Taxes when Selling Spanish Property

[RONALD FLOOK]

What is the tax position if you as a non-resident have to sell at a loss?

[ifv]

Hello Ronald,

If you are non resident and have to sell at a loss, you are exempt from capital gains tax. However, you will still have a 3% withheld, amount which will be returned a couple of months down the line if you are up to date with your yearly imputed income taxes. You will still have to pay plusvalÃ*a tax to your town hall regardless of whether you've made a profit or not.

Regards

[Kirk]

I bought a property in Spain in 2001 which I lived in till I sold last year. As I am a non-resident, 3% of the purchase price was withheld. This actually worked out less than if I had paid 18% capital gains tax. I understand that normally it’s unlikely that I will be asked to pay the extra tax.

About the same time as I sold the property, I bought another property in Spain last year which I am currently living in. Unfortunately my circumstances have now changed and I am in the process of selling the property (for a big loss), and returning to live in the UK.

I have paid the non-residents tax (Patrimonial?) every year since arriving in Spain.

I know 3% will be automatically withheld when I sell. I am hoping to try and claim this back (as I will have made a loss). Will I be opening a can of worms if I try to claim this back? Is the Spanish tax office likely to look at my previous year’s sale, and decide that I owe them money?

I have also heard that out of spite, the Spanish tax office often inform the UK tax office when refunding the 3%. Would I be liable to UK capital gains tax? (I use my brother’s address as my UK address and haven’t owned a property in the UK for over 10 years.).

[Patricia]

Hello Kirk,

Welcome to the belegal forum.

In Spain, the statute of limitations for tax obligations is of 4 years. If you sold your property last year and did not pay the corresponding 19% on Capital Gain Tax that you are liable for, there are still high chances that you will be asked to pay any outstanding taxes, especially if the tax office has to refund you.

As per your concern on the possibility that the UK tax authorities becomes aware of the capital gained in Spain, be informed that Foreign governments in Europe have been known to share information with the tax office.

Regards,

[agnes]

does the Spanish government consider how in 2001 buyers paid the price of their homes in two parts cash given to the solicitor and bank transfer
On selling the villa (adding these tow amounts together) meant we did not make any money
we sold our villa March 2011
will I be entitled to a refund of the 3% and how long does it take.

[Patricia]

Hello Agnes,

Welcome to the belegal forum.

When there is a cash payment for the purchase of a house and this does not appear in the title deeds, it is considered undeclared and therefore unlawful. The amounts you can deduct in order to reduce the CGT are the expenses directly related to the sale of the property, such as Notary, registry, solicitor and agent fees. The tax office only takes as reference the declared value on the public deeds; that is, the declared selling price and the declared purchase price, minus expenses.

If you are not a fiscal resident, you will be retained a 3% and you can only request a tax rebate in the event that this amount is higher than the CGT ( Capital Gains Tax ). Should this be the case, the tax office would take about one or two years to proceed.

Regards,

[Kathy]

I would like to clarify if I have to pay CGT if I sell my house when I am 65 . I am resident in Spain and have lived in the house for 10 years?

[ifv]

Hello Kathy

If your property classifies as your permanent residence (you've lived in it for 3 years or more as a resident) and you sell your property once you turn 65, then no CGT is applicable.

Regards

[Jacky]

Hi, My husband is tax registered here as he works as a self employed person and we want to sell our house. It is our main residence and only residence in spain or any where else and we have lived in it for 6 years, if we purchase another property directly after selling this property are we liable to any CGT

[Patricia]

Hello Jacky,

You will not be liable for the CGT payment If you comply with all the circumstances listed below:

- You are fiscal residents in Spain ( as per your message, we believe your husband is )
- You have lived in your property during at least 3 years ( it looks as it is the case )
- You invest the profit made after that sale in a new dwelling in the following two years
- You live in the new dwelling for at least 1 year after the purchase

You could avoid the last requirements if above 65 years of age.

If the property is in both your names and one of you are not a fiscal resident, the corresponding share of the property would be liable for the CGT payment.

Best Regards,