New home buyers nervous over looming tax increase

Thousands of property buyers are becoming anxiously nervous as the end of the year approaches. The reason is simple. If you are buying a new property, if you go to completion before the 31st of December you will only be paying 4% IVA (VAT) on the purchase, but if the purchase takes place in 2013 then the IVA rises to 10%. The difference of 1 day could lead to a 6% increase in the cost of purchase.

As many of you will know, Spanish properties for sale have dropped quite substantially since the end of the property boom here in Spain, and most of the new homes for sale are completed and legal. But there are still a range of properties that are still under construction for a range of reasons. From a slower construction pace, due to there being fewer residential construction companies, to pending licenses, to lack of financing. These minor delays could be quite costly to buyers.

At this moment on the purchase of a 200,000€ new property you IVA payment stands at 8,000€. From the first of January 2013 that tax will rise by 12,000€ to 20,000€.

Now for those of you that are fretting about the higher tax bill, there are methods to reducing you future tax bill.

What you need to do it contact you legal representative and arrange to bring forward the purchase of the property. Even if the property is unable to go to completion, via private contract you can arrange to pay (if not the full amount) as much as possible now to the promoter at the 4% rate. If may have already been paying in stages anyway, simply see about increase the amount payable.

Regards
Andrew Bellés

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