- This topic has 34 replies, 7 voices, and was last updated 18 years, 3 months ago by
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i have to agree never trust what you hear when it comes to spain ,if you sell hand ouer5%get rest money and do a runner dont tell them were you are going then how can they collect the other30% ,ive heard it all invest in spain what a joke ,you might as well throw your money in a manhole ,you might make a better return, no wander the spanish goverment loves us british, so do we have to pay 5% or35%? 😆 😆
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You will be deducted 5 pct of the sale amount. ie 12,500 Euros on a 250,000 Euro sale. You can reclaim this if it is greater than 35pct tax on the gain. ie bought for 150,000 sold for 250,000 Capital Gains would be 35,000 Euros ( less any off sets ) like Lawyers fees, Estate agents fees. So in this case its better to run away having 12,500 taken from you at completion of sale. But it may be difficult to buy in Spain again.
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Dear Mr. X,
The Capital Gains Tax in Spain, for non residents, is 35% on the gain, to explain what is exactly the net gain in this forum would be rather long.
The 5% retention on the price, applied when you sell before the notary, is just a guarantee for the Spanish Government that the non resident is going to pay the Capital Gains Tax. This rule had to be implemented few years ago due to the fact that many british (and other europeans) people went away without paying their taxes to the Spanish Tax office after selling their property.
If the 35% tax is higher than the retention then you are obligued to pay the extra on top, now the tax offices in the European Union are more linked and in more cooperation. If you think that you can get away without paying the taxes in Spain you risk a nusty surprise back home….
Finally let me tell you: you can not pretend to come to Spain to live, even part of the year and not contribute for the maintenance of our roads, hospitals, airports, etc, etc.
Kind regards,
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.es -
hello just like to say I dont mind paying, But 35%TAX, lawyers fees, estate agents fees, if you look at it this way50% intaxes to buy and sell IN SPAIN ,Would like to say spain is the most expensive european country to buy and sell, and wait for it might even be worlds most expensive country, May be as we are all in europe there should be one tax on buying and selling ,As spain is all about taxing there european neighbours on buying property AND SELLING,and no tax relief, no wonder people are now trying to sell and run, do you not think europe has built enough motorways for spain then to charge you more taxes, sorry for been so strong ,BUT WHY SHOULD SPAIN CHARGE 50%IN TAXESand not tax there own folk we dont do it here or do we/? AGAIN ITS ONLY MY POINT 🙄
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@Independent wrote:
Dear Mr. X,
Finally let me tell you: you can not pretend to come to Spain to live, even part of the year and not contribute for the maintenance of our roads, hospitals, airports, etc, etc.
Kind regards,
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.esHuh! That’s rich 😡 I think you will find that the nice new Mediterranean Auto route has been financed by the EU, not the Spanish Government! Wouldn’t the UK be a better place to live if we adopted the same ethos to all the foreigners living here! As members of the EU we should all be treated equally. IMO.
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Hi , I will be living in Spain part of the year ( 5.5 months ) and my only
contribution will be the rent of an apartment , will also be bringing my UK
registered vehicle which I am allowed to use up to 6 months of every year.
This way I can keep all my cash in the UK earning a higher rate of interest and not be bothered with any government bureaucracy,taxes,
resedencia etc. -
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Some more on CGT from an ebook I bought. If anyone wants the web address, send me a PM.
Capital Gains Tax
A quick summary:
Non-residents
When you sell, 5% of the total agreed declared price is paid direct to the Spanish Tax Authority (Hacienda). This is to cover any potential liability to CGT if you made a profit on the sale. This all happens in front of the Notary.
The only exception is if you have owned the property for 10 or more years prior to December 31 1996.The rate of tax is 35%, and when you submit your tax return the authorities will take into account the 5% of the total sale price you’ve already paid.
In fact if you’ve paid too much you can claim a refund, which they’ll send you…eventually.
Residents
For them the tax rate is 15% if they’ve owned the property for at least a year. If they haven’t, then any profit will be treated as income, and they’ll pay income tax on it, up to 45%.
If it’s been their principal private residence for more than two years, they can choose to roll over the profit into another principal private residence, as long as they buy the new one within two years.
Effectively they can keep on doing this until they’re 65, after which they won’t ever have to pay Capital Gains Tax on any principal private residence, unless they sell within two years of buying.
It all looks nice and easy on paper, doesn’t it? Don’t forget though, this is Spain…
I bought an apartment on the coast as an investment, both for rental and hopefully to make a profit if and when I wanted to sell.
When I bought it I wasn’t resident in Spain, but when I decided to sell it two years later, I was. And I had a shiny new identity card to prove it. I wasn’t however living in the same province where the apartment was.
Unfortunately there are two meanings of residence in Spain:
1. Resident, ie living there permanently and registered as such with the National Police
2. Resident for tax ie having registered with the taxman AND submitted a tax return. This is what caught me out.
Now, whilst I am registered with the taxman, I haven’t yet submitted a tax return. So when I came to sell the apartment the 5% retention came into play, even though I had lived in Spain for nearly two years and had had an identity card for 15 months!
The problem is that if you sell and you’re not resident in Spain, then the spanish taxman will automatically take 5% of the total sale price and trouser it, whether or not you’ve made any money. This is handed over on the day you sign at the Notary.
It’s up to you to apply for any refund if your capital gains tax is less than the amount he’s pocketed. Allow a year for this process!
In my case the amount he took was three times what the actual tax should have been!
There’s more though. What confused me was that I’d never had this problem before at the Notary in my home province. All she required was production of your residents’ card, none of this Tax Certificate rigmarole. So when my lawyer on the coast said I needed one if I didn’t want to lose the 5%, I was not only perplexed but also sure that she had got it wrong!
With a bit of asking around I eventually discovered the answer; in some provinces some Notaries are more strict on this rule than others. Although sooner or later ALL Notaries will enforce the regulation, at the moment there are gaps in its application.
So if you do become resident and want to save yourself some money, time and hassle, don’t be caught out like I was. Either get that tax return in, or check what your local Notary’s policy is. More on the Notary under N.
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@Independent wrote:
Finally let me tell you: you can not pretend to come to Spain to live, even part of the year and not contribute for the maintenance of our roads, hospitals, airports, etc, etc.
Kind regards,
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.esIndependent, rather unfortunate words, I believe, if you pretend to get clients from this forum (correct me if I’m wrong, but this is what your signature suggests). There’s something called tax mitigation, a service which lawyers usualy provide. Based solely on professional standards, what should really worry you is finding ways for your clients to pay less taxes. IMO
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Dear Imo / Lawbird,
Sorry if I have offended you or anyone in this forum. I have been cooperating here for about a year and my only intention was ( and will be for a while I hope) to give honest and professional advice.
But the advice given in this forum must be limited , at least from me, as I am giving my opinion as a professional , therefore it cannot be as complete as the advice given to mi clients. I want, and I like, to make clear that I am giving mi opinion as a lawyer and that’s the reason of my signature. For your information , in a year I haven’t got a single client from this forum, but from other section of this web site, and I have pleasure to keep giving my (not full as explained before) professional opinion in this forum.
I always double check my opinions before writing them in this forum, and I have done in the case of the capital gains tax, checking in the law and also with a tax advisor. But I can do mistakes as anybody.
Normally I finnish my opinions saying to contact an independent lawyer in your area or recomending some I know there. I think it is a big mistake to pretend a whole legal advice for your problem in this forum. You can only get ideas and opinions but you must always get in contact with a lawyer or another professional in your area.
Any way, sorry Imo/Lawbird again and have a good weekend everybody.
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.es -
When I sold a property I told my lawyer thaT I wasn’t going to pay all the capital gains tax due, they had my 5% retention which was substantial but I still owed them another 21000 euros. My lawyer said “well I don’t have your forward address do I” that was seven years ago. Fortunate I didn’t have someone like independent who believes it is every foreigners duty to pay massive taxes in order to pay for the countries infrastructure, he would have probably denounced me.
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Am I right in thinking that you dont have to pay the 35 percent if all the monies from your previous house, goes into buying another property at a higher price,I hope i am ,as what would be the point in moving up 😕
Sorry for jumping in but its worrying me a bit,we have our house on the market at the moment and are awaiting our res card ,although we have NIE numbers, and moved over less than a year ago from outside Europe.
Any ideas about this would be great.
Thanks
Merrymex -
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Independent, no offence. I only wanted to express my opinion 🙂 (In My Opinion – IMO). I think you do a very good job here helping others with your free advice. It is not the nature of the advice I was criticising, it was *your* own opinion regarding giving our money to the taxman.
This aside, I think your replies are very professional (and accurate). Continue with the hard work! 🙂
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@Independent wrote:
Dear Mr. X,
The Capital Gains Tax in Spain, for non residents, is 35% on the gain, to explain what is exactly the net gain in this forum would be rather long.
The 5% retention on the price, applied when you sell before the notary, is just a guarantee for the Spanish Government that the non resident is going to pay the Capital Gains Tax. This rule had to be implemented few years ago due to the fact that many british (and other europeans) people went away without paying their taxes to the Spanish Tax office after selling their property.
If the 35% tax is higher than the retention then you are obligued to pay the extra on top, now the tax offices in the European Union are more linked and in more cooperation. If you think that you can get away without paying the taxes in Spain you risk a nusty surprise back home….
Finally let me tell you: you can not pretend to come to Spain to live, even part of the year and not contribute for the maintenance of our roads, hospitals, airports, etc, etc.
Kind regards,
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.esIf you are a non resident and buy a house in Spain for 100,000 euros basic price you then have to pay tax at 7% making 107,000 euros plus lawyers fees and notaries etc which amount to another 3% making the total price you actually pay 110,000euros. If you sell your house for 150,000 euros is the capital gain the difference between 100,000euros and 150,000 euros ie 50,000 euros or is the differenc between total buying price 110,000 euros and the selling price of 150,000 euros ie 40,000 euros which would of course mean paying less capital gains. Are there any other things you can claim for when trying to lower the amount of capital gains tax to be paid like applying the cost of furniture if you sell fully furnished.
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the spanish tax office do not let you of set anything, best advive is pay 5% and get the hell out of spain WITHYOUR MONEY and dont give a penney more to the tax office dont give any farwarding address that way you keep any money you might of made if any,untill spain acts in away that it treats all europeans the same as it spannish folk fair 😈 😈 tax of 15% not 35% 👿
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phantom phixer, you can offset all the costs associated with the purchase (VAT, Stamp Duty, Land & Registry Fees, Lawyers’ Fees, etc), and the sale (Agent’s Fees, Plusvalia Municipal, Lawyers’ Fees, etc). You can offset also most of the costs of any refurbishment of the property. However, the furniture is not included in this list. (Independent, please confirm this is correct)
What Guest suggests is certainly an option, if you don’t plan to buy property in Spain again for at least 4 years and 6 months (by virtue of statute of limitations on this matter, the tax office will be precluded to ask for any taxes after 4 years and 6 months). I haven’t had news yet about the Spanish Taxman chasing non residents outside Spain for CGT due. However, be warned that if this amount exceeds €120,000, it will be considered a criminal offence by the Spanish authorities.
Please note that this is against the law, and no lawyer will (publicly) provide this sort of advice.
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No they didn’t!!
The minimum wage here is around 460 Euros per month.
Do you think they can afford ‘Urbanisation’ Prices? Where we live 30 mins from Alicante Airport the Spanish teenagers can’t afford to Buy now. The foreign buyers have created a bubble that can only go one way.
Tony & Angie
@Sofia wrote:
If you think Spanish Taxes are high then Walk amongst the local (Spanish) for 60 minutes…………Do you see them miserable, crying, badly dressed or suicidal I DON’T.
….they obviously didn’t buy their house through a Spanish developer…. 🙄
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Many thanks to flw and independent for the advice, you obviously know more about the subject than me. I bought an off plan villa from a “superior” estate agent, it was finally completed last year. (see my thread Late completion nightmare in Ayamonte) The smooth talking agent said I would be able to rent it for 16,000 euros a year and like a fool I believed him. I will be lucky to make 4000 euros a year so have decided to sell. Please help me with my mathematics, I bought it for 180,000 euros plus 10 % for iva and fees total 198,000 euros. I furnished it at a cost of 12,000 euros, total cost to me 210,000 euros. It is now for sale with an estate agent in Ayamonte for 238,000 euros who charge 8% commission, yes 8% plus tax. So if I sell and deduct agent’s fees plus tax and lawyers I will make 215,000 euros, a profit of just 5000 euros,yes, I know it was not one of my better investments. If the notary takes a 5% sellers fee this will be 5% of 238,000 which is 11,900 euros but my capital gains tax will be just 35% of 5000 which is 1750 euros so the Spanish tax authority will owe me 10,150 euros. Can anyone tell me how I get this 10,150 euros back.
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Anonymous wrote:No they didn’t!!
The minimum wage here is around 460 Euros per month.
Do you think they can afford ‘Urbanisation’ Prices? Where we live 30 mins from Alicante Airport the Spanish teenagers can’t afford to Buy now. The foreign buyers have created a bubble that can only go one way.
Tony & Angie
………
So do I gather then that your business (that you advertised at the bottom of your posting re. buying property, renovating, and then re-selling, and how you are always looking for properties to buy up), is for the benefit of the local people?
What is your ratio of selling to foreign buyers as against the Spanish teenagers who ‘can’t afford to buy now’?
Don’t bite my head off with your pompous lecturing. The middle-men in property (like you two) are just as to blame for ‘creating a bubble’ as the foreign buyers…. like yourselves……
….I gather you are foreign, not Spanish, and that you bought the house you are living in, as well as all the other houses you buy up for profit). -
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Phantom Phixer
You have to wait for the Spanish authorities to pay it back to you. We have been waiting since March 2005 for over 10K€ to be paid back to us. Our lawyers have chased it up and said the tax authorities still cant say when it will be paid – BUT we will get 5% interest on it starting from 8 months after they had it – so now we are in the enviable position of the Spanish Tax people paying us interest!!!! -
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This topic was 35% tax, not state of property prices , thats life get used to it , house prices go up and down its not spains problem or uk problem or any ones problem , its all down to greed , but so what you are as bad as the first person trying to get on propety ladder ,we are all after one thing to make money in short all long term ,So lets just put up and shut up,, 😆 if the first time buyer can not buy so what , Ok it slows the property market good thing, Dont pitty the first time buyer he will not pitty the first time buyer in 20 years time when the average property price now 200000 in 10 years time 275000 in 20years time 400000 so dont worry to much,, 😆 REMEMBER WHEN WE WERE ALL FIRST TIME BUYERS,and what your mum dad said , and how much there home was, remember its not a spanish thing, every country is going through a property boom ,
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Have just read through all the posts and am as dismayed as all of you seem to be over such an obvious imbalance. I have just sent an e-mail off to all of my local MEP’s requesting info on the progress of this matter through the EU.
It would be an idea for everyone to do the same. Contact all your friends and associates to do the same!!!!
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@Phantom Phixer wrote:
… I furnished it at a cost of 12,000 euros, total cost to me 210,000 euros. It is now for sale with an estate agent in Ayamonte for 238,000 euros who charge 8% commission, yes 8% plus tax. So if I sell and deduct agent’s fees plus tax and lawyers I will make 215,000 euros, a profit of just 5000 euros,yes, I know it was not one of my better investments. If the notary takes a 5% sellers fee this will be 5% of 238,000 which is 11,900 euros but my capital gains tax will be just 35% of 5000 which is 1750 euros so the Spanish tax authority will owe me 10,150 euros. Can anyone tell me how I get this 10,150 euros back.
Your calculations are more or less correct, except for the furniture, which cannot be offset (I don’t recommend including it in the price), and for a small reduction due to inflationary movements which you have not considered: If completion was in 2005, and one year has passed since then, you multiply the original purchase price times 1,02, giving you 183,600 for the purchase price.
In order to get a refund, you have to use form 212. The procedure is described in http://www.aeat.es/formularios/captura/212e/ayu212_1e.htm (text in Spanish).
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