November 11, 2016 at 3:58 pm #193547
If I sell my UK home and move to Spain I realise after 183 days there I am tax resident.
Does this mean effectively if I sell my UK home and move to Spain in the same year I will owe CGT to Spain on the sale of my UK home?
I am thinking the way round this is don’t move to Spain until after calendar day 183 (beginning of July) in any year.
Comments answers much appreciated
November 15, 2016 at 9:26 pm #193575
This raises the interesting point about items that are tax-free in UK
but subject to taxation in Spain.
Principal Home relief from CGT is just one (albeit major) item.
Others include ISA income and profits from gambling. The general
rule seems to be that the Hacienda in Spain will seek the full
charge as per Spanish rules LESS tax already paid in UK. If the
latter is nil, that is not very helpful!
The 183-day rule does apply to the calendar year but involves
the number of days actually in Spain during the year. I live
in Las Canarias for around 170 days a years – as I live in the
UK during the hotter summer months and return for shorter times
around New Year and the end of the UK fiscal year in March/April.
Part of my record keeping is an annual spreadsheet listing my
dates of arrival in and departure from Spain – with a total of
the days calculated for me. It has two sections – intended and
actual so that I can use it for planning as well as recording.
Thus I have not registered with the Hacienda – and see no need
to do so as all my income is generated from the UK (where I pay
relevant tax on it!) and converted to Euros for my living expenses.
Renting a property in the more remote parts of Las Canarias is so
cheap (by UK standards – even at Euro parity). Rentals are available
at less than €3600 per annum – very little more than paying (at higher
rate) for just the actual months of usage – with the convenience of
not having to move in and out each year. I see no need to tie up any
capital or to risk losses on a future sale. I have an NIE – which has
enabled me to purchase a car, which I keep in the garage that comes as
part of my whole-year rental. Of course, prices can be double that in
major urban/tourist centres but do retirees need to live in such places?
There are considerable advantages in keeping open the links with the UK
and certainly in closing any major tax liabilities before shifting over
to the Spanish system. Essential would seem to be keeping below the 183
day threshold in the calendar year of transition.
November 19, 2016 at 10:16 am #193612
I’m not 100% sure, but I believe it is more complicated than that. For example if you moved to Spain a few days before the end of the Spanish tax year and it was clearly your intention to live in Spain from then on I believe you are immediately seen as tax resident for that year and may face the full CGT bill on your UK residence – I think it’s around 18 or 19%. I wouldn’t risk it. I’d make sure I had all the proceeds from the UK sale in the one year and moved out the next as you are talking a lot of money.
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