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

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  1. #1
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    Default 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?

  2. #2
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    Hello Soldin

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

    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

  3. #3
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    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.
    Last edited by soldin2011; 04-02-2012 at 11:27 AM. Reason: Additional of actual dates of purchase and sale

  4. #4
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    Hello Soldin2011

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



    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

  5. #5
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    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?
    Last edited by soldin2011; 04-02-2012 at 07:55 PM.

  6. #6
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    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

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