This month we bring the second part of our guide to buying in Spain and talk about taxation. We realize it’s everyone’s least favourite topic but nevertheless a fact of life and one which needs to be explored. To bring a smile back to your face we’re also showcasing one of Marbella’s most exquisite developments, the Zen inspired Meisho Hills, we’re sure that you’ll fall in love. As always, please feel free to convey your comments or questions to me personally on adam@duchyspain.com. Have a relaxing festive break and see you in 2008... Click the headlines to read more... Marbella Property – And Then There was Zen... - seriously chic property in Marbella’s stylish suburbs. Buying in Spain PART TWO - the experts, law firm Martínez-Echevarría, Pérez y Ferrero Abogados, talk us through some taxing issues Duchy Estates’ Bargains - you’ll have to move fast, these won’t be around for long Elegance Doña Julia - sophisticated homes in a luxurious golfing community complete with five star Hyatt Hotel The Duchy Estates Team - Even more names to remember Spanish Pastures New for the Fields - Meet some happy Duchy Estates customers Marbella Property – And Then There was Zen... One of the most attractive elements of Zen Buddhism is the art of Zen Gardens, or Karesansui meaning ‘dry landscape’ in Japanese. These gardens make strong use of stones, gravel, sand and the occasional patch of moss in order to represent mountains, islands, boats, seas and rivers and are used for reflection and meditation. Modern life is full of distractions, more demands and less time to meet them, and Zen Gardens are intentionally simple in order to calm and clear the cluttered mind. The creators of Meisho Hills in Marbella have bought a touch of Karesansui to the Costa. Tucked into the pine-clad hills framing the town of Marbella, Meisho Hills is peerless on the Costa del Sol. The apartment-villas fuse the aesthetic architecture of the Orient with the appetite for everything contemporary and only the finest materials from natural stone to wood and marble are used. The two, three and four bedroom homes, all en-suite, range from an ample 350m2 to a considerable 850m2 in floor space and all come with private swimming pools, lifts, garaging for two to three cars, wine cellars and of course individual rooftop Zen Gardens for peace and energy. Every convenience is afforded with underfloor heating, air-conditioning, Italian designed kitchens with Miele appliances and Jacuzzi tubs in each bathroom. Meisho Hills doesn’t start and finish with outstanding apartment-villas, there is also an array of community facilities for leisure and pleasure. Two illuminated outdoor pools with feature beaches and changing rooms as well as three Spa areas equipped with gymnasium, heated indoor pool, sauna and Turkish bath are all on hand, enclosed in stunning gardens, whilst the entire community is overseen by 24-hour gated security. To add to the Zen-like experience the views from Meisho Hills are jaw-dropping. Full height glass walls frame the landscape and luxury white motoryachts can be seen slicing the waves on the Mediterranean Sea beneath. All this tranquility and peace does not however come at the expense of accessibility to amenities. The main toll-road serving the length and breadth of the Costa del Sol, including Málaga International Airport at a 40-minute drive, is a stone’s throw from Meisho Hills as are an array of high-street and designer boutiques in Marbella itself. Puerto Banús is viewable from the terrace, just five minutes to the west, and literally dozens of golf courses are on the doorstep, many of them championship standard. Prices at Meisho Hills start from 1,556,000 euros and completion is scheduled for March 2008. Contact us now on spain@duchyspain.com or call 00 34 952 906 944 to find out more. Buying in Spain PART TWO A) INCOME AND WEALTH TAX When the investor is an individual, the taxes to be paid on a yearly basis would be income tax and wealth tax: Income Tax is calculated according to either of the two following circumstances: a) if the property is used only by its owner, or b) if the property is rented to a third party. In the first case, the income on which the tax is applied is a legal income and which is presumed to have been yielded to the benefit of the owner of the property. This legal rent is obtained by applying the percentage of 2% on the rates value of the property; on the amount which is thus determined, a tax rate of 25% is applied. This supposed or legal rent is only payable if we are dealing with dwellings – not on plots of land or commercial premises. In contrast, if the property is let to a third party, whatever the nature of same may be, the applicable rate will be 25% on the net rent obtained by the landlord of the property. Wealth Tax is due annually on 31st December, having to be paid during the following year. The sum to be paid is calculated by the application of certain percentages (for instance, for up to 167,129.45 Euros the applicable percentage is 0.20%; for the next 167,123.43 Euros the percentage is 0.30%) to the value the property may have for tax purposes, being the highest of the following three: Purchase price as in escritura Rates value as assessed for any other tax purposes Value checked by the taxation authorities (catastral) B) CAPITAL GAINS TAX The capitals gains realised by the sale of real estate are subject to taxation. That is, the difference between the original purchase cost and the sale price is taxable. The taxation rate that is applied to this capital gain amounts to 18%. In order to guarantee the settlement of this tax liability by non-residents, Spanish Law requires the purchaser of property from a non-resident to withhold 3% of the purchase price and deposit it with the Tax Agency in order to account for the appropriate tax on the gain realised on the sale. There is an exemption of capital gains tax for residents if the profit made with the sale of the property is used to purchase another property for permanent residence. C) INHERITANCE TAX The inheritance tax is a complicated tax from a calculation point of view and it is always best to study it on a case to case basis. In this respect, it is highly advisable to grant a Spanish will which shall abide by British legislation but shall apply to your assets and interests located in Spain. D) COMPANY SET UP Setting up a Spanish Company is a relatively straightforward process that had been used in the last years by many investor to reduce the impact of Capital Gains Tax. Since a new law entered into force on the 1st January 2007, the Capital Gains for non residents is lower than the company tax, so currently it is not worth setting up a company for this purpose. See www.martinezechevarria.com for more information Duchy Estates’ Bargains Traditional with a Twist – spacious two bedroom two bathroom penthouse in an attractive development to the west of Marbella. Newly refurbished whilst retaining traditional features such as wooden beams and shutters, this home also has all mod-cons including hot and cold air-conditioning and ADSL. With access to a large communal pool with thatched beach bar and in easy reach of shops, restaurants and the beach this is an absolute deal at just 210,000 euros. Panoramic Golf Views – a phenomenal three bedroom three bathroom corner penthouse unit boasting the most incredible views across the fairways of Los Flamingos, the five star Ritz-Carlton Villa Padierna and down to the Mediterranean Sea. Modern kitchen with Bosch appliances, enormous south facing terrace, double garage, storage and no less than five swimming pools set in tropical gardens. Priced at 100,000 euros below market value, now 849,000 euros. Family Favourite – beautifully presented three bedroom two bathroom townhouse with a big paved patio within five minutes of the five star Kempinski Hotel on Marbella’s New Golden Mile. Ideal for families with young children, the community is gated and has a sunny swimming pool area set in gardens. Crazy price for a semi-detached property, only 260,000 euros. Golf Villa – frontline golf villa within the prestigious resort of La Quinta tucked behind the marina of Puerto Banús. With no less than six bedrooms and six bathrooms the property sits on an enclosed private plot of 1,420m2 complete with fruit trees, sun deck and lovely pool with beautiful sea and golf views. Bonus features include an office, gymnasium, storage and two car garage. All for less than two million, priced at 1,995,000 euros. Recent Repaint – an ideally located five bedroom five bathroom villa in the golfing hotspot of Guadalmina close to both the north and south courses. Recently repainted and with a new sundeck around the swimming pool, the home has a stash of extras including a games room, Jacuzzi and guest apartment. Just 1,380,000 euros. Elegance Doña Julia Elegance Doña Julia is a luxurious development of two bedroom apartments and three bedroom penthouses set in the 600 hectare golf resort of the same name - Doña Julia. Occupying an elevated position, residents at Elegance Doña Julia enjoy commanding views of the Bay of Casares below. The properties themselves provide a wonderful blank canvas for your dream home. Marble flooring, solid wood and top quality tiling all have a place whilst an open fireplace sits at the heart of the house, in the living room, bringing warmth in winter and a focal point in the endless summer months. Kitchens are fully equipped and fitted with prestigious brands, carefully selected by the developer’s in-house interior design experts. The 650 hectare resort itself benefits from an 18-hole golf course managed under the well-respected umbrella of Aymerich. The course, a par 72, is built to USPGA standards and was designed by Antonio García Garrido, a famous Málaga-born course architect. An International Golf School and par 3 nine-hole add to the facility. The Clubhouse will be incorporated into the Grand Luxury Park Hyatt Casares Hotel, a five star establishment scheduled to open late 2007. A provisional Clubhouse currently caters to golfers’ needs. The Hyatt hotel, destined to be one of Spain’s most luxurious, is styled as an Andalucian village with 169 rooms of which 27 will be suites – all with views of Casares and the glistening Mediterranean. Conference facilities, a business centre, vast 6,000m2 Spa, fully staffed fitness centre and indoor and outdoor feature swimming pools complete the picture. Non-golfers can step outside the resort and be at Marbella, the port of Duquesa or indeed down to the elegant marina of Sotogrande all in less than half an hour. The beach is conveniently just 150 metres from the entrance. Prices start from 366,000 euros. Contact Duchy Estates now for further information on 00 34 952 906 944 or email spain@duchyspain.com. The Duchy Estates Team – Even More Names to Remember Every office should have a Silvia. Never without a smile and always happy to help she is the very soul of the team. Andalucia-born Silvia not only manages reception and administration but also manages a happy family with two young children. She has been with Duchy Estates from almost day one and we hope that she sticks around for a few years yet. Silvia can be contacted directly by email silvia@duchyspain.com or via phone 00 34 952 906 944. Spanish Pastures New for the Fields Twelve years ago the Fields, Gary 44 and Caroline 42, came on holiday to the Costa del Sol and to be quite frank were unimpressed. They stayed in a hotel to the east of Marbella with their two young boys and never ventured far from the complex so failed to see the sights and therefore what all the fuss was about. So, based on this experience, why on earth did the Fields end up spending nearly half a million euros on a Costa del Sol holiday home over a decade later? Gary, an Insurance Broker from Edgware, picks up the story, “We’re a well-travelled family and have holidayed in the States, Caribbean and so forth, but when it came to buying a second home abroad we wanted something a lot closer to home. Southern Spain wins on many fronts for accessibility, climate and infrastructure so we decided to put our experience all those years ago down to exactly that – experience – and embark on a house hunt on the Costa del Sol.” Gary and Caroline enlisted the support of Duchy Estates, in particular Managing Director Adam Gale, and compared a number of projects before settling on the stunning Alcazaba Beach close to the marina town of Estepona to the west of Marbella. They chose a two bedroom two bathroom garden apartment for just short of 500,000 euros which at the time, in February 2006, was in the final throes of construction and scheduled for completion a few months later in May. Gary continues, “Alcazaba Beach truly sells itself. The gated beachside community is built to outstanding levels of quality and the facilities are wide-ranging with seven communal swimming pools, a gymnasium, sauna, tennis and squash courts and three beach clubs, not to mention hundreds of metres of beach to explore. The subtropical gardens are always being trimmed, pruned and tended to by armies of gardeners and it’s nice to see your community fees going to such obvious good use.” Having never bought a Spanish property the Fields figured out the buying process as they went along leaving Duchy Estates to offer expert guidance. Whilst the developers kept to schedule and finished the property in May 2006, there was a slight delay where the ‘mañana mañana’ local authorities issued the first license of occupation. A legal requirement in order for utilities to be connected. So the Fields didn’t get the keys to the front door until August 2006. Not that they complained as in comparison to the UK the purchase was stress-free and it was a pleasure not to have to juggle a ‘chain’. Gary finishes, “We’re delighted with our new home and try to come out in the school holidays, our sons are now 17 and 14, and in between if we get the chance. We’ve learnt our lesson and idyllic as Alcazaba Beach is, we spend time off the resort and are lucky to have Laguna Beach next door with its boutiques, Puro Beach club and Trader Vics Polynesian-style restaurant, ideal for a good beachfront lunch. We didn’t buy the home to turnaround a quick profit but plan to keep it and enjoy it for as long as we can.” Property at Alcazaba Beach is on the market for as little as 485.000 euros for a two bedroom two bathroom apartment. Contact Duchy Estates on spain@duchyspain.com or telephone 00 34 952 906 944. We realize that you’re busy ordering the turkey, wrapping the piles of gifts and panicking about who’s going to ‘have’ mother-in-law for Christmas, but we know the perfect antidote to all this stress and that’s a trip to see some fabulous homes in sunny Spain. Visit Duchy Estates - Research Trips, book a trip to come and see us and you’ll feel like a new person... Adam Gale, Managing Director Contact Duchy Estates by phone 00 34 952 906 944 or email spain@duchyspain.com or visit our website www.duchyestates.co.uk for further information.