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There’s lots of information about moving to Spain, solicitors fees etc. but not much about moving back to the UK. Evidently lots of people do this after trying to make a go of it in Spain.
I know all about estate agents charges, they are astronomical. I also understand that houses are not selling very well at the moment and its easy to see why, when you see all the new builds up and down the coast.
What will a lawyer/solicitor charge to sell my house as a percentage of the price?
As this is my only house, i.e. sold up in UK and moved to Spain, hope to sell up in Spain and move back to UK, been here 3 years, have residency, will I still have to pay capital gains tax on the sale of my house?
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Dear Ollie,
The fees a lawyer charges for a sale depends very much on the price of the property, it is normally around 1%, it is always negotiable with your lawyer.
The capital gains tax is almost unavoidable unless you can proof that it was your home (in Andalucía you need to be empadronado in your Town Hall for three years to be considered your home) and you must reinvest the price in your new home….in Spain obviously. The other posibility is that you are 65 or older. The tax is 15% of the gain.
The previous rules are only applied to residents, who is a resident ? well, for the Tax Office it is not enough to hold a resident card, for the notary it is enough the resident card or even the certificate of empadronamiento, and we the lawyers are caught in the middle. Non residents have to be retained 5% of the price as a guarantee of the tax ( 35% of the gain).
I hope this helps, kind regards,
Jose María Sánchez Alfonso
Lawyer / Abogado
Málaga / Costa del Sol
jmsalfonso@inicia.es -
Thanks for the information.
If there is a mortgage on the property, where does that come into the calculations?
It seems to me that the Spanish government are making a lot of money out of people such as us who have paid 7% iva on purchase, then will have to pay another 35% on the gain on sale, when this is their only home.
It means that we will be moving back to the UK (if we can sell our house) and we will not be able to afford a similar property to that which we had when we moved here.
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Dear Ollie
According to the Blevins Franks book “Living in Spain” roll over relief for Capital Gains Tax (CGT) described by Independent (Jose Maria Sanchez Alfonso) applies even if the new home is not located in Spain. It is available to under 65s classified as Spanish tax residents, there are time limits and the full proceeds must be re-invested.
This clearly contradicts what Independent stated that re-investment must be in Spain to qualify for CGT roll over relief. You will probably need independent tax advice to discover which statement is correct.
Further the book states a small element of inflation relief is given before the tax is applied at 15%.
Mike Grant
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The Book that Mr. Grant mentions in his letter is absolutely wrong and could take many readers to confusion. You can save a fiscal advisor, I am a lawyer especialised in conveyancing and I can tell you again: if you are resident in Spain ( and as said previuosly, it is not enough to hold a resident card) you have to pay Capital Gains Tax if you don’t reinvest the selling price , in Spain Obviously.
The tax is 15% for residents , of course deducting few concepts you can by law, but it is too long to explain in this forum. The same applies to non residents with their 35%: that percentage applies on the net gain, not just on the difference of prices.
I hope this helped, kind regards,
Jose Maria Sánchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.es -
Well, for the record, I checked this issue with Blevins Franks today. Their response below.
Mark
The new main home does NOT have to be in Spain.There is no requirement for the new main home to be in Spain, so provided the individual meets the usual conditions for relief, (i.e. the home to be sold has been occupied as the main home for at least 3 years – and this means that the individual must have been tax resident in Spain for at least 3 years and filing Spanish tax returns accordingly, and all the proceeds (net of any mortgage) are reinvested into the new main home, then the relief will apply.
The Spanish texts clearly state that reinversion can be outside of Spain, provided that the family as a whole moves and the new property will effectively become a new home. If, for example, the wife and children moved away from Spain, whilst the husband remained in Spain, then the relief would not apply.
One of our clients also had an opinion from one of the Big 4 in Spain (I think it was PWC) confirming absolutely that the new home can be outside of Spain.
Also, in Portugal there IS a territoriality restriction and relief only applies to reinvestment of a property within Portugal – and the European Commission has recently asked Portugal to amend this law as they consider it discriminatory and contrary to the freedom of movement within the EU.
BELVINS FRANKS
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I have to rectify in some way my opinion on this subject. It seems that the position of the Spanish Tax Office is positive regarding the exemption on the CGT if you reinvest the selling price in another country, the only condition is that you reinvest it in your new home ( have to stay there for three years).
I have to admitt that I am a bit shock to hear that opinion from the Tax Office, I have checked the law and I don’t see it so clear, also I have consulted a very experienced fiscal advisor in town and he doesn’t agree completely.
I think we are in one of those cases where the answer is not very clear, typical of the Spanish Tax System. Just like the point of whether you can avoid the retention for CGT showing a card or a certificate of fiscal residency, never ending debate about this in the lawyers and notaries community.
Regards,
Jose Maria Sanchez Alfonso
Abogado / Lawyer
Málaga / Costa del Sol
jmsalfonso@inicia.es
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