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dickuk
06-12-2011, 10:08 AM
Hi
I have owned a property in Spain since mid 1987 which I paid the equivalent of £26,000 for (in pesetas at the time).
I am looking to sell this year for approx 170,000 euros.
I realise that I have to pay 19% CGT on some of this, but can I apply the 11.11% rule (adding up to 77.77% I think for 9 years 1987 - 1996) to this to reduce it further? If so, does this 77.77% apply to the whole amount or just on a part of it?
Also, how do I convert the £26,000 that was in pesetas into euros to calculate the original purchase price in euros?
Many Thanks
Richard

miramar
06-13-2011, 11:46 AM
From what i have read in "You and the law in spain" by David Searle this "11%" rule was abolished in 2006,now only the inflation co-effecient applies of around 1.21% multiplication of the escritura price.........as for the conversion, pesetas to euros is approx 166 pesetas to 1 euro......now i need help.....non-resident rollover relief of cgt....this does not apply to non-residents but i have petitioned the eu as i think this is unfair as was the 35% cgt rate...i welcome any replies or sugestions on this.......thanks..brian

miramar
06-13-2011, 11:50 AM
Not to forget "Plusvalia" local municipal tax............i have just paid 7900 euros......ouch.

ifv
06-13-2011, 12:20 PM
Although the 11%/year reduction rule suffered changes in 2006, it has not been abolished, as it's still applicable to the capital gains deemed to have taken place before 2006. Instructions on how CGT should be calculated correctly are found in the Modelo 212 instructions (http://www.aeat.es/AEAT/Contenidos_Comunes/La_Agencia_Tributaria/Modelos_y_formularios/Declaraciones/Modelos_200_al_299/212/Instrucciones/instr_mod212.pdf).

Using a CGT calculator we have built, and introducing some rough figures, this is what you would have to pay:



Date of Purchase 01/06/1987
Date of Sale 15/06/2011
Purchase Price 40,000.00 €
Purchase Costs 3,300.00 €
Selling Price 170,000.00 €

Updated Purchase Price 55,891.64 €
Coefficient. 1.2908
Capital Gains 114,108.36 €
Days Between Sale and Purchase 8781
Days Between Purchase and 19/01/2006 6808
Capital Gains Subject to Reduction 88,469.39 €
Number of years for the calculation of the reduction 9
Reduction resulting of applying the inflation coefficients 68,802.64 €
Reduced Capital Gains 45,305.72 €
Capital Gains Tax Rate 19%
Capital Gains Tax 8,608.09 €

Miramar, I realise you have enquired already about CGT relief on another thread. I will look into the matter and get back to you.

Regards

dickuk
06-13-2011, 02:16 PM
Although the 11%/year reduction rule suffered changes in 2006, it has not been abolished, as it's still applicable to the capital gains deemed to have taken place before 2006. Instructions on how CGT should be calculated correctly are found in the xxx

Using a CGT calculator we have built, and introducing some rough figures, this is what you would have to pay:




Miramar, I realise you have enquired already about CGT relief on another thread. I will look into the matter and get back to you.

Regards

Thanks very much for your help and advice.

miramar
06-13-2011, 03:36 PM
Would you please do a calculation for my recent sale,to give me an idea of my cgt liability.........as follows
escritura dated 11th march 1993 purchase 8.500.000 pts plus 44.810 pts derechos arancelarios.
Sold 25th may 2011 250.000 euros with a 3% retention from the 250.000 and plusvalia paid at 7800 euros...thanks

ifv
06-13-2011, 05:43 PM
Hello Miramar

In your case, it would be something around the following:



Date of Purchase 11/03/1993
Date of Sale 25/05/2011
Purchase Price 51,086.00 €
Purchase Costs 3,576.02 €
Sale Costs 7,800.00 €
Selling Price 250,000.00 €

Updated Purchase Price 70,557.74 €
Coefficient. 1.2908
Capital Gains 179,442.26 €
Days Between Sale and Purchase 6650
Days Between Purchase and 19/01/2006 4698
Capital Gains Subject to Reduction 126,769.89 €
Number of years for the calculation of the reduction 3
Reduction resulting of applying the inflation coefficients 14,084.13 €
Reduced Capital Gains 157,558.13 €
Capital Gains Tax Rate 19%
Capital Gains Tax 29,936.04 €


I have added 7% costs to the purchase price (transfer tax), and discounted the plusvalia tax paid. Other deductions may apply, like notary and registry fees, or if you used a solicitor or agent, this is also deductible.

dickuk
06-13-2011, 05:48 PM
Although the 11%/year reduction rule suffered changes in 2006, it has not been abolished, as it's still applicable to the capital gains deemed to have taken place before 2006. Instructions on how CGT should be calculated correctly are found in the Modelo 212 instructions.

Using a CGT calculator we have built, and introducing some rough figures, this is what you would have to pay:




Miramar, I realise you have enquired already about CGT relief on another thread. I will look into the matter and get back to you.

Regards

Can I ask, is the plusvalia tax offsetable against the CGT too?

ifv
06-13-2011, 05:54 PM
I confirm the plusvalía tax is deductible. Other costs you may offset are things like refurbishments, or the mortgage opening and cancellation fees.



IMPUESTO SOBRE LA RENTA DE LAS PERSONAS FISICAS, LEY 35/2006
[...]
Forman parte del valor de adquisición el coste de las inversiones y mejoras efectuadas en los bienes adquiridos y los gastos y tributos inherentes a la adquisición, excluidos los intereses. A su vez, los gastos y tributos satisfechos por el transmitente minoran el valor de transmisión.

La exclusión expresa que el precepto legal realiza de los intereses como elemento integrante del valor de adquisición conduce a interpretar que los gastos de constitución de hipoteca pueden considerarse como inherentes a la adquisición y, por tanto, integrantes del valor de adquisición.

A su vez, los gastos de cancelación de hipoteca minorarán el valor de enajenación.
[...]

ifv
06-14-2011, 10:46 AM
Miramar

Adjusting the calculator following the instructions of Form 212, you would be eligible for a further 11.11% discount (you have to round up to the next figure when canlculating the number of years).

The result would be:



Date of Purchase 11/03/1993
Date of Sale 25/05/2011
Purchase Price 51,086.00 €
Purchase Costs 3,576.02 €
Sale Costs 7,800.00 €
Selling Price 250,000.00 €

Updated Purchase Price 70,557.74 €
Coefficient. 1.2908
Capital Gains 179,442.26 €
Days Between Sale and Purchase 6650
Days Between Purchase and 19/01/2006 4698
Capital Gains Subject to Reduction 126,769.89 €
Number of years for the calculation of the reduction 4
Reduction resulting of applying the inflation coefficients 28,168.27 €
Reduced Capital Gains 143,474.00 €
Capital Gains Tax Rate 19%
Capital Gains Tax 27,260.06 €


As for dickuk, the same applies:



Date of Purchase 01/06/1987
Date of Sale 15/06/2011
Purchase Price 40,000.00 €
Purchase Costs 3,300.00 €
Sale Costs
Selling Price 170,000.00 €

Updated Purchase Price 55,891.64 €
Coefficient. 1.2908
Capital Gains 114,108.36 €
Days Between Sale and Purchase 8781
Days Between Purchase and 19/01/2006 6808
Capital Gains Subject to Reduction 88,469.39 €
Number of years for the calculation of the reduction 10
Reduction resulting of applying the inflation coefficients 78,631.59 €
Reduced Capital Gains 35,476.77 €
Capital Gains Tax Rate 19%

Capital Gains Tax 6,740.59 €


However, please don't rely on the figures for your tax declaration. You should seek the assistance of a fiscal advisor before.

miramar
06-14-2011, 12:08 PM
You mention form 212 in your calculations,but i think we need to use form 210,are the conditions and allowances the same?.....thanks...brian

ifv
06-14-2011, 02:43 PM
That is correct. Form 212 was abolished at the beginning of this year, but I'm referring to it for simplicity. The calculations are exactly the same on form 210, (http://www.aeat.es/AEAT/Contenidos_Comunes/La_Agencia_Tributaria/Modelos_y_formularios/Declaraciones/Modelos_200_al_299/210/Instrucciones/OrdenIRNR2010instrucciones210.pdf) now in force for submission of capital gains tax (see section 210 H).

dickuk
07-11-2011, 08:27 PM
Just got my plusvalia tax price in - 17,800 euros ! Miramar, you thought yours was high !