How much will be worth your house in 2007

TAX NEWS Spanish Government halves Capital Gains Tax for foreign investors Overseas property investors have been handed a big Christmas present from the Spanish government this year. As the amount of tax being levied on property sales for non-residents is about to be cut in half. For decades, the Spanish government has operated a two-tier capital gains tax system. Imposing a levy of 35% on the sale of properties owned by non-residents whilst Spanish nationals paid just 15%. However this is all set to change in the New Year. As from January 1st 2007 the new Personal Income Tax law comes into effect, meaning that capital gains tax will now be levied at a standardized rate of 18% - regardless of a seller's nationality. These changes have been largely imposed upon the Spanish government by the European Union, who declared the existing two-tier system to be discriminatory and in breach of the European Commission Treaty. As a signatory of this Treaty, Spain must allow free movement of people and capital. Instead of encouraging inward investment and then taxing the proceeds heavily, as has been the case to date and which is essentially an act of non-compliance. The EU laws are designed to ensure that residents of other European countries do not pay any more tax than Spanish residents in similar tax brackets. It's not such great news for longer-term, non-resident property owners though. As anyone who purchased their house before 1985 was exempt from capial gians tax under the previous law - but will now have to comply with the new payment regulations.

MORE MARKET GROWTH Property prices rise by 8% in the Canary Islands The property market in the Canary Islands continues to grow - despite recent rises in interest rates and the cost of Spanish mortgage borrowing. Figures recently released by Spain's Ministry of Housing indicate that prices across Spain rose by nearly 3% in the second quarter of 2006. With an annual rise of nearly 11% recorded across the country as a whole. Regional variations reveal that the most significant growth was recorded in the northern province of Galicia - where prices have traditionally been much lower than in the rest of Spain. Whilst the Canary Islands have recorded solid price growth of just under 8% year on year over this same period. Most leading authorities and industry observers predict continued positive growth over the coming twelve-month period.

How much will be worth your house in 2006/2007?