Capital gains Tax
 

My parent have been living in Spain for nearly 3 years. This is their only house and they have thought about the idea of selling and buying two small apartments, one for them and one for family to use on holidays. The two apartments would cost the same or less than the house they are selling for both. They are aware of capital gains tax though have read if you are over 65 a permanent resident and have lived in the same house for over 3 years the Taxes can be less. If anyone knows any more information on this it would be much appreciated. The house they would be selling would be around €170,000 and two cheap apartments being €60 - €80,000 each. They are over 65 permant residents and by the time they sell will have been in Spain 3 years

Thanks

Daniel

Re: Capital gains Tax
 

Are they Spanish TAX residents, and have they done regular returns?

Re: Capital gains Tax
 

They are under threshold as together are only on Pensions. Yes they have it all up to date with solicitor who does it all for them they just don’t earn enough to have to pay

Re: Capital gains Tax
 

If they haven't submitted tax declarations, whether or not they are under the threshold, then the tax office will have no record of them being tax residents.

Typical bad advice from a solicitor. They need to get him to get a certificate of tax residence from the tax office covering the last three years or they will have to pay CGT.

I warn you now, this could prove difficult.

Re: Capital gains Tax
 

As per Freds current and previous advice, I submit tax returns every year with the above in mind. I get a small rebate every year as well!

Hope they manage to sort it, perhaps the Solicitor can put things right for them. Don't try and do it yourselves, the Spanish Tax people can be pretty inflexible to say the least!

Re: Capital gains Tax
 

Thank you all for your help they will look into this. Apart from checking this the other issue is, does it matter when they sell if they buy two properties instead of one? Would they be taxed more because they own two properties despite the fact together they will still have the same amount of money in property. Do you do your own Tax returns if not who do you recommend please?
Thanks again

Re: Capital gains Tax
 

CGT is only paid on the sale. If they were under 65 they could take the tax free option of reinvesting the money in another property, but it would have to be a new "habitual" residence, so if they bought two properties under those circumstances, they could have a problem - however this does not apply in their case. Let's hope they can sort out the tax residency issue.

Getting back to the issue of making tax declarations when you are under the threshold for paying tax, it is essential to make a declaration when you first become tax resident, thereafter it is not necessary as you will be correctly registered as tax resident.

Spanish solicitors and even the taxman don't seem to understand this as they are used to dealing with Spanish citizens who are registered on the system from an early age.

Re: Capital gains Tax
 

Thank you very much you’ve been a great help