I was recently told that in Spain the capitol gains tax applies to your house even when you only have one.  I was told you would pay 16% on any gain.  Does anyone know if this is true?  Clearly in the UK your main domicile is exempt of such tax. 

This also raises an issue with the price paid.  When I bought my flat I was invited to pay a large percentage of it in cash and thus reduce the perceived value (*).  This would have given a reduction in the 7% payable to the ayuntamiento.  But had I taken this offer up would I now not have a problem with the calculated gain?

I should say that the flat is in my partners name, she is spanish, and it is her only property (if she goes off me I guess any gain can be forgotten - must run and buy her some flowers)

* This was in Asturias and I was told infront of an abogado that this was normal procedure!!!

Yes, I am afraid it is correct, unfair but correct. Even your main residence when sold is liable for CGT,
Assuming she is spanish resident and has owned the house for more than 3 years she can roll the gain into another property.
If she isn’t buying another place then the capital gain will be on the difference between the escritura values not the actual purchase and sale price. If you sell to a spaniard they will want to undeclare, the problem comes that if you sell to english they might want to declare full value which will mean a big tax bill next year when she does a tax return.

The CGT is now 18% for both residents and non residents alike. Yes it is based on the difference between the declared values. Yes you can can get an exemption if the money is re-invested in Spanish property within 2 years.

There are many other twists! It is declared as income and so depending upon other earned income it may be taxed less depending on the relevant allowances. Also if you have to sell through change of job, marriage or separation then you may get exemptions.

Also (although I guess not relevant in this case) resident tax payers aged 65+ who have owned for 3+ years can also claim total exemption. This based on a very fair and logical view that they might want to sell a bigger house and trade down in their tercera edad years.

We tried to do the change of job thing but our asesor said we couldn’t.
I think you have to be with the same company and moved to another part of the country to qualify.
My husband took a job with another company in another province.

Amigos I am deeply endebted.  The situation of my partner is one thing and we can certainly delay a sale until 3 years has past and we will be buying a bigger property.  And confirmation it could be 18% allows us to plan.

But much more valuable is the possible exemption over 65 as Pilar’s mother wants to downsize and as money is tight the thought of tax had given her no hope.  Do not worry I will check everything with a lawyer and not hold anyone here responsible but just knowing possibilities is just maravilloso.  Gracias.

This place is just a cold glass of white wine on the terrace with a plate of olives, geraniums cascading, the shade of the grape vine blocking the sun, and my solea played on my trusty flamenco guitar being in compas.  (OK the last one was a dream too far!!!)

ROBI - 31 August 2007 04:13 PM

The CGT is now 18% for both residents and non residents alike. Yes it is based on the difference between the declared values. Yes you can can get an exemption if the money is re-invested in Spanish property within 2 years.

There are many other twists! It is declared as income and so depending upon other earned income it may be taxed less depending on the relevant allowances. Also if you have to sell through change of job, marriage or separation then you may get exemptions.

Also (although I guess not relevant in this case) resident tax payers aged 65+ who have owned for 3+ years can also claim total exemption. This based on a very fair and logical view that they might want to sell a bigger house and trade down in their tercera edad years.

RE the resident 3 yr rule, I have been advised by my gestoria that you have to be a fiscal resident for 3 yrs, i.e. contributing S Security payments etc. for this to apply. We have owned our main home in Spain for over 3 yrs but have been running our business for only 14 months, therefore do not comply with this rule. We have been told we will have to wait until we have been fiscal residents for 3 yrs to enjoy this option of rollover.

Can anyone advise to the contrary?

I would say if you are a resident and thus you should be paying your taxes in Spain (ie full declaracion and paying income tax - not just a few Euros IBI) then you qualify - I do not agree that you have to be working and paying social security - you might be in a financial position not to work and thus you would not be paying social security. The important thing is being resident and paying taxes in Spain. If the date of your residencia does not coincide with your paying taxes in Spain then maybe he is right - I guess to get tax advantages they want to see a tax paying 3 year period.

This is an interesting point - please post the outcome!

ROBI - 26 January 2008 10:38 PM

I would say if you are a resident and thus you should be paying your taxes in Spain (ie full declaracion and paying income tax - not just a few Euros IBI) then you qualify - I do not agree that you have to be working and paying social security - you might be in a financial position not to work and thus you would not be paying social security. The important thing is being resident and paying taxes in Spain. If the date of your residencia does not coincide with your paying taxes in Spain then maybe he is right - I guess to get tax advantages they want to see a tax paying 3 year period.

This is an interesting point - please post the outcome!

Well your right, we actually lived off of investment money we had previously generated in the UK before moving to Spain, as things stand our gestoria says we have to wait, would be ineterested if anyone had any further info on this.

We were considering purchasing a property on urban land in the meantime, waiting until we had sold our existing property using the 3 yr rule, and then rolling the profits into the building of a new home on the urban land, does anyone k now if this would be possible or can the rollover funds be used solely for the purpose of BUYING a main residence?

If I understand the question (Do I have to buy a ready built house or can I buy a plot and build ?) I would have thought either option would qualify you as the money is staying within Spanish property investment - I also thought you had a 2 year window in which to make the 2nd investment however I cant seem to find that in writing right now.

Challenge your gestoria with these points and ensure he is uptodate and correct with his replies by asking around and researching the net and:

SPANISH TAX (AEAT)

http://www.aeat.es

Mostly in Spanish but you can download forms (solictudes/modelos)

Non residents:
Ir al portal de:
Select and click

Residents:
Click: Ciudadanos

Try also:

http://www.spainaccountants.com