Articles | English speaking Palma de Mallorca lawyer

New taxes affecting property sellers in Spain

Written by admin on December 12, 2014

Property selling tax laws affecting Mallorca, Ibiza & Menorca

On the 28th November, 2014, new tax laws were published in the Official Law gazette which impact on a property seller’s tax situation.

This affects Non-Resident Income Tax and Personal Income Tax and they come into force on the 1^stof January 2015.

If you own a property that was purchased before the 31^st December 1994, this may affect you. Get some professional financial advice if you plan on selling soon as it’s now likely that you will have a much larger Capital Gains Tax bill than you may have been expecting.

We are here to help you, if you have a home in Mallorca, Ibiza or Menorca. If that home is worth more than €400,000, and was bought before the end of December 1994, then this affects you. The main change is the scrapping of the “abatement coefficient” above €400,000. However, “inflation adjustment” can still be used.

These laws didn’t pass through parliament easily. In fact, they went through with the sole approval of the Government’s own party and were opposed by almost all others. I suppose we should be grateful that there was resistance, as the original plan was to scrap the “abatement coefficient” completely. So, this could have affected many more property vendors.

It’s not all bad news

EG: If you sell a property for €300,000, and you bought if before the 31^st December 1994, then the abatement coefficients will apply. Using this example, you will have a €100,000 credit. This could be used on the sale of any other property or asset purchased before the 31^st December 2014.

If you are selling, or buying, a property in The Balearics, Palma Lawyer are here to help and guide you through the process.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.

Call for a coordinated effort to regulate Spanish holiday property lettings

Written by admin on November 25, 2014

There has been a call for a “coordinated effort” to regulate the Spanish holiday property industry by José Manuel Soria, the Minister for Industry, Energy and Tourism.

Last year, the government made alterations to the Urban Letting Act (Ley de Arrendamientos Urbanos/LAU in Spanish). This passed more control over the decisions regarding rental regulations to the local regional governments.

As mentioned in a previous article, http://palmalawyer.com/guidance-law-renting-properties-in-mallorca-ibiza-balearic-islands/249/ , we discussed the changes made to the Balearics Tourism Act in 2012 which can be interpreted to aid holiday property landlords, when taking advantage of the confusion created when combined with the Spanish Tenancy Act.

Now, the Minister has asked for further changes to be made so that the regions make their by-laws as “similar as possible” around the country. The aim is to avoid unfair competition with hotel accommodation.

For example, under Madrid’s version of the new tourist rental regulations, any touristic lettings must have a minimum duration of five days. So, under this proposal, short term city breaks are out of the question. The clear intention is to drive more business into the hotels.

If this is an example of where the Minister would like a co-ordinated set of local laws to go, then The Balearic states have yet more potentially damaging law on the way.

A possible solution:

Of course, you could always let your short term rental out for less than five days, but at a discounted rate that you might have charged for 7 days. The holiday clients will simply check out early.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.

Guidance for the new draft law for renting properties in the Balearic Islands

Written by admin on November 19, 2014

Many years ago, the powerful hoteliers in the Balearic Islands lobbied the local government and pressed the point that their income was being eroded by private villa and apartment owners who were renting the homes for holiday lets.

They argued that the private owners were also very likely to be evading their tax contributions from the holiday letting income.

The Balearic government agreed and passed various laws, designed to ensure that any holiday home owner who wished to generate an income from short-term lets, needed to gain a Touristic licence. These weren’t granted easily. As a consequence, most property owners politely ignored the law and continued to let their homes out.

Under further pressure from the hoteliers, the local government introduced the ambiguous Balearics Tourism Act in 2012. This was intended to further regulate the private rental market in the Balearics. The Act seemed to ban short-term rentals to holiday-makers.

However, the Spanish Tenancy Act appears to sidestep the Balearics Tourism Act 2012, providing your short term holiday let is offered without cleaning and by avoiding advertising in the touristic channels. Clearly, it’s not quite as simple as this. But, providing you stick to these 2 basic principles and then ensure that you don’t fall foul of the criteria that defines what a touristic rental is, you should be able to continue with your holiday let.

What changes are relevant for holiday lets?

A new category of property has been added to the list. ‘Town Houses’ (properties that are not detached, which have another house to either side or both, that sit within their own land and were built prior to 1960. This type of housing can engage in touristic lets with a licence.

With specific regard to semi-detached properties, there is now a requirement that the community does not exclude touristic lets, before you can apply for a licence.

In cases of both Town Houses and Semi-Detached houses, you will have to present a signed declaration from your neighbours declaring that they don’t oppose touristic lets.

Finally, in order to engage in touristic lets, companies will have to take out an insurance policy to cover themselves for various responsibilities. The minimum value should be €300,000.

This is a very brief summary on the variations to the Balearics Tourism Act 2012. If you are engaged in, or wish to set up a private let or business for holiday lettings in the Balearic Islands, contact us for an initial chat.

We will be happy to guide you through the process. Please CONTACT PALMA LAWYER HERE.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice

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