Two very important changes came into effect in January 2007 that make buying property in Spain an even better investment for non-residents.

The first of these changes is a reduction in capital gains tax on the sale of property in Spain from 35% to 18% for non-residents. This means that the capital gains tax is now the same for both non-residents and residents.

The second change is a reduction from 5% to 3% in the withholding tax that a property purchaser must pay to the Tax Office on account of the potential Capital Gains Tax liability of a non-resident seller. If a non resident were to incorporate his/her property into a Spanish company, then the sale of that property would not be subject to this 3% withholding tax. Instead the tax due would be the lower of either the 18% tax on capital gains or 3% of the declared purchase price.