Taxes when Selling Spanish Property

[lawbird]

Dear Elaine,

Thank you for your email. When you sold the property you were most likely retained 3% of the purchase price to deal with your CGT. As you sold at an undervalue, you had no gain, and therefore you are not liable to pay CGT. Please note that CGT is different to plusvalia tax which is not calculated with reference to your real gain but on your presumed gain (as per specific tables held by the townhall).

As a result of the above you may be entitled to a refund from the Spanish HMRC. We need to review the documentation carefully in order to confirm.

If you forward us the title deed to info @ lawbird.com, I could provide you with more information on how to apply for a refund and the cost of such.

As per your last question, to qualify for the reinvestment exemption, you need to reinvest within two years of the sale and within Spanish territory. However, and as I said earlier, you may not be liable to pay CGT and therefore you do not need to seek any exemptions in order to reduce your CGT liability. You had no gain.

Hope the above information is of assistance and please do not hesitate to contact us could we be of any help.

Kind regards,

[elaine grant]

thanks for your prompt reply. the only thing is-when we bought the property-the whole amount was not declared.In other words, so much was black money as was the practice back then so i dont think we will be exempt from capital gains tax??

[lawbird]

In that case, and depending on what was done exactly and how, you run the risk of HMRC opening up an investigation if they have any suspicion that your tax declarations were not filed correctly.

Depending on their findings, you may be taxed on any gains you realized.

[nen]

hi we have just sold one of our 3 properties in spain .we are resident and over 65 will we have to pay any capital gains tax if we dont reinvest within two years?or would we be ok and not have to pay taxs as we have two more properties in spain and all the money to buy them came from the uk with us when we moved here 8 yrs ago when we sold up there
thank you regards nen

[Elizabeth Murphy]

Dear Lawbird Lawyer,
My sister died in January 2011. She had been a resident of Spain for at least 25 years and owned and lived in a mortgage free apartment in Fuengirola. My UK sister & I (USA) & over 65 years have inherited the property. What are the tax etc implications if we sell? I would prefer to sell as the property is small, not too near the beach, & may not be condusive to renting in this market.
We are very ignorant of Spanish law. Would you suggest selling or trying to rent? Your opinion and knowledge will be greatly appreciated.
Thank you.
Elizabeth Murphy
edmleo@aol.com

[Elizabeth Murphy - again]

I forgot to mention - my deceased sister made her will in Spain. This has been found and verified by a lawyer in spain.
thank you.
Elizabeth Murphy

[Patricia]

Dear Ms. Murphy,

Welcome to the belegal.com forums.

The first step before selling inherited property is to accept the inheritance and get the property transferred into your names, and that already implies the payment of the inheritance tax, that can be calculated by a tax expert taking into consideration various aspects such us current value of the property and age of the inheritors.

Once that the property is in your names, and upon concluding the sale, Capital Gains Tax will be calculated on the difference between the selling price and the purchase value, minus purchase and sale costs. The tax rate is currently 19% on the net profit. You also need to allow the buyer to withhold 3% of the purchase price, on account of the final tax.

Additionally, you need to pay the “plusvalia” tax, it being a municipal tax based on supposed increase of the value of the land, irrespective of this actually happening.

Regards,

[Helen McDermot]

Hi,

My Spanish solicitor says he cannot set the costs of the air conditioning, new French doors and the re-tiling of the gardens against the profit I will make when I sell my Spanish property. We have owned the property since 2003.

Is this true, as I read on lots of websites that this is perfectly acceptable?

Thank you,

[Patricia]

Dear Ms. McDermot,

Welcome to the belegal forum.

According to the information that you are providing, we understand that you have made improvements and reforms in your property that have raised its value , and therefore you can set the selling price in accordance with to the current and actual value of the property.

You should bear in mind that there are taxes to be paid after the property sale:


• Plusvalia ( Increase on Property Value Tax )
• Capital Gains Tax ( increase on your income due to the property sale )


Regards,

[Mary owen]

Hello
I bought villa in Lanzarote in 2000 for 39million pesetas(41 mill but 2 mill black).I want to sell for hopefully 500000 euros.What sort of CGT would I have to pay?I am uk resident
Many thanks