Spanish Capital Gains Tax for a property purchase in June 1986 / sold in March 2011

I am hoping someone can help provide some details on the amount of Capital Gains Tax liability that would be due in Spain for the following;

Property purchased by a non resident (UK resident) in June 1986 for 4,900,000 Pesetas = 29,448 Euros

The property was sold for 150,000 Euros in March 2011.

As such what should the Capital Gains Tax liability be in Spain?

There may have been an option to purchase deed that was signed for 10,000 Euros.

If so, would the Capital Gains Tax liability calculation need to be based on a total sale price of 160,000 Euros?

Hello Soldin

I've calculated the CGT resulting from the sale of the mentioned property with the details provided. See below:

Quote:

---

Date of Purchase 01/06/1986
Date of Sale 01/03/2011
Purchase Price 29,448.00 €
Purchase Costs 2,061.36 €
Sale Costs 0.00 €
Selling Price 160,000.00 €

Updated Purchase Price 40,672.28 €
Coefficient. 1.2908
Capital Gains 119,327.72 €
Days Between Sale and Purchase 9040
Days Between Purchase and 19/01/2006 7173
Capital Gains Subject to Reduction 94,683.38 €
Number of years for the calculation of the reduction 11
Reduction resulting of applying the inflation coefficients 94,673.91 €
Reduced Capital Gains 24,653.81 €
Capital Gains Tax Rate 19%

Capital Gains Tax 4,684.22 €

---

I assume the total purchase costs were 7% (transfer tax), and that there were no selling costs (agent or lawyer fees). Let me know if this is different.

Regards

ifv

Thank you for your response.

For additional information I can confirm we have been advised of the following in relation to the costs relating to the sale;

Commission to an Agent - 5,550.00 Euros
Community payments - 418.50 Euros
Declassification & Community Certificates - 142.66
Legal Fees - 2,900.00 Euros
3% Tax Retention 4,500.00 Euros
Retention kept by buyers re non residents tax - 300.00 Euros
Plus Valia tax - 2,049.85 Euros
Notary Invoice - 433.93 Euros
Local rates payment 2010 - 391.59
Local rates payment 2011 - 434.40

Whilst some of the above might not be applicable in terms of offset costs relating to the sale this is the information that has been provided on unheaded notepaper.

Thanking you in advance of your response.

Edit - Additional information - The original date of purchase was 15th June 1986 with the date of sale being 8th March 2011, if relevant.

Further edit - I am afraid I do not have access to the original costs relating to the purchase but must assume the transfer tax was applicable. I understand the property was a new build property at the time if that helps.

Hello Soldin2011

I'm posting below the calculations with the updated values:

Quote:

---

Date of Purchase 15/06/1986
Date of Sale 08/03/2011
Purchase Price 29,448.00 €
Purchase Costs 2,061.36 €
Sale Costs 11,076.44 €
Selling Price 150,000.00 € (updated based on the 3% retention)

Updated Purchase Price 40,672.28 €
Coefficient. 1.2908
Capital Gains 109,327.72 €
Days Between Sale and Purchase 9033
Days Between Purchase and 19/01/2006 7159
Capital Gains Subject to Reduction 86,646.42 €
Number of years for the calculation of the reduction 11
Reduction resulting of applying the inflation coefficients 86,637.76 €
Reduced Capital Gains 11,613.52 €
Capital Gains Tax Rate 19%

Capital Gains Tax 2,206.57 €

---

Therefore, the tax office should refund around €2300 if your non-residents taxes were up to date when you sold the property.

When you transfer your property, you can offset agent, lawyer and notary fees, plusvalÃ*a tax and any other fees having to do with the sale. Costs having to do with non-residents or IBI taxes are not deductible. By the way, note that non-residents tax levies the owners, not the property, and therefore no retention should be made in this respect (funds are normally withheld to cover unpaid IBI taxes or community fees).

Regards

Hello ifv

Thank you for your reply which is both very useful and informative.

The property was sold in the La Manga area (on the strip by the Mar Menor) which I believe is not too far from Cartagena.

Do you know where we could gain access to a local address / contact details for where the Spanish Capital Gains Tax submissions will have been made / lodged in relation to the sale of a property in this region of Spain? Official copies of these documents are currently required in the UK.

Unfortunately, the previous owners of the property have not been provided with any copies of these documents by the Abogado who dealt with the sale of the property in 2011.

The previous owners both have Spanish NIE numbers. I understand the CGT Tax submissions in Spain will be a matter of public record and therefore should be retrievable.

On the subject of retrieving documents - Will a copy of the 'Deed of Sale' and 'Option to Purchase' deed also be retrivable from from a local registry office or elsewhere?

If so, do you know where we could gain access to a local address / contact details the necessary local address in order to also retrieve official copy of these official documents.

Thanking you once again in advance.

Regards

Edit addition - We have been advised, today, that it is a standard practice in Spain not to issue any authorised /signed / dated breakdown of costs relating to a sale of a property on Abogado company letter headed paper even when those breakdown of costs have been audited by an accountant. Would this be correct?

ifv

Further to your response to the Capital Gains Tax applicable based on the figures relating to the sale of the property I note your breakdown does not include 'Extra Capital Gains Tax'.

The breakdown of figures we have received details an item for 'Extra Capital Gains Tax' for the amount of 11,792.53 Euros.

What is 'Extra Capital Gains Tax' in Spain?

I would post a copy of the document received but unfortunately I do not know how to do this or whether it is possible on the forum.

Regards

Soldin2011

Hello Soldin2011

The easiest thing would certainly be to request all the documentation from the lawyer who dealt with the sale of the property in 2011, which includes the deeds of sale, tax forms, etc.

If this is not possible, obtaining from the tax office a copy of the tax forms submitted (Modelo 210) is as easy as visiting any Hacienda office and submitting a Modelo 01.

A copy of the deed of sale must be requested from the notary public who witnessed the transaction. If the name of the notary is unknown, the land registry should be able to provide this information.

Quote:

---

Edit addition - We have been advised, today, that it is a standard practice in Spain not to issue any authorised /signed / dated breakdown of costs relating to a sale of a property on Abogado company letter headed paper even when those breakdown of costs have been audited by an accountant. Would this be correct?

---

It sounds a bit like nonsense to me. A breakdown of costs should always be provided by the lawyer.

Quote:

---

The breakdown of figures we have received details an item for 'Extra Capital Gains Tax' for the amount of 11,792.53 Euros.
What is 'Extra Capital Gains Tax' in Spain?

---

I don't know what ‘Extra Capital Tax’ is. The calculations provided above have been done using the official Modelo 210 instructions provided by the Spanish Tax Office, which, as far as I know, mention nothing about 'Extra Capital Gains Tax'.

I suggest that you contact a Spanish fiscal advisor, who, for a small fee, should be able to find out what is the status of this 3% tax refund, and wheter the calculations were done properly. Let me know if you would like me to recommend you someone.

Regards

Hello ifv

Thank you for your reply.

Unfortunately, it is the lawyer who dealt with the sale in 2011 who is not releasing all the information being requested.

Regarding your offer of recommending a Spanish fiscal advisor - Please can you recommend someone as this will be very much appreciated.

Regarding visiting any Hacienda office and submitting a Modelo 01 we are currenlty in the UK and unable to get to Spain in the near future.

As such do you know how we can find out the Hacienda address in Cartagena given the property was sold in the La Manga strip area?

Do you know how we can also find out the approporiate local land registry office where the deeds of sale will be registered?

Regards

Soldin2011

Quote:

---

Unfortunately, it is the lawyer who dealt with the sale in 2011 who is not releasing all the information being requested.

---

Perhaps you should consider reporting this lawyer to the Murcia Law Association. Every piece of paper having to do with with a case belongs to the client, and a lawyer can never refuse to hand over a file.

However, if you still wish to request a copy of the documents, the tax office that covers La Manga region, is the one at Calle Campos 2, Cartagena.

Regarding obtaining copies of the deeds, the first step would be requesting a 'nota simple' from the land registry (around €9). This document will show the current owner and the name of the notary public who witnessed the signing of the deed. You then look it up on the Notary Association website, and you can contact him/her to request a copy of the deed.

Should you need help with this, Juan Carretero from Lawbird should be able to assist you for a reasonable fee.

Regards

Hello ifv

Thank you so much for your reply as you have yet again been very helpful.

FYI we will be looking to make contact with Juan Carretero from Lawbird.

Your suggestion re the Murcia Law Association will certainly be considered.

Do the Murcia Law Association have effective teeth when taking action if a complaint was to be made or do such matters generally just get brushed under the carpet?

Regards

Soldin2011