Taxes when Selling Spanish Property

[M Vaughan]

This is the discussion thread for the article Taxes when Selling Spanish Property (http://www.marbella-lawyers.com/articles/showArticle/taxes-when-selling-spanish-property)

--

Surely, the EU law reduced this unfair tax and Spain complied this year 2008 with the new law, therefore you need to update your site.

[Lawbird Lawyer]

Dear Sir,

You are absolutely correct.

After a protracted process grounded on discrimination the European Commission forced Spain to equate the Capital Gains Tax for residents and non-residents alike leaving it at 18% as from the 1st of January 2007 not as from 2008 as you mistakenly write.

We don't update old articles; we publish new ones with the new laws that are passed and we always include the date when they are published. The reason is that we have been publishing articles for over a decade and we can ill afford the time to amend each and every legal article every time a new fiscal law is passed, which occurs almost on a monthly basis as new laws are enacted every day and published in Spain's Official Law Gazette (BOE). What really matters is that the companys' lawyers are aware of the changes in law and are always up-to-date.

In any case I confirm we will be writing a new updated article on this matter within the next weeks so as to avoid any further confusions in this important matter.

Which is why it is a good idea to always ask a lawyer to confirm if the tax rates you've read in legal articles dating back years -such as the one you quote- are correct and updated. Quite often it will not be the case.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[tricia]

Do all pensioners have same rights when selling i.e Spanish and English etc?
Does a pensioner pay tax when selling a property?
If a pensioner has residencia, PADRON, NIE is this sufficient not to pay tax?
Do they need to opt out of Ingles tax system and become fiscal tax resident in Espana?
Kind regards

[Lawbird Lawyer]

Dear Madam,

Owners > 65 years old qualify for a CGT tax exemption on selling their primary dwelling in Spain (must be their main residence, not a second residence).

Owners < 65 y.o. qualify for a roll-over benefit. They will not pay CGT taxed at 18% within the following 2 years subject to them reinvesting the sales proceeds in another property in Spain (or elsewhere) which must be used as their main residence (they must have lived in it the 3 previous years and wil lbe required to prove it providing conclusive evidence i.e. utility bills).

On you speding more than 183 days in Spain you will become a fiscal resident and are subject to be taxed on your Worlwide income. This includes your UK pension, yes.

A pensioner pays taxes on selling property, yes, Capital Gains Tax and Plus ValÃ*a tax with the exception above.

Having residencia, NIE and Padrón makes no difference in you being liable to pay taxes on selling property. It will however affect your IHT bill. Being tax resident in Spain will make it unnecessary the buyer retains 3% of the sales proceeds on account of your CGT liability.

In any case foreigners who live in Spain should join the Padrón:


Embassy encourages foreigners to register on local ‘padrón’ (http://www.surinenglish.com/20090826/news/costasol-malaga/embassy-encourages-foreigners-register-200908261054.html)

Benefits of registering include tax reductions, access to social care and discounts
26.08.09 -

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Jenny]

Can you tell me please, if you have owned your property for less than 3 years when you sell (non-resident), are you liable to pay higher tax?

By that I mean, is there a set number of years defined where if a seller has owned the property for less than that number of years (as a non-resident) when he/she sells, are they liable to pay higher tax?

[Lawbird Lawyer]

Dear Jenny,

No, it is not the case. You pay 18% CGT.

Yours faithfully,

[John Connor]

If I were to sell my property in Spain I understand I'd have to pay CGT.

I live in the US now, so when I pay CGT in Spain, the US can't tax me on any of the money if I send it over here over a wire transfer, right?

[Lawbird Lawyer]

If I were to sell my property in Spain I understand I'd have to pay CGT.

I live in the US now, so when I pay CGT in Spain, the US can't tax me on any of the money if I send it over here over a wire transfer, right?

Dear Sir,

That is incorrect. In the case of UK citizens, with which I'm more familiar, they may have to pay CGT twice on selling Spanish property. Both to the Spanish Tax Office and also to the HMRC depending on how much is their UK tax rate.

I'm unaware of the IRS but I suggest you query a US lawyer in the state where you live on this matter as you may be required to pay CGT twice (taxed on the difference in the US).

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[carole]

i am non-resident in spain i brought holiday home in 2000.in2007 i brought a larger house but could not sell holliday home,i now have buyer for holiday home,can the profits and taxes be offset against property brought in 2007. yours faithfully carole

[Lawbird Lawyer]

Dear Madam,

You are querying in relation to post number 4?

This will not be your case as it was not your main residence following your own post, it was a holiday house.

The roll-over benefit wouldn't apply to you as it was not your main residence.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Sue Price]

When I bought my finca it cost 42000euros. The valor catastral is now 39,847,89 pesetas. I make that about 239000 euros. Ihave extended the property to a large villa. What plusvalia[more or less] would I be paying if I sell?

[Lawbird Lawyer]

Dear Madam,

You can request an estimation of the town hall where the property is located.

You will need the original Title deed and the intended sales price and date of sale of the property.

As a sidenote, I hope you registered the extension, otherwise your buyer may run into problems:

Buying Property In Spain Part I. Buying Resale: Avoiding the Pitfalls (http://www.marbella-lawyers.com/articles/showArticle/tips-on-buying-a-property-in-spain) - 31st January 2010

Quoting an excerpt:



2. Has the Property Been Registered Properly?

It is commonplace that extensions on properties are unregistered (http://www.marbella-lawyers.com/questions/showQuestion/89-I-cannot-get-on-a-loan-on-a-property-as-it-has-not-been-fully-registered--Which-is-the-best-way-forward-) at the land registry. You will only find out on requesting a mortgage loan when the bank either turns you down or else offers significantly less money than what you were expecting because the extensions remain unregistered i.e. a 4 bedroom villa which has only 2 bedrooms registered at the Land Registry.

This problem can be easily overcome by signing a New Build Deed at the Notary and paying the associated local tax levied by the Town Hall for the extension. This deed is then registered and the property description is amended accordingly adapting it to reality. This ought to be done by the vendor prior to the sale, unless agreed otherwise. This case is especially true of rural properties.

Other cases, such as illegal rural properties, may be fraught with legal problems i.e. the property had only been given a licence to build a small tool hut of 3x3 m2 to plough the fields and yet a villa has been built instead. Rural properties can be a legal quagmire and it is essential you retain a lawyer to act on your behalf and best advice you on the matter, from the very beginning.

In other cases, for perfectly legitimate reasons, properties remain unregistered or they lack the Title Deed (escritura). i.e. property inherited from one generation to another. There are different legal ways to overcome this minor problem: Acta de Notoriedad or else following an Expediente de Dominio.



Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Senga]

i live in the UK but we have a holiday apartment in Lanzarote which is in my husbands name only does this mean i have no rights to the property

[Lawbird Lawyer]

Dear Madam,

What nationality do you and your husband hold?

Did did you marry in the UK?

Yours faithfully,

[Paul]

We bought a property in 1984 for the equivalent of 16.000 euros. We want to sell it to our son for a reduced price of 80.000 euros thought the real value is twice as much. Can you tell me if we will have CGT to pay and if so how much?

[Lawbird Lawyer]

Dear Sir,

The answer to your query is in the article which starts off this very thread:




Taxes when Selling Spanish Property

2nd of May 2002

Capital Gains Tax (non-residents)

A non-resident seller is liable for payment of a 35% (as from the 1st January 2007 this has been lowered to 18%) Capital Gains Tax on the profit of the sale of their property unless it was bought before January 1st 1.987. However, there are exemptions available for those who have owned their property since 1.994 and before. Also, the vendor can offset against the gain made on the sale other costs.

A vendor will be able to mitigate his tax exposure by three different ways:

Reductions on when the property was purchased

Those who bought a property after the 31st of December of 1.994 will not be entitled to any reductions.

Those who bought in 1.987 of after will enjoy of a reduction of 11.11% on the net gain for every year they have owned the property before the 31st of December 1996 after taking the first two years. This means that a seller starts benefiting from this reduction, his first 11.11%, if he bought in 1.994, 22.22% if he bought in 1.993 and so on.

Those who bought before the 31st of December 1.986 will be pay not tax, as the cuttoff point is 1.996.



Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Christine Dalton]

We sold our apartment in La Manga last October and although below the market price we thought ourselves lucky to sell as the market was not brilliant.We paid all our dues and more and were actually shocked at the amount of fees and taxes we eventually had to pay. OK we said we have at least brocken even...sort of. Then we are told that the government holds back another 3%.....for what??? We have been told that this will be reinbursed within 12/18 months when they can prove we dont have any debts etc on the property!! This is rediculious, before we sold the lawyer had to pay all bills etc and we owed nothing,if anything we now have lost money also when we do eventually receive this 3% it will be subject again to lawers fees and transfer fee's to our bank in the UK. Come on... where is the EU in all this,this would not and could not happen in the UK.What about the interest on my 3% for 12/18months...do the Spanish government get this...who pays for my lawyer etc. Not fair,..lets get our act together,there are so many people buying abroad and they should ot be ripped of!!!!

[Lawbird Lawyer]

Dear Ms Dalton,

On selling a property in Spain you are liable for two taxes only:

1. Capital Gains Tax: taxed at 19% for all sales after the 1st of January 2010 for both residents and non-residents alike.

2. PlusvalÃ*a tax: which is a tax levied by your Town Hall where the property sold is located and taxes the imputed increase in value of the land since you purchased it.

The 3% you mention is not a tax. People often make this mistake.

The 3% is a retention withheld by the buyer and paid into the Spanish Tax office on account of your Capital Gains Tax liability as a non-fiscal resident.

CGT is paid normally on the following year after the property has been sold. The problem with non-residents is that the Spanish Tax office runs the logical risk that on selling-up in Spain you will vanish into thin air and never pay the CGT owed on the following fiscal year. This happened frequently with non-residents whether on purpose or not.

Which is why this system of a retention was brought into place whereby a retention is applied on the buyer on account of the vendor's fiscal liability (so they do not run off to their homecountry without paying taxes on the sale of the property).

The way it works out is as follows:

CGT is taxed on the profit you make between what you paid for the property on buying it and what you have sold it for.

So three scenarios are possible:

1. You make a profit. In which case you will be taxed at 19% on the said profit. the 3% withheld is used to pay this off. If there is a balanace it will be refunded to you providing your lawyer lodged tax model 212.

2.- You make a loss or you break even: you are entitled to a full refund of the 3% plus legal interests. The taxable base in tax model 212 can never be negative so it will be zero (break even). This refund normally takes on average between 12-20 months and will be paid into the Spanish bank account you designated.

So bottom line, it is not a God-given right to be entitled to a full refund on the 3% withheld before the Tax office, this is also a common mistake. The refund will hinge on your CGT liability as explained above.

I hope this clarifies the matter for you. If you're still in doubt just post your queries on this thread.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[L Davies]

Hi. We bought an apartment in Mallorca in 2005. We paid 240,000 eur however 60,000 was in "black" money. We have now received an offer to sell of 300,000 eur. We are non-residents. Will we have to pay 19% tax on the difference of 60,000 or would it be 120,000? We found out a year after we bought that the solicitor we used was dodgy (they were recommended by the estate agent who are no longer trading!) Many thanks

[Lawbird Lawyer]

Dear Sir,

That is exactly the reason why we always recommend not to underdeclare, besides being illegal of course.

As you have offically paid and declared €180,000 you will now be held liable for the difference: 19% on the profit (€120,000) = €22,800.

You can always offset expenses and invoices to bring the taxable profit down so as to pay less CGT.

In your case you saved yourself by underdeclaring paying 7% on the €60,000 = €4,200

But you will now have to pay 19% on the underdeclared €60,000= €11,400

So basically you've lost €7,200 on having underdeclared.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Mr Roberts]

Dear Sir/Madam

We bought our Spanish property in 1999, but it was purchased by an non resident Company registered in the Republic of Ireland (Eire). Would the Spanish taxes be any less if we sold the Company, rather than the actual property and what would the taxes be?

Many thanks

[Lawbird Lawyer]

Dear Sir,

If you sell the companies shares the taxes would be less than selling the property itself, yes.

I don't have enough information to give you more details. This matter can become a whole lot more complicated.

Yours faithfully,

[Richard Byrne]

Is there an agreement on tax debtors from Spain returnng to ther country of origin.
My pensionista sister 67, lived in Spain for 6 years but returned to Wales due to the continuing ill health of husband 67.
Although she was registered on Padron and for NIE plus residencia, she did not become a fiscal tax resident. A 3% retention was, therefore, paid on a capital gain of 120,000 € in November 2009. Things are bad at present and she is paying for additonal care. ( By the way, she should not be payng ths tax because the lawyer and builder underdeclared the value of house by 100.000€. I think this contributed to stress and heart problems.
Is she likely to be pursued by the hacienda for non payment of remaining capital gain as I would rather pay this for her f I can by instalments. How much would it be. Where do I go to pay and when?
Please can you help us

[Lawbird Lawyer]

Dear Mr Byrne,

I would find it highly unlikley she will be pursued abroad, whether the UK or elsewhere, for this.

That is exactly the whole purpose of the 3% retention practised on account of vendor's CGT; so if they sell on and "run away" back to their home countries at least the Spanish tax man has recouped part of the CGT liability.

If you want to discuss this privately with me free of compromise, just for your reassurance, contact me. (http://www.lawbird.com/services/contact)

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Richard Byrne]

Thank You so much for your help with my sisters problem. A great weight has been taken off the family. Your website is fantastic for those of us who are completely ignorant of the Spanish legal system. My sister was taken in when she bought the house and I advise all out there to take nothng forgranted . Check your lawyer is properly registered like lawbird and do your research.

Thank you once again
Richard and famly

[Lawbird Lawyer]

You are welcome Mr Byrne.

[Mr Tron]

Hi,

I purchased a property in Spain in 1996 as a holiday home for the family-
However as it's not being used I am looking to sell the place. During that time I have moved to Spain and become a resident as off 1 year ago ( previous to that I was uk resident).
I am living in a different part of Spain to where my holiday house was and am building a new place here to which I have already purchased the land.

What are the tax implications of selling the house I bought in 1996, taking in mind that I am now a resident and also that I have another property in Spain now?


Thanks, Mr Tron.

[Ian Carter]

My parents bought an appartment in Majorca in 1981 and are now looking to sell.As they have owned the appartment for so long,my undestanding is that they will not have any CGT to pay in Spain (though they will in the UK),but will they still have the 3% Retention/Withholding Tax deducted even though they have no CGT liability in Spain and then have to wait for 12/20 months for a refund.

[Lawbird Lawyer]

Dear Mr Tron,

It basically means you will not be able to benefit from tax allowances of any kind.

You will be liable for 19% CGT and PlusvalÃ*a tax just like a non-resident.

Unless you are able to produce a certificate from your Tax Office stating that you are a fiscal resident, in addition a 3% of the sales proceeds will be withheld by your buyer and paid into Tax office on account of your CGT liability.

The roll-over benefit you are probably inquiring on CGT must be on your main residence, which is not your case. Besides, you nee to be resident to benefit from it and you may noit qualify either, at least yet. Anf finally you need to have lived in that property for teh last 3 years as your main residence and be able to demonstrate it.

However there is an exception with an amendment that was brought in recently, providing you are resident in Spain, whereby prior to selling on your main residence you have bought another property in 2006, 2007 or 2008 exceptionally the deadline for this roll-over relief was extended over to the 31st of December 2010. Maybe you could qualify for that.

You need to have purchased another property in the interim prior to the sell of your own main residence.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Lawbird Lawyer]

Dear Mr Carter,

Your understanding is correct.

Regrettably unless they are able to produce at completion before the Notary public a certificate from the Tax office stating they are fiscally resident in Spain the 3% of the sales proceeds will be withheld regardless if they are almost exempt from paying CGT after holding the property for so long.

They will of course be able to claim back the 3% after completing and lodging tax model 212.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[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/bases_datos/doc.php?id=BOE-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.php?t=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 (http://belegal.com/articles/showArticle/buying-property-private-spain) - 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 (http://belegal.com/blog-by-antonio-flores/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,

[Mo Chapman]

I am hoping you can help. My mum purchased a property in Spain in 2004 and paid 210,000 euros she thinks that they may have paid part cash (is this called "black money")? but is unsure currently how much and needs to look back at the records.

She is now looking at selling and has had an estimated valuation of 145,000 euros. She is a UK resident and will be bringing the money back to the UK so please could you give me some indication of how much in taxes and any additional charges she may have to pay.

Many thanks

[Lawbird Lawyer]

Dear Sir or Madam

Black money means underdeclaring. For example If I buy a property for an agreed price of €300,000 ina Private Purchase Contract but only end up declaring in the Title deed that I'm paying €200,000 I have effectively underdeclared €100,000.

The reasons why a buyer would do this are many i.e. money laundering, saving yourself 7% or 8% (depending on whether it's a resale or a new build property) on the underdeclared amount etc.

This practice, which used to be rife in the boom days, is illegal and in fact most of the times only benefits the vendor, not the smug buyer who mistakenly believes he's being smart but is actually being outsmarted by the vendor on not having done his Maths.

As a buyer you are saving yourself either 7% on a resale (Property Transfer Tax) or 8% (VAT) on a new build but when you sell the property later on you will be taxed for the "profit" you've made (difference between what you declared you paid for and what you are receiving now). And this is taxed by Capital Gains Tax (CGT, for short):

If you are non-resident in Spain, CGT is 19%

If you are tax resident in Spain it's 19% for the first €6,000 profit and a flat rate of 21% for what exceeds said amount.

So effectively you are going to pay much more taxes on selling than what you were trying to elude initially on buying; in some cases even double the amount of taxes (21-7 = 14% tax difference).

So basically on underdeclaring you are actually paying, in the future, for the vendor's taxes, you are actually subsidizing the vendor's taxes!

You can pay for a property part cash at a Notary Public and this does not mean its underdeclaring or "black money" so long as its declared (meaning tax is paid on this cash element). It would only be underdeclaring if this cash element was not declared in the Title deed which means that no taxes are paid on this cash element as it has gone undeclared before the Notary witnessing the transaction.

I cannot give you an estimation because you are not giving me the facts correctly.

One thing is what your mother paid, 210k, and a different matter altogether is what she actually declared in the Title deed which can be 210 or less.

Vendors are liable for both Plus ValÃ*a tax (local tax levied by the Town Hall) and for Capital Gains Tax.

I would advise you to hire one of the British currency exchange companies to send back your money to England, they have excellent rates and your mother will save considerable money. If you want names, just register and PM me.

When you have your figures right come back here and ask me again and I'll give you an estimation.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[bobby]

Can you help please, I agreed to sell my spanish house in may 2008, A 6 month contract was agreed before completion was to take place and a 20,000 euros deposit was received by me, after 6 months the buyer could not get a mortgage but stayed in the house and paid rent along with another deposit of 25,000 euros, the contract was extended till dec 2009 where a further 13500 euros was given, this left a balance of 135,000 euros which is the mortgage amount, they buyer did not renew the sales contract but continued to pay rental with covered the mortgage, unfortunately the rental monies have not been recieved and the bank are wanting there money, but the buyer is still in the house, i have been informed that the buyer has got a mortgage but doesn't want to pay the arears, sale price was 193500 euros, my purchase price was 140,000 euros + purchase costs, i also spent 35000 euros updating the property, what tax would i be liable for or what can i do.
Kind Regards

[GILL MORGAN]

Re: July 20th reply above :

Does the age 65 still apply if you are already in receipt of the UK State Pension ? I am now 63. I have residencia, and am taxed in Spain.

[lynne hamilton]

I have a company automonus here in spain, am a resident, I have read above that to sell my house, it is 19% on the first 6000 capital gains, and 21% flat on the balance, which would equate to a hefty sum of 52000, approx, taking into account the amount we paid for the villa, and the costs and subtracting these from the sale price, would I still pay the same taxes if I waited until I am 65 years of age in spain, and what happens if I do not want to roll over the money in another property here in spain, but want to go back to the U.K.

Also another problem, one of my family has not paid his mortgage for 6 months and the bank, even after we agreed to restart the payments sold it on to another company without informing them. It is now 11 months and we sought legal advice today and they say we should restart the payments and back payments of some 10,000 euros as when this company go to the judge to reposes the house, the payments will be up to date, and the courts will not allow them to take the house as from December 2009 the clause in the hipoteca is deemed abusive by allowing them to sell this mortgage on. The people who have bought the mortgage are not in communication with us at all, at this stage, and I am worried that if this solicitor is not right, we have paid the 10,000 euros into their account for nothing, please give me your views, as we can ill afford as a family to lose this money.

[Miss Kar]

First question - I am a uk resident. I sold my british home and invested all profits in a spanish house in 2006, I was going to move there permenantly. However, I had to return to the uk and rent accomadation in 2007 as my mother was dying. I have continued to rent here in uk since. I want to sell the spanish house now to buy in the uk again. Do I still have to pay CGT if my spanish house is the only house/home i own?
Second question, I took out a loan to complete spanish house improvements, I paid for new kitchen and air con by credit card which I have not managed to repay yet! Can I offset any of this debt against CGT?

[Wicker]

We moved to Spain in 2004 as pensioners and became fiscal residents in 2005. Having lived in the same property for more than 3 years we believe that when we sell we beome exempt from capital gains.
However, we have heard that if we sell between the months of January and July in any year and return to the UK we automatically revert to non residents and become liable to CGT. Is this correct.

[aflores]

Dear Wicker,

I have never heard of this perverse and illogical regulation but would be grateful if you could advise on the source! (I am already thinking on the prolific expat legal-gossip activity!).

[aflores]

First question - I am a uk resident. I sold my british home and invested all profits in a spanish house in 2006, I was going to move there permenantly. However, I had to return to the uk and rent accomadation in 2007 as my mother was dying. I have continued to rent here in uk since. I want to sell the spanish house now to buy in the uk again. Do I still have to pay CGT if my spanish house is the only house/home i own?
Second question, I took out a loan to complete spanish house improvements, I paid for new kitchen and air con by credit card which I have not managed to repay yet! Can I offset any of this debt against CGT?

Mis Kar, you need to be a Spanish resident to avail from the exemptions applicable on CGT for residents for tax purposes because this is only way to prove your commitment to pay your taxes in Spain. Think about it, how do the Spanish authorities know that you dont have property in say Japan or Chile?

You are able to deduct from CGT improvements on the property that are not movable, and a kitchen is in principle such an item, althought not the appliances.

[elaine grant]

we have lived in spain for 6 years.we bought a house with my father and when he died we paid inheritance tax along with funeral expenses etc., which left us with little money as well as a monthly income of about 400 euros a month.We were hoping to sell the house at a profit-buy another and have enough money left to tide us over until my husband got his old age pension in 2012.Things got desperate and we had to sell the house at half the price we wanted as the market was and still is very bad.Thing is we are in rented accomodation and paying 600 euros a month plus electric which is all coming out of our 150,000 euro profit.We cannot afford to buy another house and will soon be landed with a CGT bill for around 10,000 euros.Is there any way we can avoid paying this tax as we are on the bread line!We are of course residents.Any help would be appreciated.Also if we reinvested,do we have to buy in Spain or anywhere in the EU??

[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

[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,

[Chris]

Hi. I am planning to sell my apartment in Sitges, Barcelona and understand that I will be liable to pay CGT at 19% on the increase in value of the property, correct?
I have owned the apartment since 2003 and remember reading somewhere that 'tapered' CGT relief is offered after so many years, is this the case?
Also I have an NIE number and my 'empadronment' here in Spain although am NOT a fiscal resident as I work part time for a British company and pay tax in England under PAYE. (I spend less than 183 days a year in Spain).
Does this mean that my purchaser will be liable to withold 3% of the purchase price and pay direct to the Spanish Hacienda, regardless of my actual CGT liability?
I am planning to buy another property in Spain. Am I correct in thinking that as long as I am resident here (although not fiscal resident) I can claim back any CGT liability from the Hacienda so long as I purchase another property within two years and this is my main residence?
Further, do I have to prove to the Hacienda that I am 'resident' here, even with my empadroment and NIE number, with the use of utility bills etc? On a side note, all bills are paid in my name, apart from the water bill which the previous owner never changed over so her name still features on these bills, although I am obviously paying them. Is this a potential problem?
Also, am I liable to pay/declare any capital gains on my Spanish assets to the HMRC, even if I never bring the money into the UK and re-invest again in Spain? As I spend less than 3 months of the year in the UK and work for an airline, if I register as 'non tax UK' resident would I still be liable to pay tax on capital gains made in Spain? (I own a property in the UK).
Lastly, I read that the Spanish govenrment has reduced the purchase tax on new build property to 4% until the end of 2011, has this been extended do you know?

Many thanks. Chris

[paul lang]

My father wants to gift me his villa in spain which he had built 43 years ago.i am 43 and reside in the uk.He is also resident in the uk and has only used it for holidays .What taxes will i be liable to pay on transfer.

[aflores]

Hello Paul, we can calculate your exposure to gift tax, as will be requested by the Tax Office, with a copy of the council tax receipt. Also, bear in mind that there could be a liability on Income Tax too, which we can look into.

[Caroline]

My Dutch relatives bought a house in Spain in 1973 as their main residence. They moved to the UK in 2010 due to poor health and now wish to sell their Spanish house in order to pay for their care in the UK.

Please could you tell me whether they are subject to any Spanish tax on the sale proceeds.

thank you

Caroline

[Anita]

I bought a plot of land in India when I was an Indian citizen living in india in 1996. Subsequently I have moved to the UK and am now a citizen here (dual citizenship). I will be paying the tax on the money received in India.What are the tax implications in the UK if I now sell the plot in India? Do I have to pay tax again here?
Thank you
Anita

[Anita]

Sorry. I did not realise this was a specific forum for Spanish property. regards
Anita

[Patricia]

My Dutch relatives bought a house in Spain in 1973 as their main residence. They moved to the UK in 2010 due to poor health and now wish to sell their Spanish house in order to pay for their care in the UK.

Please could you tell me whether they are subject to any Spanish tax on the sale proceeds.

thank you

Caroline

Hello Caroline,

If you relatives were registered as fiscal residents, the said property was their main residence and they are over 65, they would be exempt from taxes.

If they were not registered as fiscal residents ( registered at the Tax office ), but just ordinary residents, they would be subject to the 3% retention and pay Capital Gain Tax if there was a profit made out of the sale.

Regards,

[michael jennings]

Hi, I have seen in comments on this page that if you are a non resident from the UK and you pay CGT tax in Spain that you may be liable to pay in the uk as well.
How does the tax authority in the UK know that you have sold your property in Spain?

[Unregistered]

Michael let me answer your question...

If you believe you owe tax for any reason then under UK tax law you are obliged to submit a self-assessment tax return. Of course there are certain instances when you will be already obliged to submit a self-assessment tax return, being a director of a company or a higher rate tax payer are just 2 examples. If you are a lower rate tax payer then in general all your tax is taken via PAYE, but 1 in 4 lower rate tax payers are randomly selected each year and asked to submit a self-assessment tax return.

Even so if you are a lower rate rate payer not submitting returns and you sell an asset such as a holiday home then if your CGT libablity exceeds the threshold of £10100 then you must by law submit a tax return.

You will not pay CGT tax twice. You will pay in Spain only as Spain and the UK have a dual tax treaty, unless of course the UK charge a higher rate. In such a case you pay the tax due in Spain and then the rest in the UK.

Note that for gains above £37,400 in the UK you pay 28% tax. Taking into account the 0% band of £10100, then if your gain is greater than £47,400 you need to pay the extra 9% tax (28-19) to the UK tax authorities.

[meg]

Hi we bought an apartment in Marbella 5 years ago and sold it in June 2010 for a huge loss due to the economic climate in Spain. At the point of sale our Lawyer said we would have to pay 3% CGT but not to worry as we would be reimbursed with the full amount within 2-3 months. After the sale he changed this period of waiting for reimbursment to up to one year. Here we are 18 months later still waiting! It really sticks in the throat that we had to pay this 3% as it was stressful enough having to sell because of health reasons for a 100,000 euros loss on what we paid for the property. We were also shocked at all the extra taxes etc that were deducted but had not been made aware of. We have not seen receipts for anything that has been paid from our funds that the Lawyer was holding despite requesting them and the Plusvalia tax actually doubled from the initial figure to over 2000 euros. We were told this is because we had to also pay this tax for when we purchased our property. This tax was never mentioned to us before now but from research on the internet we now know that it is the Vendor who pays this so why are we being hit with both! Our Lawyer fobs us off when we query anything and to be honest we have lost all trust in him. We really feel something is not quite right with him. Is there anyone we can complain to such as an Ombudsman like we have in the UK?
Thank you and regards Meg

[GCKB]

My husband and I are divorcing and I want to transfer ownership of our Spanish property to him. How do I go about this?

[tom clarke]

I sold a flat in 2005 and paid no tax on the sale. I was considered a resident and intended to roll over to a new property. I then left Spain. I guess this makes me a classical tax absconder. I now wish to return and buy another property. Am I still liable for the GST 7 years later?

[debra coates]

we are just selling an apt that we have owned since 1988, i understand that we will get a discount on cgt will that discount be deducted when we are at the notary, im worried ill have to pay the full 18% and then have to wait to get my dicount amount back at a later date??

[aflores]

Dear Debra

Capital Gains Tax is paid on any profit made on the sale of your property, and is currently fixed at 19% on the profit made. In the current economic climate, not many sellers are making any profit, and therefore the sale will attract no Capital Gains Tax. However, if you are a non-resident, you will have a 3% of the purchase price automatically withheld by the buyer at the Notary. You are eligible for a full refund of this 3% if you are up to date with your taxes at the Tax Office (namely Non-Residents Imputed Income Tax). The refund takes around 6 months to be issued. Your lawyer should be able to take care of all the paperwork to request this full refund. Also, watch out for the PlusvalÃ*a Tax (IIVTNU), which can amount to a substantial figure if the property was bought in 1988.

Regards

[aflores]

Hello GCKB

I’m sorry that your marriage didn't work and that you are divorcing (I hope it’s amicable). Regarding your question, the most tax efficient way of transferring your share of the property on to your husband is that you conduct a Dissolution of joint property Ownership (http://belegal.com/articles/showArticle/dissolution-of-joint-property-ownership-in-spain), which attracts 1% of the property value as opposed to 7-10% Transfer Tax (depending on the value of the property) you would have to pay if you sold your share. I recommend that you contact your solicitor for further information on how to proceed.

Regards

[aflores]

Hello Tom

I’m afraid I cannot give you a straight answer to your enquiry, as I would need further information before I can determine what your legal situation is. If you are indebted with the Spanish Taxman or not, depends on whether you were formally requested in writing by the Tax Office to submit and pay your Capital Gains Tax forms within the 4 years and 3 months set by the statute of limitations. If this didn’t happen, your debt has expired and the Taxman will not be able request from you this amount.

I recommend that you instruct your solicitor to request from the Tax Office a report on your current tax situation. Should you require help with this, please let me know.

Regards

[aflores]

Hello meg

Sorry for the late reply. I hope that you have received the refund by now, as 18 months is indeed a long time. If you have lost faith in your current lawyers, perhaps you should personally request from the Tax Office a report on your legal situation (what forms have been submitted and whether the refund has already been issued or not). If you are unsure how to go about this, a Fiscal Advisor should be able to carry out this work for you for a small fee.

Regarding the PlusvalÃ*a Tax, I'm sorry you have been hit twice. Spanish law indeed mentions it's the vendor who pays it, but can be agreed between the parties for the buyer to take care of it. This should have been mentioned by your lawyer when you purchased the property (it's normally a clause in the private purchase contract). If this was not the case, and you feel misrepressented, you can always try to submit a formal complaint to the local Law Association.

Let me know if you need further help.

Regards

[Rene Koppen]

Hi, we bought a house from BBVA 2 weeks ago. The entire deal was done according correctly but because of others reasons we are no longer able to live in the house. BBVA has agreed to swop the house with another BBVA owned house to an equal price. We already paid the 7% transfer fee and my question is whatever the Transfer Fee can be swoped or do we again have to pay another 7% Transfer Fee?

[peebee]

An elderly friend has an apartment in La Manga which she wishes to sell. She is resident in the UK.
Her husband died in August 2009 with whom she had joint ownership of the apartment which they had owned since 1995 and they lived in the apartment for 6 months of every year untill his death.
What does she require in the way of paperwork to sell the apartment ?. I assume deeds, death certificate, passport.

[philip]

i bought a property in 2002 for 212,000Euro's i now want to sell, it is worth circa euro's 450,000. I am a non resident.
I have spent circa 60,000 euro's on building work , bathroom , kitchens etc . I was advised if I held it for more than 10 years there was a tax advantage - is this correct? Having raed your site it appears i will staill pay 19% on teh gain and 3 % retention> can you clarify.

[Patricia]

Hello Peebee,

Sorry for the delay in responding.

She must have full ownership of the property to be able to sell it, that is, that it must be registered in her name, and that can only be done through an inheritance process which you do not mention if it has taken place.

Once confirmed the apartment is in her name, the selling process is quite simple and the aid of a Spanish solicitor will be required to handle the purchase and make sure all the steps are followed as well as the corresponding taxes paid.

You may find interesting reading an article written by one of our expert lawyers about the Capital Gains Tax: http://belegal.com/wordpress/spanish-capital-gains-tax-raise-goes-unnoticed/

We can offer our assistance in this case, either by checking the Estate has been transferred or handling the selling process, so please feel free to email me on patricia at Lawbird.com if you wish to discuss the matter further.

Regards,

[PeeBee]

Hi Patricia,

Thanks for the advice.
My friend has flown to Murcia today so no doubt she will be attempting to sort things out.
Unfortunately I couldnt follow your link as it presents a 404 error (but with a nice explanation) .

[Marta]

i bought a property in 2002 for 212,000Euro's i now want to sell, it is worth circa euro's 450,000. I am a non resident.
I have spent circa 60,000 euro's on building work , bathroom , kitchens etc . I was advised if I held it for more than 10 years there was a tax advantage - is this correct? Having raed your site it appears i will staill pay 19% on teh gain and 3 % retention> can you clarify.

Hello Philip,

Enclosed is a preliminary table with your capital gains calculation. It is only for guidance as the costs involved in your purchase and sale would need to be taken into account to obtain a correct figure.

Date of Purchase 01/01/2002
Date of Sale 01/04/2012
Purchase Price 212,000.00 €
Purchase Costs 76,960.00 €
Sale Costs 0.00 €
Selling Price 450,000.00 €

Updated Purchase Price 338,574.43 €
Coefficient. 1.1717
Capital Gains 111,425.57 €
Capital Gains Tax Rate 21%

Capital Gains Tax 23,399.37 €

[Patricia]

Hello Peebee,

Please try now: http://belegal.com/wordpress/spanish-capital-gains-tax-raise-goes-unnoticed/

Also, please note that the percentage mentioned in the article has been increased to 21% begining of this year. You can read more detailed information on the instructions issued by the Tax Office ( page 8 ): https://www.agenciatributaria.gob.es/static_files/AEAT_Sede/Ayuda/GF01/OrdenIRNR2010instrucciones210.pdf

Regards,

[Patricia]

Mr. Koppen,

You should not be required to pay transfer tax for a property you did not buy in the end, that is, you cannot be taxed twice.

However, the limited information you provide prevents us for giving a more detailed advice. We are unsure if you mean you signed the purchase deeds or only the reservation contract. If you signed the deeds, the swap can only be possible if there is an additional swap deeds, that will certainly entail taxes that, initially, BBVA will have to assume. As it is swap operation, two transfer taxes are to be applied.

Regards

[Africa]

I am trying to sell my propety in Spain, because I have to move to another palce for work, however I am resident there, so I was wondering what taxes and which porcentage I will have to pay.

Thank you

[pauline overton]

Dear Sir, Could you please help? My daughter is at her wits end.
She purchased a property some 8 years ago with a friend when it was 94.00,00 Euros but there is 64.000,00 on the escertara with a girl friend. Three years ago my daughter found it difficult to pay the mortgage and went to see the bank manager. She told Jacqueline my daughter if she stopped paying the mortgage that she would be found in the UK and would not only have to pay the 20.000,00 she owed but have to pay double 40.000,00 and be taken to court for it. I think this frightened my daughter so we both continued to pay up until a month ago. The other partner was always late in paying up front, so this left me having to pay for the mortgage until I received the money in my account. I deal now with the bank because Jacqueline lives in England (does not own a property in UK) and is getting very stressed over the matter. Could you please HELP.

My daughter has found someone that will take the mortgage over, but because we do not know the how to proceed we have asked the bank to deal with the person and tell her all the documents she will need. The bank promises to deal with this person, but has not been in touch with her by telephone or email. The bank is the ones holding everything up. We also asked what expenses Jacqueline would have, if any, if she just gave her half of the property away.
Jacqueline has not paid any taxes on the property since she owned it, and insists that she must pay this up before passing it over to the girl taking the flat over. But Lola the bank manager says this;- please see below costs involved in the sale of the appartment
Notary office
Land registery
TAX
7% of the sale price (50% as your daughter only sells her half)
3% (50% of the sale price) as she is non resident.
eg: sale price 75.000€
Tax: 7% of 37.500 + 3% of 37.500

Surely this cannot be right?

Can you help please?

Does the person taking the mortgage over need a solicitor?
What costs would the person have? Notary etc.
What does she need for the Bank, statement of wages etc.
NIE number before taking the property over?
We must try to let the person know what costs are involved before she takes this mortgage over.
Also my daughter what will she have to pay in CGT as the bank say that they tax office will think she is trying to dodge taxes by giving this half of flat away, so it has got to have a minimum selling price. Say 75.000,00 Euros
We thought all of this would be so simple, just give the half away, but it is very complicated as far as I can see.

Thanking you Pauline Overton (Jacqueline’s Mum)

[Patricia]

Hello Pauline,

If your real intention is that your daughter sells her half of the property, I recommend you to appoint a solicitor that takes care of the process and represents both parties; seller and buyer, who would also deal with the mortgage subrogation.

You can contact me on the details below my signature if you wish and send me the related documentation so I can give you an estimate of costs if that operation was finally formalized, though if unable to sell the property in time, it may be the best option to try a Dacion en Pago, that is, to hand over the property as payment of the debt, considering there is positive equity and that the bank can still make a profit if they sell the property after repossessing. We could also offer our assistance in this matter.

Regards,

[Patricia]

Hello Africa

Sorry for the late reply.

If you are are a resident and reinvest the proceeds of the sale in another property whithin two years, you are exempt capital gains. If you will not be buying another property, then you will be taxed at 21% of the profit made. If you provide me with the date of purchase, purchase price, expected sale price and costs involved in the purchase and sale, I can provide a rough estimate of your capital gains liability.

Kind regards,

[stuart lippitt]

I currently live in the uk and pay rent for my main accomadation. I purchased a property in spain in 2004 which I use as a holiday home for my self so I only have one actual property I own to my name which is in spain. what taxes would I be liable to incurr in spain should I wish to sell my Spanish property and buy a main residence in the uk. I am aware of the non residents 19% cgt and the 3%. is there such thing as in the uk as the private resident relief? Most of the questions I have read refer to IHT or second property owners. many thanks.

[Dangerous Disco]

I bought my house which was a new build in 2004. My solicitor seems to be taking a long time obtaining the Plusvalia amount from the town hall after the sale of my house in order to settle my fees from which he still retains my 10000 euros deposit as he cannot send any surplus amount back due to not knowing the Plusvalia amount to retain. Now I was told by my solicitor it would not be that much for the Oriheula area of Costa Blanca, but the amount is still unknown. What takes the town hall so long to come up with an answer to such a query? Also after selling my house, I was disappointed to find out I have to purchase a habitation certificate that will cost approximately 700 euros in order for the name on my water bill to be transferred to the new owner. Should this not be supplied by the town hall for free as if my old house was inhabitable I would not be allowed to live there ? Is it not the responsibility of the town hall or the builder top supply such a certificate also?

[Patricia]

Hello Dangerous Disco,

Something similar to the UK private resident relief also applies for reinvested capital in a property in the UK after you sell in Spain, however you have to be a registered resident in Spain beforehand if you want to take advantage of this.

The taxes you will attract are Capital Gains tax - 21 % and not 19% as it was increased last year- and plusvalia municipal tax (IIVTNU).

If you are a fiscal resident, and therefore obliged to file your Income Tax Return (IRPF), you will have to declare that you sold a property and that your capital gains was X but that you wish to reinvest the proceeds of the sale on another property within two years. There is an option on the income tax form (Modelo 100) for this purpose. Within two years, as soon as you buy a property in the UK, you will have to notify the Spanish Taxman in writing, with details of the transaction confirming that you are eligible for this exemption.

You can read various posts and information here: http://belegal.com/forums/showthread.php?2300-Capital-gains-tax-rollover-relief.

Regards,

[johnM]

I'm buying a country property in Murcia. It hasn't been extended but has been improved inside with an additional bathroom. It's been 4 weeks since we started and my solicitor is saying country properties do not have a new habitation ceritificate for every new owner and only the original is needed which he is trying to "sort out"
what do you think

[Patricia]

Hello JohnM,

The First occupation Licence is only issued once but as there have been improvements made in the property, your solicitor may be trying to obtain a licence for a minor construction ( Licencia de Obra menor ).


Regards,

[mr c norris]

I have a holiday home in spain which me and my wife purchased for £175000 in 2000 we are looking to sell for £200000 what are the tax implications for the sale i am a high rate tax payer my wife is a basic rate tax payer we are both domiciled in the uk.

[Andrea Dorset]

Hello, I want to ask your advice on behalf of my parents. They bought an apartment in Catalonia in 1986 for 2 million pesetas (usual story - my dad was pressurised into agreeing to 1.5 million pesetas being the official price on the escritura & the rest in cash to the Dutch owner) The deal was cut by my then Spanish partner & his estate agent friend. Now my parents are 80 & can no longer make the twice yearly journey over to their flat. My name is on the escritura as joint owner with my Dad - because I lived in Spain at the time, so the lawyer advised us that would be wise. Now, in the process of looking for a house in the same area in Catalonia (25 years after I left) I have been made aware of the taxes that need to be paid (IBI & Suma?) on a yearly basis when you own a property in Spain. This lead me to question my Dad as I don't ever remember them mentioning any taxes- just the gastos de comunidad. It turns out that my Dad (and myself as I am on the escritura) have never paid any taxes or filed a declaracion de la renta since buying the apartment in 1986. To help my parents out with selling the apartment, I had thought about buying it from them, even though it is too small for my needs as it only has 2 bedrooms & 1 bathroom- my future home for retirement in 10 years needs to be bigger for my partner and our joint 6 children. My dad cannot even afford the gastos de comunidad any more , so I am paying them for him. The apartment is 50 years old & those trying to sell in the same block for 3 years are up for sale at 140.000 - 200.000 Euros, my dad's is as original with not many improvements. What should we do - how can we pay back the taxes since 1986. Is it best to wait & sell & then pay or to contact the tax office. Can I just take it over from my Dad as I am on the escritura & then I can assume all responsibilities for it? An estate agent has recently advised that we could put it up for sale for max 115.000 & expect 100.000. My Dad is extremely worried, I know ignorance is no excuse but he hasn't avoided paying tax on purpose. Your advice would be most appreciated. Kind regards Andrea

[Keith Hollingworth]

Hi i want to sell my property i hope to make about €60000 profit i will then use the profit plus some of my origional purchase price to buy a smaller property what taxes will i be liable to i am 61 years old resident and tax paying

[Patricia]

Dear Keith,

As of 1-1-2012 residents pay up to 27% CGT on the profit made on the sale of a property. In order to calculate this profit (the €60.000 figure you quote is reduced based on when the property was bought), I will need more details to calculate your tax liability, such as the original purchase price, date of purchase, date of selling and selling price.

As a 61 year-old resident you will only get a partial exemption if you reinvest the proceeds within two years of the sale.

Regards,

[paul Weaver]

do you pay vat when you sell in spain thanks

[dannyderek]

Your best choice would be to pop into your neighbourhood Citizens Advice Bureau who can gone through the methodology and figures with you.