Taxes when Selling Spanish Property

[Unregistered]

Thanks for your response Raymundo.

Where can I find out more information about this amendment? I was lead to believe that if I sold my property in order to buy another property there would be less tax to pay?

This new place that i'm currently building in spain will be my main residence.

Thanks, Mr Tron

[Lawbird Lawyer]

You're welcome.

Here you go:

http://www.boe.es/aeboe/consultas/ba...E-A-2008-19437

This amendment simply extends 2 more years (capped at 31st December 2010) the normal roll-over relief of 2 years on selling your main residence on having purchased a second property (which will become your next main residence) in 2006, 2007 or 2008.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Highlander]

I'm non-resident and purchased property in Tenerife in November 1989 and with all the tax changes things have become complicated so could anyone give me guidance on what I'd pay if selling.

Let's say as a basic example I bought for £40,000 and sold now for £180,000. Further to this what happens if your total tax bill is greater than the 3% retention, do you pay anything above this.

Am I right in thinking my CGT will be reduced by 66.66% i.e.

1994 11.11%
1993 22.22%
1992 33.33%
1991 44.44%
1990 55.55%
1989 66.66%

I'd really appreciate any help.

[Lawbird Lawyer]

Hi,

Yes you are right.

Yes, you will be expected to pay above the 3% retention if your CGT liability exceeds it on the following year.

The 3% retention withheld at completion by the purchaser and paid into the Tax office is on account of your CGT liability.

This is explained in great detail in this post:

http://belegal.com/forums/showthread...=118&page=2#18

Yours faithfully,

[eric dixon]

We are just in the process of selling our apartment We were told that a 10% deposit would go into our bank account this has not happened, the Lawyer has a cheque which is 6%. Also the exchange date has been brought forward a week.From start to finish the sell will have only taken 4 weeks is this normal. We have a lawyer but the estate agent used his one. Regards Eric Dixon

[Lawbird Lawyer]

Dear Sir,

It will depend on whatever was agreed.

Normally on re-sale property you first pay a reservation deposit amounting to say €6,000 and then on exchanges you are paid 10% of the value of the property (less the initial reservation deposit).

The third step would be completion in which the balance due is paid before the Notary Public and the Title deed is signed.

You can of course skip the second step and jump straight to completion cutting down timelines as necessary to a couple of weeks, or even less.

You really ought to query your lawyer on what's going on. You should be aware of everything that's happening during the whole conveyance procedure. After all, that's what you are paying for.

You can read our re-sale conveyance overview:

Buying Property from a Private Seller - 15th March 2000

If you have further legal queries, just post them here.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Hickman]

Dear Sir, We sold a villa in Mallorca Oct 2008. We sold it totally legally (no black money) and made no profit. We handed over 3% retention of approx 700,000 euros, now after over a year and a half the Town Hall Tax people have decided that the villa was worth 1.2million euros and we not only do not get 3% back but we owe them over 6,000euros as well. All documents showing purchase, sell price and bank statements have been lodged but they are adamant that we owe them. This seems like theft what can we do?

[Lawbird Lawyer]

Dear Mr Hickman,

This is fairly common.

You may want to read our blog post on the matter:

Careful With the Tax Office When Selling or Buying at a Discounted Price - 26th November 2008

Before selling a property, you ought to make sure that the sales price is not below the value that appears lodged in the Tax office's books. You may request a binding valuation prior to selling, in which case you will NOT be sanctioned or taxed if you sell above or equal to this value, which is their value. If you sell below their assesd valuation for your property you will be held liable to pay extra tax.

The Spanish Tax office is oblivious to the current economical environment of firesales, distressed assets, BMV sales etc...it just doesn't care. All it knows is that if you sell real estate below the value they have on their books they will request the shortfall in tax from you, period.

However, the tax man is not always right and you have a right to challenge their valuations or tax assesments by what's known as a "tasación pericial contradictoria" or alternative appraisal.

In fact, I can tell you from our personal experience that on challenging legally the Tax office's valuations we've been fairly successful. i.e. in one of our recent cases a Marbella villa with an assesed value of 1.8 million euros was sold on for 1.3million. The Tax office claimed from our clients (the buyers) 7 p.c. Transfer tax on the shortfall, half a million euros (some €35,000 in tax). We lodged the appeal and the tax bill came to zero.

We charged €1,000 plus VAT and a further €1,000 plus VAT for the architect's report. Total expenses for our client: €2,320; total savings= €32,680. This was done under 5 months.

So bottom line, even if you did not take the advisable precaution of requesting this assesd value from the Tax office prior to selling your villa you may still be able to successfully obtain a tax rebate, not all is lost.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[us home]

We recently sold a property in Spain and are planning to use the proceeds to buy a property in the U.S. Upon sale, we paid capital gains taxes in Spain. Will we have to pay capital gains taxes on the remaining amount in the United States before purchasing a new property in the U.S.?

[Lawbird Lawyer]

Dear Sir or Madam,

You would need to seek the advice of a US lawyer specialised in tax issues, specifically on the state where you intend to buy.

This may well be the case if Spain charges less CGT than the US estate where you're relocating to. It is reasonable to expect to be charged for the balance if you're tax resident in the US.

Yours faithfully,