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 1st of January 2015.
If you own a property that was purchased before the 31st 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 31st 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 31st 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.