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chicadeb
04-08-2010, 04:41 PM
Hi,

I want to sell my apt and buy a smaller one (to hopefully get rid of my mortgage) but I'm worried about Capital Gains Tax as I don't really understand it. Does my calculation look right?

Original apt price - €125,000 (inc. tax) plus €858 spent on plus valia of €24, property registry of €255 + 0.5% stamp duty of €579 = €125,858 x 1.125 (coeficiente example as I bought the apt in 2002 and hope to sell it this year) = €141,590. If I sell the apt for €199,000 - €141.590 acquisition costs that leaves €57,410 net proceeds. If I buy something within 2 years for €100,000 with 10% acquisition costs of €10,000, total €110,000 then I'm re-investing 88% of the profit (€110,00 divided into €125,000 = 88%) so am I right in thinking that I will be taxed on the remaining 12% of the profit? €57,410 x 12% = €6,889.20 x 15% resident capital gains tax = €1,033.38.

Also, can Notary costs be included in my calculations as they were €2,008 in total? (inc. the plus valia, property registry and stamp duty as it was a new property).

Would these costs have anything to do with my mortgage which I took when I bought the house as someone said to me that I couldn't include the notary costs in my calculations if they were connected with mortgage costs - to be honest I'm not sure of the notary breakdown apart from the 3 payments I just mentioned. Would a normal notary cost have anything to do with mortgage things?

Finally, what coeficiente amount should I use for purchase in 2002 and sell in 2010 (is it 1.125?).

Thanking you in advance for any advice.

Debbie

Lawbird Lawyer
04-09-2010, 01:56 PM
Dear Debbie,

To take advantage of the roll-over relief you must meet certain criteria:

1. Owners < 65 y.o.
2. They will not pay CGT taxed at 19% within the following 2 years subject to them reinvesting the sales proceeds in another property in Spain (or elsewhere)
3. Must be used as their main residence (they must have lived in it the 3 previous years and wil lbe required to prove it providing conclusive evidence i.e. utility bills).

Let me note you have the CGT wrong, it's 19% not 15% if you sell on in 2010. More on GCT tax changes for 2010 here:



Spanish Capital Gains Tax Raise to 19% Goes Unnoticed (http://belegal.com/wordpress/spanish-capital-gains-tax-raise-goes-unnoticed/) - 22nd March 2010

Of course you can include Notary fees, providing you have their VAT invoice as support.

Let's say you sell on the 1st of May 2010.

Date of Purchase 01/01/2002
Date of Sale 01/05/2010
Purchase Price 125,000.00 €
Purchase Costs (estimation) 9,608.00 €
Selling Price 199,000.00 €
Updated Purchase Price 160,506.58 €
Coefficient. 1.1601
Capital Gains 38,493.42 €
Days Between Sale and Purchase 3043
Days Between Sale and 19/01/2006 1480
Capital Gains Subject to Reduction 18,721.74 €
Number of years for the calculation of the reduction 0
Reduction resulting of applying the inflation coefficients 0.00 €
Reduced Capital Gains 38,493.42 €
Capital Gains Tax Rate 19%
Capital Gains Tax 6,928.82 €

On hiring us we would make sure you pay the minimum on reinvesting with in the following 2 years.


Yours faithfully,
Raymundo Larraνn Nesbitt

Unregistered
08-14-2010, 07:14 PM
Firstly, the purchase price was 125,000 INCLUDING tax. You have added another 7% transfer tax onto the costs in addition to the tax included in the price.

Secondly, although you have stated that the capital gains tax is 19%, you have used 18% in your calculation!!

ifv
08-15-2010, 12:28 PM
You are right. The calculator I wrote had a bug which didn't apply the 19% change.

These are the correct figures:


Date of Purchase 01/01/2002
Date of Sale 01/05/2010
Purchase Price 116,822.43 €
Purchase Costs 9,035.57 €
Selling Price 199,000.00 €

Updated Purchase Price 150,073.08 €
Coefficient. 1.1601
Capital Gains 48,926.92 €
Days Between Sale and Purchase 3043
Days Between Sale and 19/01/2006 1480
Capital Gains Subject to Reduction 23,796.20 €
Number of years for the calculation of the reduction 0
Reduction resulting of applying the inflation coefficients 0.00 €
Reduced Capital Gains 48,926.92 €
Capital Gains Tax Rate 19%
Capital Gains Tax 9,296.11 €

I have not included the notary costs. However, the notary costs having to do with the deeds of purchase can be included (those having to do with the mortgage deeds cannot).