Yes, the bank can do that. Generally speaking, mortgage-loan contracts for individuals signed with bank entities include the faculty for the bank being able to choose any of the debtor’s assets, present or future, at the time they recover the debt. Therefore, the bank can proceed against the mortgaged property and also against other assets if the debt is not fully covered by such mortgaged property, and even against those other assets different than the mortgaged property instead of this one.
Overseas property owners based in the UK are about to be targeted by a new HM Revenue & Customs “affluent unit”, which has been set up by the British government to address what it sees as tax avoidance by the rich.
A new team of 200 taxation investigators and specialists has been established by HMRC to identify wealthy individuals who, amongst other things, own land and property abroad … such as a holiday home.
OPP understands that the tax attack unit will concentrate on overseas property assets first, and then switch its attention to UK-based commodity traders (who have been accused of helping to drive up food prices,) before looking into the number of UK residents who hold offshore investment accounts.
HMRC says that it will be using sophisticated “data mining” techniques to try and track down people who own overseas properties, but do not pay the right amount of tax.
This might include someone who owns a villa in Spain which they are renting out, or an individual who owns a piece of land in France that is being used as business premises, said an HMRC spokesman. The experts will be looking for people who do not seem to be declaring the correct income and gains.
The new unit, which has been announced by the UK’s Chief Secretary to the Treasury, Danny Alexander, will focus solely on people paying the 50% top tax rate.
David Gauke, the exchequer secretary to the Treasury, said there would be “no hiding place” for tax cheats, adding that the UK government “is committed to tackling tax evasion and avoidance across all areas of the economy. That is why we allocated HMRC £917m to reduce the tax gap over the next four years. This new team is part of that investment.”
Ronnie Ludwig, tax partner at accountancy group Saffery Champness told OPP that “those who have been letting out their foreign property and declaring the rents received have nothing to fear, but those who own foreign property which has never been let out should be prepared to prove to HMRC that they have received no income from the property.”
“This will involve producing UK and foreign bank statements and being able to demonstrate that they could afford to purchase and maintain the property out of normal declared sources.”
Source: http://www.opp.org.uk/news-article.php?id=5844
New rules are proposed to increase the amount of the remittance basis charge in certain circumstances and to allow tax-free remittances for the purposes of investing in qualifying businesses.
Non-UK domiciled individuals are broadly liable to UK tax on offshore income and gains only to the extent that they are remitted to the UK. Individuals that have been resident in the UK for at least seven of the last nine years must pay a £30,000 remittance basis charge to HMRC in any year in which they wish to use this regime, or otherwise be charged to UK tax on all income and gains regardless of where they arise in that year.
Remittance basis charge
The remittance basis charge will be increased to £50,000 p.a. for those who have been resident in the UK for at least 12 of the 14 years prior to the year of the claim. The charge will work in exactly the same way as the current £30,000 charge and will take effect from 6 April 2012.
There should therefore be increased interest in planning that allows control over when income and gains arise (to minimise the years for which you need to pay the remittance basis charge). This might include overseas trusts and bonds with interest paid at redemption.
Remitting to invest in qualifying businesses
Non-domiciled individuals will be allowed to remit income into the UK without incurring a UK tax charge where they do so to invest in a “qualifying business”, broadly:
businesses carrying out a trading activity; or
businesses undertaking the development or letting of commercial property as a substantial part of their businesses; but not
the holding and letting of residential property nor leasing of intangible moveable property.
Views are sought on whether remitting funds to invest in listed companies should also be tax-free, although this does not sit consistently with the stated aim of the reform as being to promote “generation of jobs, tax receipts and wider economic benefits”. Nevertheless, the additional flexibility and simplicity of this proposal would be attractive to taxpayers.
The investment must be made into a UK company (or an offshore company with a UK permanent establishment) and it will be possible to invest either directly or via an investment vehicle or trust. To allow private equity companies to qualify, investment may also be made into a company which holds other companies provided it is part of a trading group.
On disposal of the investment, the proceeds must be taken out of the UK within two weeks if an immediate tax charge on the value of the investment is to be avoided. It seems that any gain (or loss) from the disposal of the investment itself will be taxed in the usual way.
Anti-avoidance
The Government aims to prevent individuals from deriving personal benefit from this relief. The anti-avoidance measures will include, for example, provisions which allow the investor (and family) to work in the business to which the funds are remitted, and receive a commercial salary, but will prevent any non-commercial payments such as guarantees or loans.
Article by John Watson, Richard Palmer, Alexander Cox, Paul Miller and Simon Swann
The Spanish Supreme Court’s judgement recently published is bringing a somehow renewed and fresh approach in this matter and is based on the idea that the consumer’s defence on a house’s purchase is performed through a set of legal rules not only previous but also following the time of the sales contract. Those rules are about the existence of a guaranty for specific and accurate information regarding the asset to be sold, and such guaranty shall force the vendor to comply with the existing publicity normative and to be truthful and not misleading in specific cases related to the house’s physical and legal characteristics.
The Judgement goes on explaining that the home sales contracts are within the scope of present legal rules of Consumer’s defence and also develop the Spanish Constitution. In such field the buyer’s rights to receive a copy of several documents about the property and the sales contract’s price are determined in a wide sense by the product’s offer, including the one being subject of publicity, and more importantly, by the contract’s documentation. The matter is after all about the buyer having means to reach an accurate picture that allows him to know what he is going to buy and the seller assuming the essential legally binding obligation to deliver the sold asset once this has reached real physical existence and thus fulfilling what has been offered in the qualities’ inventory as well as in the publicity elements included within the contract’s contents.
If, with the aim of attracting buyers, the publicity is not limited to the development of the lands on which the buildings were built but included an informative content and offered a different image of the urban environs within which the buildings were located thus creating a confidence in the buyer about his house individually, as well as the building as a whole, was to be developed in a specific way that later on did not correspond to the publicity existing prior to the sale’s contract, then such publicity is certainly misleading.
Even if the seller had permissions to develop the surrounding and adjacent areas, this did not release the seller whatsoever of his obligations as per the contracts signed with the buyers no matter if somewhere within the publicity there was a paragraph saying “pending approval” since the reality of things is not supplied to a medium purchaser and, contrary to that, he has been offered something pending approval but then it is not that the elements subject to approval were something different than what was offered to him.
The Judgement ends reasoning that the publicity’s importance within the process of taking decisions by an average buyer is getting bigger with time as it is also bigger the possibility to create a fake expectation that deprives him of the possibility of evaluating the convenience about taking a house with a set of given conditions. It is a fact that the selling company the Judgement condemns did not deliver to the buyers all that was announced in its publicity activity and that was promised as the subject of the respective sales contracts, and such thing caused them an evident damage the legal consequences of which have nothing to do with the business expectative the defaulting seller tried to get with such unlawful action.
No you cannot, since the law protects any actual occupant of a real estate property even if the legal validity of the occupation is finishing or in dispute. The same rule applies to cases where the tenancy’s term is clearly over but the tenant has not left for whatever reason. In such cases the legal possessor can only solve the matter through the courts that would legally put the property back in his hands.
Also, and this is very important, you must formally let know your tenant before the end of the contract that you do not want to renew it. If you do not do this the rental can be regarded as renewed for two more years.
Yes, you can. Private contracts, as opposed to public contracts (the ones signed in front of Notaries) also have validity and completion force in what refers to any permissible condition they include and are perfectly binding for you and your seller.
However, according to the Spanish legal system these contracts have no legal effects for/against third parties not knowing that such contract exists, such as banks, creditors, tax authorities, claimants, etc. Bearing this in mind you would understand how important it is that a purchasing contract is made “public”, and in Spain this is only legally possible through a Notary’s “Escritura” jointly with the registry at the Property’s Registry of the town where the property is situated. By means of this Escritura and registry, there is no third party who can allege the contract has no effects for/against him.
(Google translation from Noticias Vlex.com)
The Congress of Deputies validated by a majority a number of fiscal stimulus initiatives aimed at the home rehabilitation sector that were included in the Royal Decree on Measures to Promote Economic Recovery and Employment, approved on Friday April 9 by the Council of Ministers.
The government expects that the tax package has a strong leverage effect on the construction sector, which together with other government initiatives, such as the reform agenda in public buildings to improve energy efficiency, “serve to contribute to employment generation.
These tax measures will help further the goal of efficiency and energy savings made by the Government in the framework of the Strategy of Sustainable Economy.
DEDUCTION FOR NEW CONSTRUCTION IN THE PIT
The first of these reforms is the new temporary income tax deduction for improvement works in the residence. This will be deducted up to 10% of the amounts to be invested between April 14, 2010 (date of entry into force of Decree-Law) and December 31, 2012 on actions to improve the residence, or building in which it is found, with a total limit of 12,000 euros per household. The annual limit per taxpayer is € 4,000.
To be eligible for this deduction the vast majority of taxpayers, with the exception of those with a higher tax base to 53007.20 euros, representing only 5% of the total. The deduction is most effective on taxpayers with taxable income exceeding 33007.20 per year, as they may apply the 10% deduction on the basis of the prescribed annual maximum of € 4,000 per taxpayer. As the income level of taxpayers go on increasing this limit, the basis of the deduction will be reduced to zero when it exceeds the taxable EUR 53007.20.
To optimize the effectiveness of tax incentives, will be allowed to the amounts paid by a taxpayer during a period that cannot be deduced by the application of the base annual maximum of 4,000 euros established, can be derived, with the same annual limit during the four subs.
In any case, the amount subject to deduction for all applicable tax periods that apply not exceed 12,000 euros per residence. In cases where there is more homeowners eligible for the deduction on a same property, the limit of 12,000 euros will be distributed among the joint owners according to their respective percentage ownership in the building.
In line with the provisions of the State Housing Plan and Rehabilitation 2009-2012, allowed to benefit from this new tax incentive works aimed at improving the energy efficiency of the home (installing solar panels, improved insulation of windows, change …), shower bath by consolidating security and sealing of buildings (replacement of facilities of electricity, water or gas), to improve the accessibility (lifts adapted to the needs of people with disabilities, installing ramps. ..) and install new telecommunications infrastructure to provide access to the Internet or digital television services in the homes of taxpayers.
On the contrary, works carried out in parking lots, gardens, swimming pools, sports facilities and other similar items shall not be entitled to deduct, nor will change of furniture of the kitchen cabinets do or wear, replace tiles, paint , throwing bricks or change soils.
It is important to note also that the incentive can be applied only on the amounts paid by credit or debit card, bank transfer, check or income accounts of credit institutions, not when the services are paid in cash. This caution has as main objective to collaborate in the prevention of tax evasion and labor.
Taxpayers may not get the benefits of this new tax relief from the Income tax Statement, 2010 (to be made in 2011) and therefore they cannot apply that in this exercise. It is therefore important to retain the invoices received by the work involved to justify the investment.
In this regard, it will be retained as proof of payment method chosen as the invoice, which shall contain the following information: number and number of the same, the date of issue and date of completion of the operation if two do not coincide, name and first name of the consignor and consignee, NIF and address of the consignor and, where appropriate, the consignee detailed description of the action taken, type or VAT rates and tax charged VAT.
REDUCED VAT RATE FOR REPAIR WORKS
The second major tax incentive is the reduced rate of 7% (8% from July 1) of the VAT for all types of renovation and repair of private housing to be made between 14 April 2010 31 December 2012. So far, the scheme only applied to the masonry, and the rest were applied to 16%. With this new framework, it will also benefit from the actions of plumbing, carpentry, installations and fittings, electricity or painting and, in general, all the reforms made in housing, whatever their purpose.
The Royal Decree establishes three requirements to qualify for the new tax scheme. First, the recipient is an individual and that the works are directed towards a particular purpose, and not a business or professional. This requirement will also operate when the recipient is a community of owners and the works are made in the building where is the private dwelling. Second, the construction or rehabilitation of housing where the works are finished at least two years before the start of the renovation or repair.
The third requirement is that the incentive applies to those who do not provide material works costing more than 33% of the taxable amount of the transaction. For example, if the work in question was the placement of the floor of a house and the same total cost amounted to $ 10,000, you may apply the reduced rate if the material used does not exceed 3,300 euros. If the materials provided exceed that amount, the rate applicable to such work is the normal 16%. Until the present Decree Law, the limit of the material was 20%.
The invoice must state the cost of materials supplied or the condition that this cost does not exceed 33% of the tax base.
EXTENSION OF THE CONCEPT OF REHABILITATION IN THE VAT
The other axis of action to promote the activity in the area of housing rehabilitation is extending the concept of structural rehabilitation for VAT purposes, through the definition of similar works and related to structural, which will reduce tax costs economic activity associated with rehabilitation.
The old law already took these concepts, but did not give them an adequate definition, which prevented, in many cases, the application of reduced rates in certain actions related to rehabilitation. The definition of these concepts in the decree law that goes into effect now will not only improve legal certainty for businesses, but will significantly reduce your tax costs.
So, since last April 14 and remain in force indefinitely extending the concept of structural rehabilitation, which applies the reduced rate of 7% (8% from July 1) to the works of rehabilitation of buildings, including premises attached garages, additional facilities, provided that more than 50% of the building is intended for private homes.
To be considered for rehabilitation, the cost of works should not exceed 25% of the purchase price of the building (if it was made in the two years prior to rehabilitation) or market value, less in both cases land value. Also, over 50% of the actions envisaged in the project will include reconstruction of the building or in carrying out similar works or related to those.
Consideration will be given to works like structural adjustment actions that serve to ensure stability and mechanical strength of the building, the reinforcement of the foundations, the expansion of built-up area, the reconstruction of facades and patios of interior and installation of elevators. Related works will be considered, for their part, masonry, plumbing and carpentry, measures to improve facilities and enclosures or energy rehabilitation works.
The decree provides, finally, the reform of the Canary Islands General Indirect Tax in the same sense that the VAT on materials which are appropriate to state regulation, so that the tax benefits resulting from these changes reach the entire territory.
The transfer tax, or Impuesto de Transmisiones Patrimoniales (ITP), applicable to private real estate property sales, is for the time being in Andalucía a 7% of the value declared in the contract for private sales. However, as from March 19th, 2010 the tax has been raised to 8% for the stretch of the value of the real estate property that exceeds the amount of 400,000 Euros. The same new rate will apply to garages (except for those annexed to houses with a maximum of two units) for the stretch of the value of the real estate property that exceeds the amount of 30,000 Euros.
In Spain “Escritura” or “Escritura Pública” means Deed or legal written document signed, sealed, witnessed and recorded by a notary public. A Deed related to any form of real estate transaction is normally submitted to the Land Registry for its registration.
No, you will not, I am afraid. From January 20, 2006 there is no exemption from capital gains tax for property sellers. Those long-term proprietors who bought before 1986 had privileges of reduction which reduced their tax to zero after 10 years. At the present, however, they must pay capital gains tax on the part of their profit calculated since January 20, 2006. Therefore, all sellers of property can now apply only a coefficient of reduction that approximately matches the inflation rate, but then again no matter how long you have owned your property, you will certainly have capital gains tax to declare when you sell it.