CGT Tax relief

Old Nov 2nd 2009, 3:48 pm
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Default CGT Tax relief

Hi, be grateful if someone could help with the following query:

"can the tax relief given to the reinvestment of the proceeds from the sale of a main home in Spain can also be applied to purchase main residence outside of Spain (eg UK) ? "

Many thanks
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Old Nov 2nd 2009, 3:55 pm
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Default Re: CGT Tax relief

Originally Posted by LittleWeed
Hi, be grateful if someone could help with the following query:

"can the tax relief given to the reinvestment of the proceeds from the sale of a main home in Spain can also be applied to purchase main residence outside of Spain (eg UK) ? "

Many thanks
Nice thought, but thinking logically, why would the Spanish authorities want to give you tax relief for buying a property outside the UK?
Unless our resident tax expert suprises me, I would guess the answer is no
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Old Nov 2nd 2009, 4:00 pm
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Default Re: CGT Tax relief

Originally Posted by LittleWeed
Hi, be grateful if someone could help with the following query:

"can the tax relief given to the reinvestment of the proceeds from the sale of a main home in Spain can also be applied to purchase main residence outside of Spain (eg UK) ? "

Many thanks
The reinvestment deal only applies to tax residents, but, assuming that applies to you, yes, you can reinvest in a property outside Spain (so long as it is your new main residence).

When you fill in the current tax return you declare the gain but apply for the 2 year moratorium on the tax due. In next years declaration or the following year you enter the new acquisition in Spain, or outside Spain, and, so long as it costs the same or more than the previous house, you pay no tax. You have two years to reinvest the money.

Sorry to surprise you Mitzy!
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Old Nov 2nd 2009, 4:06 pm
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Default Re: CGT Tax relief

Originally Posted by Fred James
The reinvestment deal only applies to tax residents, but, assuming that applies to you, yes, you can reinvest in a property outside Spain (so long as it is your new main residence).

When you fill in the current tax return you declare the gain but apply for the 2 year moratorium on the tax due. In next years declaration or the following year you enter the new acquisition in Spain, or outside Spain, and, so long as it costs the same or more than the previous house, you pay no tax. You have two years to reinvest the money.

Sorry to surprise you Mitzy!
I have to say ......... thats completely ridiculous!
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Old Nov 2nd 2009, 4:15 pm
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Default Re: CGT Tax relief

Have got to admit it surprised me as well! Not doubting what you say Fred but could you say anymore about this, for example, when how it came about - EU ruling or something like that ?

Thanks
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Old Nov 2nd 2009, 4:24 pm
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Default Re: CGT Tax relief

I was surprised, but it was confirmed by Blevins Franks who are probably the best experts in this field.

There is no doubt that you can declare the gain on your tax return and then apply to withhold the tax due for two years. It's just a box you tick.

The key point is that you reinvest the money in your "Vivienda Habituel" which can be in Spain or anywhere else.

As a tax resident you will not be subject to the 3% retention that applies to non residents so there is no way they can grab the tax at the time of sale.
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Old Nov 2nd 2009, 4:56 pm
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Default Re: CGT Tax relief

Originally Posted by Fred James
I was surprised, but it was confirmed by Blevins Franks who are probably the best experts in this field.

There is no doubt that you can declare the gain on your tax return and then apply to withhold the tax due for two years. It's just a box you tick.

The key point is that you reinvest the money in your "Vivienda Habituel" which can be in Spain or anywhere else.

As a tax resident you will not be subject to the 3% retention that applies to non residents so there is no way they can grab the tax at the time of sale.


I think the problem arises when your Vivienda habituel is not in Spain. If your main residence is not in Spain, then you are a non resident, so this cannot apply to you.
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Old Nov 2nd 2009, 5:18 pm
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Default Re: CGT Tax relief

Originally Posted by lmj50
I think the problem arises when your Vivienda habituel is not in Spain. If your main residence is not in Spain, then you are a non resident, so this cannot apply to you.
As I said, it is possible to do this. At the time you made the gain you were tax resident in Spain. You may well be non tax resident when you buy the new house, but you can still claim the investment back against you old tax declaration, where you chose to defer the tax, when you were resident.

If you disagree with this, go talk to Blevins Franks who will confirm what I have said.
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Old Nov 2nd 2009, 5:27 pm
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Default Re: CGT Tax relief

Bit of a long link I´m afraid, but the situation described here for Portugal looks like it might apply to Spain. OK, different countries but this a European Court ruling on freedom of movement etc.

http://www.ey.be/EYBE/HumCapAl.nsf/c4dede06060fcd87c125757f002e6fa0/baed43777aaab05dc1257558002affa7/$FILE/Portugal%20-%2027012009.pdf
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Old Nov 2nd 2009, 5:31 pm
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Default Re: CGT Tax relief

Originally Posted by LittleWeed
Bit of a long link I´m afraid, but the situation described here for Portugal looks like it might apply to Spain. OK, different countries but this a European Court ruling on freedom of movement etc.

http://www.ey.be/EYBE/HumCapAl.nsf/c4dede06060fcd87c125757f002e6fa0/baed43777aaab05dc1257558002affa7/$FILE/Portugal%20-%2027012009.pdf
Not working for me, try again
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Old Nov 2nd 2009, 5:47 pm
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Default Re: CGT Tax relief

Here´s the link again. Works OK here, so not sure what´s gone wrong. It´s an article from Ernst & Young in Jan 2009 reporting the change to the Portuguese tax regime follwing the ECJ ruling.

http://www.ey.be/EYBE/HumCapAl.nsf/c4dede06060fcd87c125757f002e6fa0/baed43777aaab05dc1257558002affa7/$FILE/Portugal%20-%2027012009.pdf

Here´s a story on the orginal referral;

http://www.themovechannel.com/news/f...tp://www.ey.be
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Old Nov 2nd 2009, 7:53 pm
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Default Re: CGT Tax relief

Yes, got the link to work - it just confirms what I said.
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Old Nov 2nd 2009, 8:27 pm
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Default Re: CGT Tax relief

Originally Posted by Fred James
Yes, got the link to work - it just confirms what I said.
How would it apply to those of us who are joint or co-owners, one resident one non-resident? A straight split of allowances?
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Old Nov 2nd 2009, 10:11 pm
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Default Re: CGT Tax relief

Originally Posted by Fred James
The reinvestment deal only applies to tax residents, but, assuming that applies to you, yes, you can reinvest in a property outside Spain (so long as it is your new main residence).

When you fill in the current tax return you declare the gain but apply for the 2 year moratorium on the tax due. In next years declaration or the following year you enter the new acquisition in Spain, or outside Spain, and, so long as it costs the same or more than the previous house, you pay no tax. You have two years to reinvest the money.

Sorry to surprise you Mitzy!

So from that I gather you have to fill in a tax declaration for 2years or until you have purchased another property in the EU. I bet the hosue purchase documents will have to be written in Spanish for the authorities to reorganised the purchase too, or am I being to sceptical?
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Old Nov 3rd 2009, 5:59 am
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Default Re: CGT Tax relief

Originally Posted by fionamw
How would it apply to those of us who are joint or co-owners, one resident one non-resident? A straight split of allowances?
Yes, it would be treated as two transactions.

When you declare your "Vivienda Habitual" on your tax declaration every year you put down the ownership percentage.
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