British Expats - Capital Gains Tax: selling UK property and buying Spanish one

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Capital Gains Tax: selling UK property and buying Spanish one

Hi there

3. CGT questions for you:

1. I own a UK property that has doubled in value since I bought it back in 2006. Am I correct in thinking that the calculation for Spanish CGT = sale price - (original price+improvements+outstanding mortgage)? The outstanding mortgage is important to know that this is factored in (to reduce the “profit”) ias I have quite a bit left to pay off that will be paid off with the sale albeit that there will still be CGT to pay due to increase.

2. I am currently renting here in Spain and looking to buy a house here. Am I right in thinking that I can invest the proceeds of the UK house in the Spanish house and thus avoid/minimise CGT? Can the UK house continue to be called my prime residence even though I’m renting temporarily here in Spain while looking to buy a house?

3. Further to point 2, can I buy here in Spain first and then sell later the UK property and still benefit from this relief? I’d need to take out a temporary mortgage here in Spain to part fund the purchase and then use the proceeds from the UK sake to pay it off. I have read there is a period of 2 years before/after sale?.

if anyone can recommend tax advisors to speak to on this subject that’d be great thanks

Many thanks

Re: Capital Gains Tax: selling UK property and buying Spanish one

Are you tax resident in UK or Spain?

Re: Capital Gains Tax: selling UK property and buying Spanish one

Tax resident Spain thanks

Re: Capital Gains Tax: selling UK property and buying Spanish one

I cannot answer all the tax questions but I would warn you to think very carefully about a 'temporary' mortgage. Although interest rates look tempting the setup and redemption costs can be enormous and time-consuming etc. And banks want you to setup a life insurance plan also a big expensive hassle IMO.

Good luck and good move getting out of renting the costs are rising rapidly and no guaranteed long term tenure.

Re: Capital Gains Tax: selling UK property and buying Spanish one

Q1. I don't think you can take into account the outstanding mortgage. If you think about it, you get the full gain irrespective of having a mortgage. If the mortgage company took their share of the gain that would be different, but they don't.

Q2/3. To qualify as your main residence, you must have lived in it for three years (which you have) and you must reinvest all the proceeds within 2 years of the sale. Proceeds of the sale are the net amount after you have paid off the mortgage. If you reinvest less the exemption is reduced pro rata.