people who can't afford the soaring rents due to amount of property being bought by speculators. Barcelona, Valencia and Alicante are already seeing most people unable to afford the soaring rents and having to move out of the place...

...s they work and paying loads in commuting costs.

It will impact on holiday home owners from outside the EU unfortunately but will hit those, like Air BnB, who buy up properties for holidays. Holiday makers won't think twice about paying 500 euro a so every week in the Summer but the young who live here just cannot afford the thousand euro a month an apartment full time. 

These taxes are already paid in Canada and Sweden, for example, and UK has many places that are going to double or treble the council taxes with UK considering a tourist tax. 

Seems like a government which is listening to its people and trying to alleviate the problems the (especially) young are having in affording to purchase or rent a property. Hence why so many 30 somethings are moving back in with their parents. 

If you want to come and live in Spain it won't affect you. 

And do you think these new rules will help, i doubt it, i also doubt Valencia regions new rental rules will help with the housing situation either.

If they really wanted to do something useful they could do something about the tens or maybe hundreds of thousands of holiday homes that sit empty 70+ % of the year.

Quite sure there are enough houses, problem is the wealthy own them as holiday homes and only live in these houses a few months per year.

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marcliff

Posted: Mon Jan 13, 2025 7:26pm

marcliff

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Posted: Mon Jan 13, 2025 7:26pm

RonTT wrote on Mon Jan 13, 2025 7:18pm:

And do you think these new rules will help, i doubt it, i also doubt Valencia regions new rental rules will help with the housing situation either.

If they really wanted to do something useful they could do something about the tens or maybe hundreds of thousands of holiday homes that sit empty 70+ % of the year....

...

Quite sure there are enough houses, problem is the wealthy own them as holiday homes and only live in these houses a few months per year.

Read the proposals. This is designed for those which stand empty for a long time. Maybe not able to do anything about the ones that already are but this is aimed at those who buy and then only occupy them for a short time. Lots of proposals there and that is definitely in the firing line.

Growing Old Disgracefully

Posted: Mon Jan 13, 2025 9:17pm

Growing Old Disgracefully

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Posted: Mon Jan 13, 2025 9:17pm

Thanks for highlighting this. We are planning to apply for our NLV towards the end of the year, and had intended to look to purchase a Spanish property as soon as our UK home was sold and before applying for the visa.  It appears that we now may have to rent first if these proposals are enacted. Whether this will be for months or years before being able to buy a property is unclear from the Prime Minister's basic outline of his proposals.

Hopefully things will become clearer before we put our UK property on the market in March / April otherwise we may have to consider delaying our plans.

marcliff

Posted: Mon Jan 13, 2025 9:46pm

marcliff

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Posted: Mon Jan 13, 2025 9:46pm

Growing Old Disgracefully wrote on Mon Jan 13, 2025 9:17pm:

Thanks for highlighting this. We are planning to apply for our NLV towards the end of the year, and had intended to look to purchase a Spanish property as soon as our UK home was sold and before applying for the visa.  It appears that we now may have to rent first if these proposals are enac...

...ted. Whether this will be for months or years before being able to buy a property is unclear from the Prime Minister's basic outline of his proposals.

Hopefully things will become clearer before we put our UK property on the market in March / April otherwise we may have to consider delaying our plans.

I think you may be jumping the gun. If you apply for an NLV then, reading the El Mundo, you will be showing you are going to be a resident. You will have 3 months in which to apply for residency after gaining the NLV. Only those, from reading it a couple of times, who do not become residents will be liable for this super tax. I may be wrong but if your intention is to be a resident then this won't apply to you.

These proposals, if adopted by parliament, will take place some time in 2026 and the ones they want to target are those who are buying to rent or use for a couple of months a year and leave property vacant for the rest of the year. 

As an aside, if you sell in March/April and then become a resident in Spain in the first 6 months of the year you will be liable to capital gains tax on your sale in UK. Wait until after June and you will not become tax resident until the next year so be careful when you sell and become resident as it could cost thousands with the amount prices have gone up in UK. 

Growing Old Disgracefully

Posted: Mon Jan 13, 2025 9:53pm

Growing Old Disgracefully

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Posted: Mon Jan 13, 2025 9:53pm

marcliff wrote on Mon Jan 13, 2025 9:46pm:

I think you may be jumping the gun. If you apply for an NLV then, reading the El Mundo, you will be showing you are going to be a resident. You will have 3 months in which to apply for residency after gaining the NLV. Only those, from reading it a couple of times, who do not become residents will...

... be liable for this super tax. I may be wrong but if your intention is to be a resident then this won't apply to you.

These proposals, if adopted by parliament, will take place some time in 2026 and the ones they want to target are those who are buying to rent or use for a couple of months a year and leave property vacant for the rest of the year. 

As an aside, if you sell in March/April and then become a resident in Spain in the first 6 months of the year you will be liable to capital gains tax on your sale in UK. Wait until after June and you will not become tax resident until the next year so be careful when you sell and become resident as it could cost thousands with the amount prices have gone up in UK. 

Thanks. I am aware of the CGT trap. We will be putting our property on the market in the spring, but it is likely to be a minimum of 3 months before a sale is completed. We wouldn't be applying for our visa until at least September.

If these proposals won't be adopted until 2026 then you are right. Our current plans shouldn't be affected.It wasn't clear from the article when these changes were likely to be implemented.

Stirling36

Posted: Tue Jan 14, 2025 8:08am

Posts: 73

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Joined: 5 Feb 2021

Posted: Tue Jan 14, 2025 8:08am

No 8 on the list.does it mean i will have to pay more suma tax ,or any other tax i.m a non resident and have owned my property for 20 years and don,t rent my property out thank you.

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