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Tinsa property price index confirms improving trend

The Tinsa property price index for November shows that average prices fell by 6.6% over the last 12 months, down from 7.4% last month. That’s the smallest fall in a year.

As you can see from the chart above, price falls stabilised at around 10% in the first half of the year, and started shrinking from July onwards. On present trends prices will be rising again within a few months.

Property prices are already reported to be rising strongly in the UK. The price of the average house is up by £13,000 to almost £168,000 since the trough earlier in the year, according to Halifax.

Moving back to Spain, even the price of property on the coast is falling at a slower rate, narrowing to -8.9% in November, just above what it was a year ago (-8.5%). Coastal property prices have been hit the hardest thanks to the surplus of holiday homes for which there is little market in a recession.

There was a dramatic improvement in the index for The Balearics and The Canaries, where prices were down just 3.2% on a year ago.

Note that Tinsa’s index is based on valuations carried out by the company, and not on actual transaction prices.

Capital Gains Tax Rebate stretched back to 1997

Up to 90,000 foreigners who have sold a holiday home in Spain in the past 12 years could be owed thousands of pounds by the Spanish tax authority.

During that time, the price of holiday homes in Spain enjoyed a huge boom, with prices peaking in 2007.

But while the locals paid just 15% in capital gains tax (CGT) on their profits when they sold, Britons and other non-residents were charged a hefty 35%.

Experts estimate the homeowners who sold since 1997 could be due an average £13,500 tax refund.

The European Court of Justice has opened the door to this huge tax rebate for non-residents by ruling that the tax regime was 'unlawful and discriminatory' to other EU citizens.

This latest ruling paves the way for tax rebates totalling £283m, according to calculations by foreign currency specialists HiFX.

The ruling applies to homes sold after 1986, when Spain joined the European Community, but the differences in the level of CGT charged to Spanish and UK nationals mean that rebates are only due to those who sold from 1997 onwards.

Someone making €100,000 profit on the sale of their holiday home, for example, would pay €35,000 in tax if they were British, but only €15,000 if they were Spanish residents - a massive 133% difference. So they would be entitled to a rebate of €20,000 (£17,680).

In addition, they can claim interest on the amount of 6% a year. Spain's two-tier CGT system was changed to a single rate of 18% for all in 2007, after the Spanish High Court found in favour of a British couple who argued that they shouldn't have been charged more for selling their holiday home.

But at that time the tax authorities allowed only claims for tax rebates going back to 2004. Now the limit for claims has been extended.

The amounts owed will be boosted by the exchange rate as the euro has soared 27% against the pound in the past two years.

However, it is not easy to calculate exactly how much you will receive as you still have to allow for CGT in Britain. Under UK tax rules, if you are taxed less overseas than you would have paid here, then you have to pay our taxman the difference.

So once you receive your refund from the Spanish you may have to hand some back to HM Revenue & Customs.

Until April 2008, the top rate of CGT was 40% but rates were tiered - the longer you'd held the property, the less tax you had to pay. Everyone has an annual exemption from CGT which they can set against their gain before tax has to be paid. This amount rises every year.

Those most likely to gain are basic-rate taxpayers and those who owned their property for more than five years. Contact us for more information.