Questions on capital gains tax.
"I have heard that Spain is planning big changes in the capital gains tax for when people sell their property next year. If this is true, can you tell me what the changes will be?"
Yes, it is true. The good news is that non-resident capital gains tax will be slashed from 35 per cent to 18 per cent as of January 1, 2007.
Remember this is the proposed budget which has not yet been enacted into law, but no observer expects this to change.
The bad news comes for long-term owners, both resident and non-resident, who think they are free of capital gains tax if they purchased before December 31, 1986. Until January 20 of this year, it was true. These long-term owners applied a series of reductions and had no capital gains tax.
The reductions have now been annulled and the owners must pay. This measure has already been put into force. Even worse is that the cut in the tax rate will not come until January 1, so a non-resident long-term owner who wants to sell before then still faces the tax of 35 per cent plus the loss of his reductions.
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