CGT Primary Residence – Sell in Spain Buy in UK

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This topic contains 15 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 11 months ago.

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  • #55269
    Profile photo of Anonymous
    Anonymous
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    I have been a fiscal resident in Spain for the past 5 years, and have recently sold a house in Spain, my sole property.

    Unfortunately, as a result of common practice at that time, the difference between the house ‘declaration’ value on purchase (bought from a developer) and the recent fully declared sale price, now means I have a considerable CGT bill should I choose not to reinvest in Spain within 2 years. (As I understand it).

    I have now decided to return to the UK. Because I’m not a 2nd home-owner, and will be reinvesting all this money in purchasing a primary and sole residence in the UK, rather than Spain, would I still be liable for Spanish CGT?

    I’m hopeful, although clutching at straws admittedly, that within the EU there is some bi-lateral agreement between countries that exempts me paying this tax, as I would be exempt if selling/buying a main residence in either Spain or UK. Cannot find an answer trawling through the net, so would appreciate if anyone has a definitive answer on this one.

    Thanks all. ❓

  • #94837
    Profile photo of Anonymous
    Anonymous
    Participant

    I am not an expert on this but having sold just over 2 years ago with a CGT liability of €90k we have been advised by our gestor that we have another 2 year extension (so 4 years in total) to make a purchase.

    I know this doesn’t help with regards to you going back to the UK but I would be tempted to keep schtum 😉 – there have been worse crimes!

  • #94838
    Profile photo of Anonymous
    Anonymous
    Participant

    The Spanish CGT requires to purchae within two years. The question is does it say to purchase within two years in Spain. If it is silent than I will assume & argue this.

    I will go with oily squeak advise & buy a place & UK and make sure its near a pub & drink everynight to the Hacienda.

  • #94839
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks guys for the advice, but I wouldn’t ever dream of doing that.

    🙄

  • #94843
    Profile photo of Anonymous
    Anonymous
    Participant

    In Spain two wrongs always make it right.

  • #94844
    Profile photo of logan
    logan
    Participant

    Had you bothered to obtain a residencia (just a small effort) and declared on sale this property as your principal residence you would not have a problem.
    However I suspect you have a moral conscience. Nothing wrong with that except the costs involved. So my advice is – if you have said moral conscience pay up. Spain needs all the cash it can get right now.

  • #94845
    Profile photo of Anonymous
    Anonymous
    Participant

    If they can ring fence your funds for the Priors than by all means pay. Morality does not come into taxation. Escorts are taxed where is the moral ????????????.

  • #94847
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    Had you bothered to obtain a residencia (just a small effort)

    Logan,

    I do have residencia fiscal, but not yet aged 65, therefore liable for CGT on gains UNLESS I reinvest in buying another principal residence in Spain within 2 years.

    My question is; does the double-taxation agreement between UK/Spain allow me to reinvest the whole proceeds in buying a principal residence in the UK, rather than Spain, within 2 years, without incurring CGT?

    Hoping there’d be a tax boffin reading this thread! If not, have to seriously consider Shakeels advice. 😯

  • #94874
    Profile photo of logan
    logan
    Participant

    As far as I am aware CGT is not payable on your principal residence throughout the EU. Special exemptions apply in some EU states as all tax laws are not yet harmonised. I am afraid I cannot give you a reliable answer to this question because if what you say is correct the law seems to have changed since I was in Spanish property. (Another good reason to keep out of it). Spanish tax laws seem to have become draconien in recent years.
    Inheritance tax in particular.

  • #94875
    Profile photo of Anonymous
    Anonymous
    Participant

    ” Spanish tax laws seem to have become draconien in recent years.
    Inheritance tax in particular”

    They have always been. Anybody who has/had any money they would grab it. It for this reason that Spaniards do not believe in creating wealth or leave anything for their offspring or the society.

  • #94879
    Profile photo of logan
    logan
    Participant

    @shakeel wrote:

    They have always been. .

    Not always Shakeel. During my long association in the Spanish property market during the nineteen eighties, tax was something other folks paid!
    This was of course pre-EU entry and a hay day for investors and developers. There was no morality it was a gold rush. It had to change of course and it has. I would not advocate a return to those days but I do believe the pendulum has swung too far in the opposite direction. It will need to return to more moderate ground if the market is ever going to get off the floor.
    In my experience the Spanish simply live for today in everything they do. It has nothing to do with tax avoidance, it’s simply their culture of consumerisim.

  • #94880
    Profile photo of Anonymous
    Anonymous
    Participant

    My comment was not restricted to the property sector only. The unjust taxes & excessively high rates of taxes made people deal in cash & had developed the attitude of the others pay taxes & not me.

    If you look accross Countries with high tax rates. These are the Countries with the highest tax evasion.

  • #95292
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi, newbie here,
    Cgt is payable if you do not re-invest in another property within 2 years. Their is no requirement for the property to be in Spain.

  • #95633
    Profile photo of Anonymous
    Anonymous
    Participant

    Just seen this.

    Not that I doubt what you’re saying Gus, but if you’re still around, could you direct me to a web source for this info?

    Thanks much.

  • #95683
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi, iano, no I can’t find where I read it but I have seen it on two or three occasions. The Spanish law was written long before the influx of foreigners and just states that no cgt is payable if the profits are rolled over into a new MAIN residence without stating what country it is in. Also I personally know 7 or 8 people who have sold in the last two or three years and have asked the question of their solicitors and have been told the same. One thing to remember is that under the rules now you not only have to be resident but also have to have an up to date tax declaration or the buyer is required to withold a 3 or 5% (not sure which ) amount which is paid to the ‘Hacienda? in your name for covering the CGT. I hope this helps and if I track down the info. I will post it.

  • #95685
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks Gus 😀

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