Capital Gains Tax: selling UK property and buying Spanish one
Aug 4th 2019, 3:45 pm
#1
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Joined: Apr 2019
Posts: 5
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
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
Aug 4th 2019, 9:47 pm
#2
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Joined: Feb 2009
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Re: Capital Gains Tax: selling UK property and buying Spanish one
Are you tax resident in UK or Spain?
Aug 4th 2019, 10:15 pm
#3
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Re: Capital Gains Tax: selling UK property and buying Spanish one
Tax resident Spain thanks
Aug 5th 2019, 12:53 pm
#4
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Joined: Aug 2009
Location: Costa Blanca
Posts: 3,142
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.
Good luck and good move getting out of renting the costs are rising rapidly and no guaranteed long term tenure.
Aug 5th 2019, 1:23 pm
#5
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
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.
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.
