CGT

[jayne]

Hi
In 2002 I bought a house for 97,000 cash in 2007 I re-mortgaged the property for 150,000 euros to buy the house I now live in.When we made our declaration de la renta the tax office asked for proof that we used the mortgage to buy our vivienda habitual and accepted that we had and we have always claimed tax relief on it.Last week I sold the original house for 135,000 (I owed 132950 on my mortgage)
My question is what happens about CGT after I paid my mortgage and costs walked away with nothing does this mean that I will pay no CGT.Or will the fact that I only paid 97000 and sold it for 135,000 mean I am eligible for CGT
Thanks
Jayne

[Patricia]

Hello Jayne,

I believe you are a fiscal resident in Spain, and as such, you must declare your capital gains in your income tax return for 2012 (deadline June-2013).

The fact of having used the profit from the sale to pay off the mortgage does not affect your CGT liability, which is calculated regardless of any debt attached to the property. Using the figures you have provided, see below some rough calculations:

Date of Sale 15/08/2012
Purchase Price 97,000.00 €
Purchase Costs 9,700.00 €
Sale Costs 0.00 €
Selling Price 135,000.00 €

Updated Purchase Price 125,020.39 €
Coefficient. 1.1717
Capital Gains 9,979.61 €

In 2012, as a resident, you pay 21% for the first 6,000 € and 25% for the excess. With this is mind, your total tax liability will be around 2,200 €. Note that I haven't included any selling costs (solicitor, agent, plusvalia tax, etc). If these exsit, and are over 9979.61 €, you will end up paying nothing.

Regards,

[jayne3110]

Hello Jayne,

I believe you are a fiscal resident in Spain, and as such, you must declare your capital gains in your income tax return for 2012 (deadline June-2013).

The fact of having used the profit from the sale to pay off the mortgage does not affect your CGT liability, which is calculated regardless of any debt attached to the property. Using the figures you have provided, see below some rough calculations:



In 2012, as a resident, you pay 21% for the first 6,000 € and 25% for the excess. With this is mind, your total tax liability will be around 2,200 €. Note that I haven't included any selling costs (solicitor, agent, plusvalia tax, etc). If these exsit, and are over 9979.61 €, you will end up paying nothing.

Regards,

Hi
Thanks for your reply.
Do I automatically get 10% buying costs or do I have to prove them.I have no reciepts from when I bought the house only the escritura
Thanks
Jayne

[Patricia]

Hello Jayne

The receipts are mandatory. However, you may get around with just the escritura, as it will state whether you had to pay Transfer Tax on VAT (I believe it was 7% at the time). Regarding other receipts (notary, land registry, solicitor, etc) I'm afraid you will have to have them with you if you want to offset these costs).

Regards,