SPAIN FINANCES 2011

Quite what the state of Spanish Finance is, is unknown to the general public, particularly the expat community.

It is obvious that the banks do not have any money. Moreover the crippling property market has left buyers reeling and being unable to pursue their purchase because that once available mortgage was no longer there.

Employment levels have dropped despite the unadjusted figures provided. Unemployment has reached 20.8%.

More and more employers are putting employees on part time contracts and the increase in people working on the black economic is more marked.

It is generally accepted that Spain has no money. Hacienda is short to repay monies due and despite the fact that their website states that Capital Gains Refunds will be made within 90 days it fails to do so. In reality it is expect it when you see it.

With the situation prevailing regarding Ireland and its budget deficit and the need to borrow from the EU this raises questions over Spain and Portugal alike. Both have delicate financial situations and notwithstandings Spains Austerity Budget in September there are clearly many anxious faces around.

The reality is all we can do is wait and hope that the situation is not as bad as is anticipated.

The worrying part is what happens if it is and at the moment no one has the answer. There will undoubtedly be further difficulties.

The banks need to work together to create a level playing field. They are not known for their compassion when it comes to mortgage payments, something many expats find hard to understand. However, they do need to realise that there is often the will to pay at a lower level which is often preferable to no payment at all.

Furthermore the cost of repossession is high and with the many properties with no or negative equity repossession is often a way out for an owner. Banks really need to think hard about this. There is no logic in having the number of properties they have with no buyers and they being unable to offer mortgages to buyers. It seems like financial suicide.

The problem is that they have had it so good for so long and have never really had to contemplate the situation as it exists at the moment.

As this blog is written we know that times may still change and there is a glimmer of hope the trouble is it is out of our hands and in those of the politicians, maybe they will think in view of the impending elections about the effect of their actions.

Costa Blanca Lawyers will keep you updated as events unfold but if anyone does need advice then please contact us via http://www.costablancalawyers.com

COSTA BLANCA LAWYERS - Round Up 2010

Could anyone have envisaged the rapid changes on the Costa Blanca over the last 12 months. In 2009 we thought we had seen the difficult times yet they continued with avengence and this year has been a real struggle for most.

For those who tell us otherwise we are sceptical, although there are a small number of businesses flourishing in difficult times.

The sad part is that divorce and separation are on the increase. This is often caused by financial issues and if a couple are experiencing a particularly difficult financial time then a marriage can often take its toll.

There are the usual reasons for separation unconnected to finance and this will always be the case.

Despite the number of times we have written about Wills there are still those who refuse or do not consider it necessary. How wrong they are. It causes distress to those around them in the event of death and in some instances it is impossible to obtain probate.

Estate Transfer can be straightforward if what is needed has been anticipated. However, many families are left with what can only be described as a mess because no thought has been given to the consequences. There is often tactical planning required to minimise Inheritance Tax, something which is often disregarded or misunderstood. We have seen beneficiaries lose thousands because no careful planning was made.

With the Spanish financial climate being as difficult as it is, this has hampered business growth and property purchases.

The banks have been unable to lend money in the way previously known. One client was informed by their bank when they enquired about a mortgage. Sorry but we have no money!

The question of Residency continues to be a problem for people. Many think they are a resident yet they fail to understand that they actually have to tell Spain that they are here - they then wonder why Spain will not accept that they are residents.

Conversely there are many property owners who do not reside in Spain who do not appreciate that they need to do a Non Residents Tax Return and then wonder why they have been fined for the failure.

As with many issues failure to understand does not excuse the situation.

Car transfers have been particularly difficult this year. With many expats returning they have sold their vehicles, probably in all inocence but the right paperwork has not been completed. This leaves two problems, firstly the vehicle is still in the name of the original owner and secondly the new owner can never get title because they have no idea where the seller is.

It is likely that the problems for the expats will continue in 2011 but just a little thought and understanding of the spanish system would go a long way to preventing some of the problems faced.

Capital Gains Tax Affecting Sellers in Spain

For a long time now we have been dealing with the reclaim of Capital Gains Tax for non residents who sold their properties but paid over the odds in Capital Gains.

The EU intervention put paid to the 35% charged on the sale of a property.

Bringing the tax paid by both residents and non residents alike was brought into line at 18% which is where it has remained since January 2007.

Bearing in mind that the Capital Gains Tax payable is based on the NET gain when taking into account expenses we have seen many who in more recent times have been entitled to a reclaim. This is caused by the decrease in value of properties on the Costa Blanca and the fact that many are actually selling at less than they purchased.

There is, however, a hidden problem that sellers are unaware of and that is the fact that in January 2010 Capital Gains Tax on the sale of a property increased to 19% for a gain of under 6000€ yet the increase to 21% on gains over 6000€ seems to have escaped peoples notice.

Only on the sale of a property or in attempting to reconcile the amount actually payable is this coming to peoples notice.

At the point of sale 3% of the declared value is retained and the sellers are then left to work out what their Capital Gains Tax liability is and how to go about it.

Sellers really should be advised before they sell their property of their potential liability but no one seems keen to tell a seller that they might have more tax to pay than they thought.

This problem is largely aimed at the Non Resident home owner but can affect residents too, particularly if they have owned their property for less than three years.

So whilst the finding of a buyer is exciting it is wise to be aware of your financial situation.

For more information or advice on the sale of your property, particularly if you are a Non Resident in Spain contact Costa Blanca Lawyers via the website at http://costablancalawyers.com/ Your Capital Gains Tax liability is your responsibility.