Warning over deadline for Spanish home sale refunds

Britons who sold second homes in Spain were warned yesterday they had just one month left to begin reclaiming tax they were overcharged.

The European Court of Justice (ECJ) ruled in November last year that the Spanish government had been wrong to charge non-residents who sold properties in the country twice as much capital gains tax as was paid by residents.

The Spanish government had charged people with a second home in the country a tax of 35 per cent on any capital gains they made through the sale of a property. But Spanish residents were taxed at a rate of 15 per cent.

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The ECJ said any EU citizen who paid the higher rate on a property sold between the beginning of 1997 and the end of 2006 could claim a refund.

So far more than 500 British and Irish homeowners have had the tax refunded, receiving an average of 18,000 euros (15,000) each.

But the ECJ ruling stated that all claims must be settled by the end of October this year.

Currency exchange broker HiFX and Spanish lawyers Costa, Alvarez, Manglano & Associates, which have been campaigning to help people reclaim the tax, warned that it takes up to three months to process claims.

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As a result, it is urging people to submit their claim before the end of July.

Home owners who paid the five per cent compulsory withholding tax on their property's sale price instead of the capital gains tax are also able to claim a refund, if the money they paid was higher than if they had been charged the 15 per cent rate of capital gains tax.

People who have previously tried to claim but failed can also resubmit their claim following a change by the ECJ.

Mark Bodega, marketing director of HiFX, said: "We estimate that there are still thousands of Britons who sold Spanish properties in the eligible time period who still haven't come forward.

"But time is running out."

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