Pam Sarky

If we were to sell our house in Spain and buy another in Spain, does anyone know what the taxes would be? We have heard today that there is also a retention tax that we havent heard of? When buying we were told to add another 10% on for the fees and taxes, now we are being told to add another 20% for selling and buying.

Also if we sell in Spain and buy in Portugal, does anyone know of any taxes for taking money out of the country?

helen17

Fred is the best person to answer this but .... if you are a resident then you can apply for a certificate to exempt you from the retention of 5% at the tax office, but you must pay your taxes or they will collar you for everything when you apply as the records are more up to date than people think! Plus there is capital gains - dependant on the length of time you owned the property you are selling (difference between purchase price and selling price) and the price of what you are buying which is currently I think at 18%. So far as moving to portugal and taking your money out ... dont know - depends on whether you want to live in Spain again as to what you do! I know Fred is more knowledgable than me and perhaps he will post more on this subject.

brodev

AFAIK There is a difference between resident and non resident. If a resident sells his main home and puts his money into another house within Spain then he is exempt from capital gains tax. I think it must be done within 24 months. this does not apply to a second home and by definition a non-resident. Therefore a resident can produce his official proof of residency and escape the necessity of a retention. If, at that point, he then does a runner to say,Portugal, the Spanish authorities will have to find him after 2 years and get him to pay his taxes. It is unlikely this would happen. If he then went back to Spain and had to use his NIE number they would come after him with fines.
A non-resident will pay a retention 3% or 5% of the selling price. He will be expected to pay the remainder of the 18% of the profit, but if he is out of the country then he will probably get away without paying. Again if he ever goes back and uses his NIE then ................

Fred James

Currently CGT in Spain is 18%, resident or non resident.

If non residents sell they pay a retention of 3% of the sale price. If this is more than the tax would be they can get a rebate of the difference.

If the 3% is less then they can do a runner and pay no more - but as Brodev said - don't come back to Spain! In theory the total CGT must be paid and the retention will be deducted from it.

Residents get some good tax breaks but remember that being a "resident" is not enough - you must be tax resident and paying your income tax in Spain. A residencia card used to be all you needed but not any more.

If you have owned your house for 3 years (as a resident) and it is your primary residence then, if you reinvest ALL the money from the proceeds of the sale in another house you will pay no CGT. If you downsize then the tax is paid on that part of the money that you did not reinvest, on a pro-rata basis.

You have 2 years to reinvest the money. You declare the full gain on your tax declaration at the time but it will not be taxed for 2 years if you ask for the exemption. If you reinvest you declare that on your tax return and that takes care of it. If you don't reinvest the tax will be deducted in 2 years.

In addition, if you are a resident and have owned the house for 3 years and you are over 65 then there is no tax to pay even if you pocket all the cash.

aspeangel

So, I am resident, have owned my house for 3 years and pay tax. When I (maybe I should say if I ever manage to!) sell my house all I will pay at this point is solicitors fees and pay off my mortgage and then I ask for a tax exemption for 2 years? I then need to reinvest within that time in order to not have to pay CGT. Am i getting it right?? I am trying to sell but I would rather wait a couple of years to reinvest and see what happens in the housing market, but my husband is concerned about losing out through paying CGT.

Fred James

Absolutely correct.