December 22, 2016 at 12:29 am #194045
I am a resident in the UK, I want to sell a property in Spain (Elche). I bought it for 28,000 euros in 2001 and I would sell for 40,000 in 2017. I woud have made 12,000 capital gains. Assuming a tax rate of 19%. I would need to pay tax for 2,280 euros of which 1,200 euros woud be retained (3%) by the buyer). So, I would still need to pay to Hacienda 1,080 euros. If you agree that my calculations are correct, my question is regarding the bank transfer of the sale minus the tax (37,720 euros) to bring it back to the UK.
Will I have to contact HMRC to let them know about this income resulting of the sale, or present any kind of documentation to them so as not to be taxed twice? Would I have to pay any other tax based on this amount in the UK? Or alternatively, do I just transfer my 37,720 euros and invest in the UK as I wish without further complications?
December 29, 2016 at 3:07 pm #194106
Your calculation is incorrect, you probably have no Capital gains tax to pay.
You have forgotten to include the effect of inflation. Just as a very basic calculation your property has risen about 2% a year over those 16 years to now reach a price of 40,000 Euros. In fact I think you will find you have made a loss as if you look at various on-line calculators for measuring worth 28,000 Euros is around 42,000 Euros at today’s value.
Hacienda will use it’s own rates to determine what 28,000 is now worth, but I think whatever it is you certainly have not made a gain.
You won’t have anything to pay, if you paid your annual property taxes in Spain.
You need to declare the sale to HMRC but again you have nothing to pay.
December 29, 2016 at 3:34 pm #194107
I wish you were right. However, the Spanish Government eliminated the inflation factor from 2014 and now, you have to pay ALL OF THE PROFIT of the sale.
The spanish website below has an example where they compare capital gains to be paid from a property bought in 2000 and sold in 2014, 2015 and 2016. It’s shocking and illogical but that’s the Spanish way.
If the website is wrong, I would be happy to hear from you. (please use Google Translate)
December 31, 2016 at 10:45 pm #194137
You can subtract all your buying and selling costs, which will probably amount to a couple of thousand and more if you use an estate agent. Also if you have receipts for any work carried out on the improvement of the property during your ownership you are entitled to subtract those. It is probably a good idea to get a Gestor to submit the final Form 210 for whatever year you finally sell as they will be familiar with all the deductions you would be allowed. As for the UK if the tax rates are higher than Spain for the CGT then you may have to pay the difference minus whatever allowances you are entitled to in the UK. If you make a loss you would presumably be entitled to use the loss against other asset disposals in the UK. There is probably a special form for doing the UK declaration which will show you paying the tax in Spain on the disposal. CGT returns are usually filed on different dates to normal tax returns.
December 31, 2016 at 11:00 pm #194139
Thanks for some of the good ideas you give regarding the costs of selling i.e. estate agents and also any improvements or renovations to the house. That shoud make a difference.
I asked HMRC and the capital gains after selling a property in the UK is 18%. So, Spain is still higher at 19% (if the sell was during 2016).
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