Although the initial draft of the Law was announced on the 19/01/06, it is only after it is approved by the Spanish Parliament and made public in the Official Gazette of Spain (BOE) that it becomes Law. At the moment it has already been approved by the Parliament, but it has not yet been in the Official Gazette of the Lower Chamber of Parliament (“Boletin del Congreso de los diputados”) since the 21/11/06.
Sales of property by non-residents
Retentions to be made to the vendors
At the moment all the non-resident vendors are retained by the purchasers with a 5% of the sale value, except when the property was bought by the 31/12/86, in which case the retention is Nil.
From the 01/01/07, the retentions to be made to the non resident vendors will be a 3% in all cases, even when the property was bought by the 31/12/86.
Rate of tax applicable on the capital gains of the non-resident vendors
With the actual Law, the rate of tax is a 35%, but the properties bought by the 31/12/86 are free of capital gains tax.
From the 01/01/07 it will be only 18% (therefore the tax is reduced down to almost half), but all the properties will pay tax if there is a gain, although those bought prior to 31/12/86 will pay a very low amount.
Notes to be considered
Any non-resident who bought the property by the 31/12/86 would be benefited if the escritura of sale is signed the sooner the better. Although the retention would be nil up to 31/12/06, there could be some capital gains tax to pay if the escritura is signed after it is printed in the Official Gazette.
Anybody who bought the property from 01/01/87 will be much better if the sale is signed in the Notary from 01/01/07, as the retention will be only 3% and the tax will be almost half (only 18%).
Sales of property by residents
The resident payers are taxed with the actual Law at a rate of 15%, and it will be 18% with the New Law (equal as non-residents), but the 15% will be applicable only up until 19/01/06, therefore, there is no big change if property is sold this year or next, the only good thing of selling next year is that tax is not payable until June 2008.