You’ve spotted a property that is everything you dreamt of for your new life in the sun. The marketing price is even relatively sensible.

You’ve also been diligent in your research. You’ve done all the calculations around the taxes and costs involved. You know you have enough to go ahead and secure your dream home.

Imagine now, a few months into living your Andalusian, sun-filled new life, you get some post. It’s a letter demanding you pay a tax bill. The problem is, it’s much higher than you budgeted for.

Seems implausible and it can, and does, happen.

What is a ‘comparison of values’ or in Spanish ‘comprobación de valores’?

When a property is purchased, there is a law that states that the Stamp Duty you paid on purchase is allowed to be reviewed.

Although the price of the property is specified in the Deeds, there is also a market value.

Therefore, although you paid the ‘real price’, if it’s considered lower than the market value, you have to pay tax on that figure, not the one you bought it for.

Could you appeal this decision?

As always, there is an appeals procedure.

You can claim that the tax bill they’ve sent is excessive and the market value is the ‘real price’, the one in the Deeds.

This is considered a subjective issue. There are many variables to consider too. This means you’ve got a good opportunity to fight your defence.

When will the Comparison of Values be sent?

The Tax Office have four years from the date of your purchase. This means it could turn up at any point from the day of purchase and for up to four years beyond.

If you need any help with arranging comparables, or with arranging your finances prior to purchase, just get in touch.

info@lanjaronproperty.com

(+34) 643 821 325

Good Morning

Currencies continued to trade in the familiar tight ranges for most of last week as the markets awaited the US Consumer Price Index (CPI) for May, which, when published, reported the highest core inflation figure for 30 years. Investors remain concerned with the inflationary pressures that appear to be growing as the developed world recovers from the pandemic and how quickly central banks will stifle uptick by tightening policy. Initially, the dollar rallied before falling back and then rallying again into the close on Friday as the US Bond market belatedly reacted to the CPI data and yields increased. The pound was buffeted by these outside influences and has opened this morning a little easier than last week at $1.4100.

Another potentially busy week lies ahead with key data from the UK and the monthly Federal Reserve Open Market Committee (FOMC) meeting. After last week’s surprisingly high inflation report from the US, pressure has increased on the Federal Reserve to tighten policy. The markets will hang onto every word Jerome Powell says at the press conference following the meeting for any hints to a change in policy. There is an avalanche of reports from the Office for National Statistics (ONS) over the next few days for the pound to digest in the UK. In the background, as so often, there is an ongoing Brexit dispute with the EU rumbling on. The so-called “sausage wars “seem likely to continue into this week as the tricky issues of the Northern Ireland Protocol remained unresolved. Hopefully, the Euro 2020 tournament will be less contentious!

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UK

The pound had a relatively quiet week last week but may become more vulnerable this week as the final easing of restrictions on the 21st June looks likely to be delayed and tensions between the EU and the UK show little sign of easing. However, as has often been seen, the EU likes to take negotiations to the last minute. So far, the impact of the dispute over the Northern Ireland Protocol has been muted, with sterling virtually unchanged against the euro in the last week at €1.1650. We have a data-packed week in front of us starting tomorrow morning when the ONS will release Average Earnings and hopefully Employment figures that are continuing to improve. On Wednesday, it’s the UK’s turn for CPI, which is likely to show a rise towards the 2% level whilst not rising as quickly as the US. The week closes out with May’s Retail Sales which several analysts expect to disappoint after April’s sharp rise. We will be listening to Bank of England Governor Andrew Bailey when he speaks tomorrow afternoon for any comments on the morning’s unemployment data.

Euro

As expected, at their monthly meeting last week, the European Central Bank played down any chances of tightening policy soon. Whilst not unexpected, the market turned against the euro, and some quite heavy selling occurred, which pushed the single currency to below $1.2100 against the dollar. It remained against sterling, but both currencies remain vulnerable to any breakdown in the ongoing talks over the trade issues surrounding Northern Ireland. An extremely quiet week appears to lay ahead with mainly second-string data on the docket apart from Eurozone Industrial Production this morning, German CPI tomorrow, and lastly, May’s CPI for the Eurozone on Thursday.

US

The highlight of the week for financial markets, generally not least the currency markets, will be Wednesday’s FOMC meeting. However, with the markets entering summer mode and volatility decreasing, it is unlikely that the Fed will want to rock the boat by discussing tapering; indeed, it is most likely that Jerome Powell will do all he can to avoid the subject at the press conference. Only two reports stand out on the data docket: May’s Retail Sales and Industrial Production, both of which are released tomorrow. The retail sales data may unsettle the markets as they are likely to be distorted by disruptions to the car market caused by the shortage of semiconductors. Away from financial data, President Biden will continue his travels this side of the Atlantic with what should be interesting meetings with President Putin from Russia and his Turkish counterpart President Erdogan.Scandi

Scandi

Even though macro-data came in worse than expected last week, the Swedish krona kept on strengthening confirming what many analysts had written earlier about its seasonal performance. We are now in official krona strong ground that usually lasts until Midsummer and sometimes until the last Riksbank meeting in July which is the last one until the long summer holiday ending in mid-August. This week sees no major data releases which means technical and seasonal traders may outnumber day traders looking for quick profits.

The macro data from Norway also provided some sombre readings last week, in particular the latest CPI figure which was much lower than expected. It prompted the financial press to seriously question whether a rate hike from Norges Bank Governor Olsen will come in September, some going as far as saying that the Norwegian krone now has become a two-way bet. Volatility against most G10 crosses is expected to remain high throughout the week until the Deposit Rate announcement on Thursday. The market expects Governor Olsen to stay put but will closely listen to what he has to say regarding last week’s low inflation figures during the press conference.

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Image courtesy of BBC

After a week of anticipation, the non-farm payroll report came in at a slightly disappointing level and encouraged sellers of the dollar to reappear. With employment rising at a lower than expected 559,000, the pace of the recovery in the US and the subsequent tightening of economic policy is starting to be questioned by investors. However, on closer analysis, the problem is not a lack of jobs but a reluctance to return to the workforce. This hesitancy by workers is leading to a squeeze on wages, although there are nearly 8 million fewer people employed than at the start of the pandemic. This combination of factors presents the Federal Reserve and the currency markets with a problem. The market perceives that the Federal Reserve should be starting to tighten policy to control inflation but is boxed in until employment drops.

Looking ahead into this week, events are likely to be dominated by worries over a possible surge in Covid cases in the UK caused by new variants, inflation concerns, and the monthly meeting of the European Central Bank on Thursday. With new variants occurring and cases increasing, there have been doubts cast over the further lifting of restrictions on June 21st. Still, with most of the country’s businesses open, the damage caused by delay is more likely to be psychological and damage confidence. However, with travel restrictions increasing and the chances of a vacation abroad receding, the euro may become increasingly vulnerable as the southern European countries miss out for a second summer in a row on the UK holidaymaker boosting the local economies. The G7 summit meeting also takes place this week at Carbis Bay in Cornwall to discuss the world’s economic fightback

UK

The pound flew the flag for the G10 currencies last week against the strengthening dollar and has opened this morning at $1.4140 whilst staying relatively strong against the euro at €1.1620. However, with the government’s Matt Hancock saying yesterday that they were “absolutely open” to delaying the next stage on the roadmap to normality and concerns over the efficiency of the vaccines, worries will start to mount about whether consumer confidence has returned too early. If these fears grow, sterling could well begin to drift lower as the concerns of a stagnant economy and rising inflation come to the fore. this week Andy Haldane is slated to speak, who is always thought-provoking and maybe more so than usual as he is soon to be free from the current constraints of his current role as Chief Economist of the Bank of England. On Friday, we will be studying how the economy is performing when both Industrial and Manufacturing data are released, along with a snapshot of April’s Gross Domestic Product.

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Euro

The euro slipped against both the dollar and the pound last week and has opened at just above $1.2150 this morning for what is sure to be a busy week for the single currency. As with the UK, concerns are growing over the spread of the Delta variant across the continent and the impact that the travel restrictions that the UK has imposed on holiday destinations will have on the economy. We have a plethora of data to digest head of the monthly ECB meeting on Thursday starting tomorrow with the ZEW* Economic Sentiment indicators, German Industrial Production and Employment, Eurozone Employment, and its GDP. Wednesday is a quiet day with only regional data to digest, and on Thursday, the ECB meets.

* Zentrum für Europäische Wirtschaftsforschung – Centre for European Economic Research

US

The non-farm data was slightly weaker than expected on Friday, and immediate thoughts of tapering and tightening were returned to the back burner and with them the recent dollar strength. As a result, some analysts think that the greenback may now ease ahead of the next Federal Open Market Committee meeting on June 16th. However, it is unlikely to see too much movement before Thursday when alongside the regular weekly jobless claims numbers, May’s Consumer Price Index (CPI) is released. CPI is likely to show a rise towards 4.8%, its highest level since the early 1990s, and any substantial increase on that forecast rate will reignite the tapering debate. As usual, ahead of the monthly Federal Open Market Committee meeting, Fed officials are in speech blackout mode until after the next meeting on June 10th.

Scandi

Sweden celebrated its National Day on Sunday and last week saw the krona strengthen against the G10 currencies. However, it has so far been a quite lacklustre six months period for the Nordic region’s largest currency which was tipped to be one of the best-performing currencies of this year at the outset. Instead, it has been stuck in quite a narrow range throughout most of 2021. This week will get the CPI figures on Thursday, which are expected to come in at 2% on a year-on-year basis and a positive change of 0.4% month-on-month.

In Norway, the week kicks off with the Industrial Production figures for April this morning, and the CPI and PPI figures are released on Thursday. Inflation is expected to be on the high side, at 2.9%, but that would be lower than in the past four months. If worries about inflation cool off, there is a chance that the market might start questioning whether Norges Bank Governor Olsen will increase interest rates come September as widely is anticipated. This kind of speculation is behind the recent Krone weakness we have experienced.

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Have a great week.

Mathew

When looking for a home in Spain, either for a holiday home or for a permanent residence, there can be many differences from how things work in your home country. There are a wide variety of marketplaces around the world with differing levels of sophistication and maturity within those markets.  With over 25 years’ experience in the property market and having dealt with properties internationally for over 20 years, we asked our Local Property Expert, Mathew Wood from Lanjarón Property, to give you his best tips on making your search easier.

Mathew said that there are many myths and legends about the best way to find your ideal property in Spain, “I often hear people repeating advice given to them by friends or taken from Facebook groups that just are not true or may have been relevant in a market from 20 year ago but not today. The property market in Spain is maturing and, with recent global events, is seeing a resurgence in popularity from buyers around the globe. Things vary from area to area in terms of the maturity and complexity of the property market but here in The Alpujarra and Lecrin Valley areas, things are progressing rapidly.”

Mathew shared his top five tips for buyers to help them secure the best property for them and to make the process as comfortable as possible. Here is his advice:

  1. Portals are not everything

Despite our internet driven world, buying property is still a people business. Do not rely on the internet portals having all of the information that you need about every house on the market. There are numerous properties advertised still that were sold months ago and there are many properties available that are not advertised publicly on the internet, for various reasons. My best advice is to contact a trustworthy agent in the area that you are looking in and speak to them about your needs. For example, here at Lanjarón Property we have a good number of properties that are not publicly advertised. This may be because they are being used for holiday lets and the sellers do not want to jeopardise bookings until sold or they may not be publicly advertised for personal reasons, such as divorce. I believe it is essential to register your interest with an agent so that they can inform you personally of suitable properties. I have seen over and over again people contacting us too late and missing out on their dream home. ‘Get in touch’ is my top tip.

 

  1. Be realistic about prices

What can you genuinely afford?  Be honest about the budget that you have to spend and if this includes buying costs or if you have allowed for them on top of the purchase price. Some people seem to think that being honest about your budget will somehow mean that they will end up paying a higher price for the property or conversely, I hear people telling me that “friends” have told them they can get property for 50% less than advertised.  There certainly has been some truth to that in the past but those days are far behind us for almost all properties nowadays. The best way to think about it when offering on a property is to consider how you would react as the seller to a half price offer! I suspect not favourably, if you are honest with yourself. Also ensure that you have calculated any hidden purchase costs into your budget. For example, some agents can charge buyers a 3% buyers’ fee on top of the price. Fortunately, here at Lanjarón Property, there are no hidden costs or buyers’ fees to pay, which can be quite a saving for you.

 

  1. Be clear

This really comes down to buyers being honest about their requirements. It is essential to ensure that you do not waste your time looking at properties that will not be suitable for you. Things like the legal status of a property i.e. do you need a Vivienda, a Nave Appero or a Nave?  All have different meanings and if you are not sure what they are, or how to find out about them, this leads back to tip 1. Be honest about the level of work you may be happy to do in a property and if you have a budget for this. What do you really need to have; what is essential in a property; and does it exist?  I am often asked to find a 4-bedroom house with lots of land and in excellent condition with a garage, only a 5-minute walk from a town for under 100,000e and to be honest, in this area it just doesn’t exist. There are properties like that available in other areas of Spain and they are priced like that for a reason, but they don’t exist here realistically.

 

  1. Timescale

Be honest and realistic about the timescale that you are working to when buying a house. If you are only browsing and not yet ready to make a commitment to a property, then be honest about that. The age-old phrase of “I’m in no rush” is not going to help you find a better property, if anything it will probably lead to you missing out on more.  If you have a 12-month rental contract and do not want to complete a purchase until that is up, be honest about it. Many sellers are happy to work to delayed completion dates and you will not then find out later that your dream home sold without you knowing about it until too late.

 

  1. Contact

This one is really simple, return calls to your agent!  This one is quite simple and really just being courteous. Keep in touch and return calls to your agent. A good agent is genuinely trying to help you and wants to have a good working relationship with you. After all, we are likely going to be neighbours and many of my clients have become good friends over the years. Many people would not believe how often we leave messages, return emails and calls and then get totally ghosted by a client. A few weeks later they call up and ask about a new property they have seen and find out it has sold.  When buyers do not bother to return calls or emails, even after they themselves have requested information, this gets noted. Sellers do not usually want to deal with potential buyers who might go incognito at any minute; would you if you were a seller? 

If you are thinking of moving to Spain, and you live outside of the European Union ( a non EU citizen),  you will need to apply for the correct residency visa.  The non-profit residence visa (known as the Ex-01) will be the best option for the vast majority of retirees, depending on your circumstances.

If you have an income of € 30,000 per year or more, retirees can live very comfortably in Spain, and enjoy their retirement without worry.

What is the Spanish non-profit residence visa? 

The non-profit residence visa allows people without a job to reside in Spain. You can request it while you’re still in the UK, as long as you can provide all the necessary documentation.

What documentation do I need for the Spanish non-profit residence visa? 

  1. You must provide proof that your income level is at least £2,000 per month. In most applications for this type of visa, your pensioner’s certificate and a bank statement should be sufficient proof.
  2. Private health insurance in place with a Spanish insurer.
  3. Health certificate that states that you do not suffer from any illnesses or diseases that could have serious public health repercussions.
  4. Demonstrate that you don’t have a criminal record.
  5. Prove that you have no “irregular” situation in Spain that could hinder your application (this does not apply to 99% of applicants – if you’re in doubt, talk to your solicitor).
  6. Pay the procedure fee.

Keep in mind that you must provide original documents and translations into Spanish. You can get help with this here.

 

What are the benefits of the Spanish non-profit residence visa? 

The non-profit residence visa will allow you to live legally in Spain for one year. Once that period ends, you can renew the permit for another two years, and then another two years after that (as long as you still meet the initial requirements each time).

After 5 years of living in Spain, you can apply for permanent residence.

What about tax? 

The Spanish non-profit residence visa will immediately make you a tax resident in Spain, so you will be required to pay tax, just like any other Spanish resident. This means you will have to pay:

  1. Income tax or “IRPF”. Please note that you will have to pay taxes on ALL of your income (not just income obtained in Spain). Income tax is currently between 19% and 45%, depending on your income.
  2. Capital gains tax. This is between 19 and 23% of the profit  you make from selling assets, such as property.
  3. Wealth tax or “IP”. You will pay between 0.2 to 2.5% on assets valued at more than €700,000.

Don’t forget that there are other taxes you will need to pay in Spain too, such as council tax, tax on motor vehicles etc

 

If you need any help with this or would like to discuss your options, please do not hesitate to contact us.

 

Original article by Kyero.com