February 18, 2007 at 6:38 pm #52654
With the new capital gains tax rate of 18% now in operation, is there still a reduction in the amount of tax you pay depending on how long you have owned your property. In my case since 2003. Also, what other reductions allowances are there. regards, Saga
February 18, 2007 at 8:11 pm #69435
Hi. Are you resident or non-resident for tax purposes? Is the house your principal residence? How old are you?!
February 18, 2007 at 11:09 pm #69442
It would be for a non-resident and not principal home, under 60!
February 18, 2007 at 11:40 pm #69443
I am 98% sure, that you get a tapering releif.
February 19, 2007 at 8:07 am #69444
There is an inflation factor you can employ (not seen an up to date table but will be currently in the order of 1.0802 for purchase year of 2003) plus you can offset all official expenses incurred at time of purchase against CGT.
February 19, 2007 at 11:47 am #69460
That’s grand thanks. It’ll give me a rough idea to work it out. regards, saga
February 19, 2007 at 6:10 pm #69480
If non resident for tax in Spain, but resident for tax in the UK remember you must declare the gain to the UK Inland Revenue as well as pay CGT in Spain.
The Uk IR will allow you to deduct any Spanish tax paid from your UK CGT tax bill – which will be up to 40% depending on the size of the gain, the allownaces used and your income tax bracket.
February 21, 2007 at 9:04 pm #69528
‘Tapering scale’ only applies to properties purchased before 1994. Rate or tax for non residents/residents/nationals alike is 18% with 3% retention. Can claim for expenses associated with purchase eg. IVA, Notary fees, stamp duty, registration, legal fees etc.
February 21, 2007 at 11:02 pm #69529
@andy G wrote:
‘Tapering scale’ only applies to properties purchased before 1994. Rate or tax for non residents/residents/nationals alike is 18% with 3% retention.
But the inflation factor reduction DOES apply for properties purchased SINCE 1994, as in Saga’s case. (And, for residents, there is no 3% retention).
As a tax adviser yourself you most probably have this year’s inflation factor table to be able to tell Saga what the factor will be.
February 22, 2007 at 10:25 am #69533
I am afraid. I was the one who creaed the confusion by using the word “Tapering relief “.
Not knowing the backsground, as Saga was keen to find out if there was , any deductions he could make to reduce his CGT. What I meant was there will be a reduction. Call it tapering releif or indexation allowance.
February 22, 2007 at 1:07 pm #69538
Well-spotted Hillybilly 🙂 AndyG only made two incorrect statements in a 4 line post, not bad for a tax advisor!
February 23, 2007 at 10:22 am #69548
February 23, 2007 at 10:28 am #69549
May 21, 2007 at 10:29 am #72295
Who actually stops cgt, I know the 3% withholding tax is stopped by my lawyer but in the case of cgt should this also be stopped at source, also at what age is cgt exempt.
May 21, 2007 at 5:57 pm #72311
Lynx: Ofcouse the seller has to pay the CGT. The 3% is witheld by the Notory at the time of the sale,
Your say your solicitor, I take it that you have appointed him/her to act for you in respect of the sale.
May 21, 2007 at 8:31 pm #72314
the buyer is responsible for withholding the 3% retention. This is not payment of the CGT liability but is merely a retention which is offset against a non residents tax liability. (in most cases if they are returning to UK or country of residence then they pay no further – but are still liable for the CGT nonetheless)
If there is a mortgage then the buyers bank will normally deal with the retention. If not then the solicitor will do it. It is your responsibility to retain this amount and make sure it goes to the Hacienda within 30 days (I believe) of the notary signing. Having never conducted a transaction without a bank or solicitor being present I couldn’t say whether or not the notary then takes this retention on the buyers behalf
May 21, 2007 at 11:35 pm #72317
You are corect that its buyer who has to withold the %. I had sold a property that did not have a mortgage nor did I use a lawyer. My reasoning was:
1) My documents were in order.
2) I had receipts of community fee, last gas, water, electrcity payment.
Finally, I was not the one parting with the cash so the buyer had to be aware.
The Notary witheld the than 5%, which I had to provide in person and cash to some one in his back office. This person than gave me a receipt with rubber stamp of the notory. Frankly at this point if I had left calmly no one would have missed me in the choas that prevails in a notary office.
Finally, yes it has to be done in 30 days otherwise you pay a penalty. Please note that if the notory or his back office delays the handover to the hacienda. You as a seller will have to pay the fine. This is the level of accountabilty of the Spanish civil service.
May 22, 2007 at 5:20 am #72318
I was at the notarys office last Tuesday to complete the sale of my property, I was surprised to see no cgt tax had been stopped, the 3% withholding tax, agents/lawyers fees and plusvalvalia were all stopped.
As I’m staying in Spain and buying a new property at what stage do I pay the cgt which I guess is less the 3% withholding tax.
May 22, 2007 at 7:48 am #72319
Nobody will stop your CGT liability at the time of sale.
It is up to you to declare it if you are resident for tax purposes.
However, I would not recommend that you attempt to do this alone.
Get the services of a Gestor.
Tax is complicated (see my posts about War In Lanzarote) and sometimes even the experts cannot agree.
A good Gestor (and most of them wouldn’t be in business unless they were good) will sort it all out for you and do your declarations for very little money.
May 22, 2007 at 8:25 am #72321
Lynx – are you resident or non-resident for tax purposes and how old are you (if you don’t mind me asking!)?
May 22, 2007 at 8:57 am #72324
Non resident for tax and 62
May 22, 2007 at 9:16 am #72325
Exemption from CGT kicks in at age 65 so you have no get out that way!
As Stewlanz has said above it is up to you (your gestor) to do your tax declaration and pay your CGT liability if you have any. This has to be done within 90 days of selling (I think – I’m sure somebody can confirm).
May 22, 2007 at 9:22 am #72326
Many thanks for all your helpful replies
May 22, 2007 at 9:59 am #72327
It is the obligation of the buyer to deduct the CGT. So if Lynx does not pay, the Hacienda should be chasing the buyer ?
May 22, 2007 at 10:12 am #72328
No, it’s the obligation of the buyer (or his representative) to withhold the 3% retention and pay it over to Hacienda on account against any CGT liability. It’s the seller’s obligation to declare and pay any outstanding CGT.
Otherwise we’d all end up liable for paying one another’s taxes!
May 22, 2007 at 11:41 am #72331
Yes, you are right its the seller who pays the CGT, as he/she has made the gain. What, I meant was the 3% the buyer has to withold.
May 23, 2007 at 5:37 am #72341
Just out of interest what is the positon if the sold property is owned jointly by husband and wife, where the husband is say 65 or over and the wife is under is cgt required to be paid ?
May 23, 2007 at 7:22 am #72343
If the house is jointly owned, each person is responsible for their own tax.
In other words, the person over 65 will get the relief, the other will not and will pay tax based on the gain on their half of the house.
May 23, 2007 at 12:52 pm #72350
Can you clarify the following questions for me –
1. If I use a REA to sell my property I understand I can deduct the fee from CGT I have to pay. Is it only the IVA I can deduct or all the whole fee – whatever the percentage is I have to pay to the REA?
2. If I remortgage my spanish property in Spain and pay tax on the amount gained, and then use that same money to buy another property and pay all the taxes, can I claim that back from the Hacienda as a non-resident? If not, would I not be paying tax on the same money twice( in the same tax year, if that is important)?
3. I understand that I have to pay CGT in Spain and UK, but if some of the money gained is going to be used on another property in either Spain or UK, do I get a rebate and from who?
May 23, 2007 at 6:04 pm #72352
Exemption from CGT kicks in at age 65 so you have no get out that way!
As far as I know the over 65 exemption only applies to residents.
June 1, 2007 at 8:05 pm #72649
will try and answer your questions
1. The Real estate agents fee is deductible in total – but there must be IVA paid on the amount you have claimed otherwise it will not be accepted, so ensure you get a proper factura with IVA paid and the company name and tax number clearly written on it.
2. Not sure you would pay tax on the amount gained during a remortgage because you haven’t in fact gained anything until you sell it. What would probably happen is the cadastral would give you a new cadastral value for IBI purposes but it is the gain from the amount you bought the house for and the amount you sell it for at the point of sale that determines the capital gains
3. This is a tricky area and one that ou should seek specialist advice on because it strides double taxation. However if you buy another property in Spain and are a resident here and it is your main residence – then you are exempt capital gains on the money you use to buy another house. Soi if you make a capital gain of say 100,000 and buy another house and use all this money to buy it (in Spain not UK) then you will not be liable for capital gains tax on it. BUT you must be resident here when you sell.
Also the Spanish government don’t care if you use the money to buy a house in UK. If you are resident here and buy another home here then it applies. If you buy a home in UK then you pay CGT on the full amount.
Hope this covers your questions
June 1, 2007 at 8:10 pm #72650
One more thing. I recently sold m house in Oliva (2 weeks ago) and a non resident (just didn’t get round to it) I had the 3% retention kept back as is normal. Ordinarily I would expect to write this off as it is normally nigh on impossible to do so. However I received a call from my solicitor today who told me that he has successfully claimed on behalf of 4 clients the money back from the hacienda and in less than 3 months.
I will be claiming it back because my lawyer is a very good friend whom I trust implicitly and it gives me hope )I actually sold the house for the same as I bought it for in the end so I didn’t make anything – in fact lost on the deal)
But it gives hope to all that if you have had 3% retained that you can get it back with the right peple working on your behalf.
June 1, 2007 at 8:22 pm #72652
I don’t know about your area but in Andalucía it takes about 12 months to get the retention back.
June 1, 2007 at 8:48 pm #72654
O was under the impression that it ws nigh on impossible in Valencia to get it back or at the very least it took 19 months to 2 years. But my solicitor informed basically they took the hacienda to court and won – not once but four times and now they are a lot more expedient in delaing with claims. So sometimes, just sometimes, things work out – I will let you know in due course how it goes
June 4, 2007 at 2:56 pm #72718
Thanks for your detailed reply. I appreciate your point in section 3. in regards to paying my spanish cgt irrelavant of whether I am purchasing a new property in another country. So, I suppose my question is if I am currently a resident of the UK and I pay my cgt in the uk at my current tax rate, minus the 18% I would have already paid in Spain, do you think/know if I can claim back the UK portion of the CGT tax against the new property I would buy there in the UK?
How does it normally work in the uk when selling one property for another property that would then be your main residence?
With regards to point two and the CGT being based on the amount I purchased the flat for and how much I sold it for, that is quite valid. I think I will need to speak to a tax advisor about the tax I paid on the remortgage and whether that would be deducted from the CGT.
Thanks again Vince.
(I will PM you later.)
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