June 7, 2005 at 10:30 pm #51129
I bought my house in March 2004 and so this is the first time I’ve had to make a tax return here.
I am a resident of Spain. As I have no income, I believe the only tax I need to concern myself with is wealth tax (Patrimonio). My house has a value lower than the threshold at which I have to pay wealth tax BUT as I understand it, it is better to submit a negative Patrimonio tax return than none at all, to prove that you are in the Hacienda system (in order to avoid possible CGT complications in the future).
Am I correct in the above assumptions? And is the relevant tax form D-714? Can a negative return be presented at the bank too? I just need some reassurance that I’m doing things right!
June 8, 2005 at 10:55 pm #58378
Being resident, considering that the value of your house is under the threshold (under +- 150.000 € if you are single owner and under +-300.000 € if you share the owner ship with your spouse or anybody else), has no sense to make a negative “Declaración de Impuesto sobre el Patrimonio”.
That is only for non residents.
June 9, 2005 at 6:57 am #58379
Thank you. I understood though that it was no longer sufficient just to have nominal “residency” in order to avoid high CGT on the sale of a house and that you had to produce your last tax returns to show that that you are a “fiscal resident”. This is what is worrying me as if I don’t submit a return (even a negative one) every year I will have no returns to prove to Hacienda in the future that I really am resident for tax purposes! Is this not really the case?
June 9, 2005 at 4:11 pm #58383
Juan Bertomeu has given you a right advice and I would go further with the following: in my opinion you are right worrying about your future Capital Gains Tax, I have had the experience of resident clients ( with or without resident card ) who had to to be retained 5% of the selling price because the Tax Office refused to issue a certificate of fiscal residence as the didn’t present tax declarations every year as residents.
But don’t make a mistake thinking that doing things like a resident will avoid you paying CGT, if you can proof your fiscal residence when you sell then you will have to declare CGT as a Spaniard would do, only that we pay a much lower percentage on the gain and we have few legal reasons to be exempt from the tax.
For peace of mind and to plan ahead properly you should meet with a tax advisor in your area.
Jose Maria Sánchez Alfonso
Costa del Sol, Málaga
June 9, 2005 at 6:41 pm #58384
I can see what you are trying to clarify and I guess the safest thing to do is present an annual tax declaration – even if you don’t have any income -just to be sure that the Spanish tax authorities have you registered as a fiscal resident when you come to sell. However I guess you would need to do both Income tax (IRPF) and wealth tax (Patrimonio), but as I’m not a tax specialist I can’t be sure. As José María says, you should check your personal circumstances with a tax advisor to be on the safe side. I’ll look into it in more detail but it’ll take me a bit of time.
June 9, 2005 at 7:36 pm #58385
Thank you all for your replies.
Am not trying to avoid paying any CGT, indeed am not even trying to sell yet, just want to make sure that I’m “in the system” when the time comes so that I am treated as a resident rather than a non-resident!
June 10, 2005 at 12:06 pm #58389
If you have a residency permit (tarjeta de residencia) that proves beyond all doubt that you are tax resident in Spain. You can make a tax declaration if you want to be on the safe side, but in this case you would do the IRPF – income tax, rather than Patrimonio. However, as before, if you want to be extra sure, check with a Spanish tax consultant.
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