Hi,

I am a resident in Spain (for more than 3 years) and currently living in my main (and only) property which I want to sell.  I want to re-invest in a smaller property (in Spain) to try and get rid of my mortgage but want to make sure that I avoid being taxed on capital gains, if possible.

Please could you have a look at my calculations and tell me if they look correct?

Cost of original apt purchase - ?125,000 (inc. 7% tax) + costs ?2,008 (notary, registry, etc) = ?127,008
Cost of new apt (an example of what I would like to spend) - ?100,000 + 10% costs = ?110,000

If I sell the apt for ?197,000 minus the outstanding mortgage owed (?87,000) = ?110,000 profit that could be taxed.  As long as I use this ?110,000 to put into another property, will I avoid the CG tax?

Also, I read somewhere that as well as costs spent on buying the original apt, I can add any expenses that have been spent on improving the property since I’ve had it - could I include a centralised air cond unit and the work undertaken (putting in the grills above each door in each room and the pipes, etc) as an expense?  It cost around ?7,000. 

Many Thanks

Debbie