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Expat Investor : January February 2008
Serving expats for more than 16 years J In this issue Tens of thousands of British expats face having their homes demolished under new plans by the Spanish government to clear up to 500 miles of coastline of what they call "illegal" developments. The areas under threat have been popular with Brits for decades including the Mediterranean coast, the Canary Islands and the Balearic Islands. The homes most at threat from the bulldozers are those which have been Expats' Spanish coastal properties under threat Investor EXPAT g £4.95/ 7.50/US$7.50 Jan/Feb 2008 Bringing advisers and investors together Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Where to invest in 2008 The inside track on the year's investment opportunities. Isle of Man Essential products and services from the Manx money companies. Forex winners and losers The FSA's ombudsman tells the stories behind forex claims and disputes. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investment 22 Offshore mortgage market Next issue Practical banking Jersey Healthcare insurance Inheritance tax 6 13 18 4 www.expatinvestor.com A Spanish government initiative which seeks to protect the country's coastline from illegally built developments could affects tens of thousands of home-owning Brits, as Hannah Beecham reports. For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Fast Facts 22000 www.expatinvestor.com "There are those that you know you should read, and then there's the magazine you will read." To register for Expat Investor digital edition, visit the website at www.expatinvestor.com Serving expats for more than 19 years positioned "too close" to the coastline. The Spanish government's new development plan for coastal property, which is contained in a recently published document,A Strategy for Coastal Sustainability,from the environment ministry argues that the country should move away from mass tourism and paid urbanisation. The document states, "It is clear that the coastal development model of recent decades is unsustainable." The report specifically singles out holiday resorts along the Spanish coast which are "no longer pleasant or satisfying in many areas." In conclusion, the document urges that radical solutions are necessary to save the environment and guarantee a sustainable future for the coastal economy. The Spanish government has stressed that it does not seek to expropriate the properties, in the first instance. A sum of 5bn has been set aside with which the government intends to negotiate with homeowners over the sale of those properties which are deemed unlawful. The government, likewise, reassures homeowners that it is not seeking mass demolitions. However, such declarations have failed to reassure many Brits who have long feared their homes will be pulled down because they were built without the proper planning permission. Ever since the exposure of a widespread corruption scandal which brought down the Marbella local government, building permits have been hard to obtain. Property developers, too, have fallen foul of the law resulting in considerable financial debt -- all of which has only added to the British property-owning population's woes. Brits have witnessed other land/property controversies. The so-called "land- grab" laws in Valencia which permitted private property to pass into the hands of developers has added to a mood of desperation and fear amongst the British coastal communities. The UK's FCO states that Britain will engage with the Spanish government and its regional authorities on any policy which has implications for British citizens who have bought property in good faith. You paid how much? Brits with homes in Spain may face a tax bill of thousands of pounds following a clampdown on the practice of under-declaring sale prices. The Spanish tax office is running a new computer system to crack down on homeowners who evade tax by claiming to have sold their properties for much less than the actual selling price. For many a long year, sellers both foreign and local, have under-declared the sale price of their property by as much as 30%. Thus a property valued at around 100,000, might 'officially' sell it for 70,000. The other 30,000 would be paid in cash, thereby reducing the amount on which tax would have to be paid by the seller. Whereas this practice has always been illegal, buyers have been pressurised into complying with it by sellers who might not otherwise accept the property purchase offer. However, the Spanish tax authorities' computer program links to those operated by the public notary and property-registry offices. This makes it easier to spot unrealistic sales prices. Such a move means many homeowners will have to declare a larger capital gain when they sell and, consequently, be taxed on a higher sum. A recent tax law establishes that all property sellers are liable to pay 18% on capital gains accrued in Spain. However,ifyou become a Spanish resident, (that is, if you are spending more than 183 days of the year in Spain), the property has been your main home for three years, and you are over 65 when you sell, you avoid that capital gains tax in Spain. Resident sellers under the age of 65, who reinvested their profits in another home in Spain, will also be capital gains exempt on the profits of their sale. Where Brits beach While the British Foreign and Commonwealth Office estimates over a million Brits are living in Spain for all or part of the year, the Spanish 2006 census reveals most favoured coastal locations. Location Total North coast Asturias 603 Cantabria 333 Guizpuzcoa 621 La Coruna 687 Lugo 130 Pontevedra 430 Vizaya 675 East coast Barcelona 9,771 Belearics 17,637 Castellon 1,415 Gerona 3,345 To rragana 3,449 Valencia 9,146 South coast Alicante 95,374 Almeria 12,429 Cadiz 5,705 Malaga 51,162 Murcia 13,901 Huelva 620 Total number of Brits 262,074 Source: Spanish census 2006 OUT NOW! *THE ANNUAL INTEREST RATE QUOTED IS VARIABLE, GROSS AND EFFECTIVE FROM 31 DECEMBER 2007. THIS RATE IS PAYABLE WHERE NO MORE THAN 3 WITHDRAWALS ARE MADE IN A BONUS YEAR (1ST APRIL -- 31ST MARCH) WITH A RATE OF 5.75% PAYABLE WHERE 4 OR MORE WITHDRAWALS ARE MADE IN THIS PERIOD. THIS ACCOUNT IS ONLY AVAILABLE ONLINE TO INDIVIDUALS AGED 18 OR OVER AND IS NOT AVAILABLE TO UK RESIDENTS. Maximum balance is £1,000,000. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ British Isles. Registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA. With share capital and reserves in excess of £266 million. Copies of our most recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle of Man legislation, eligible deposits made with an Isle of Man office of Bradford & Bingley International Limited are covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). This advertisement does not constitute an invitation to make deposits in any jurisdiction to any person to whom it is unlawful to make such an invitation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your personal circumstances and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business.%* GROSS P.A. 6.25 eSaver Internet Savings Account . Minimum balance £1 . No hassles . Helps you save . Manage from home 24/7 Available now at www.bbi.co.im/esaver Up to