Please could someone out there help me?? I have posted this question on here before but I have had some new info recently.
We are hoping to put our house on the market next month, with view to returning to the UK by the summer.
The problems that I have are tax.
We have been living in Spain for 2 yrs but have never applied for our residencia, which obviously makes us non resident. When we sell our property, people have told us that we will have to pay 35% Capital Gains tax :scared: I understand that as non residents the notary will hold back 5% right from the start, but then we need to pay another 35% later. Has anyone sold in the last few months, that can help. One suggestion that I have had is that we hand over the 5% then do a runner, but I would've thought the notary would take all tax owing at the start??
Is this tax lower if we become residents???
If this is the case and we do have to pay all this in tax then we'll never be able to afford a property in the UK!!!!
A solicitor has told me that the 35% is nonsense and that people tell you that to scare you????
For example said house sold for 400,000 euros what on earth would the tax be then, this seems very high.
I understand it was introduced to stop people doing runners but there must be a solution otherwise we'll never get out of this country!!!!!!

Really grateful for as much advice as possible

thanx

I sold last year as a non resident. Don't be scared. It's not that bad at all.

The reason they withold more tax as a non resident is precisely because people often do a runner. By witholding the % of the selling price, rather than the 35% CGT, it works out more or less the same so you don't get another bill for CGT after you've sold.

You can claim back the tax, at least part of it. You are charged the 5% on the day and then you get your solicitor to start the proceedings to claim back. To do this is a tad complicated and takes a while.

In short you apply to pay CGT. You'll be given a bill of the difference between the 5% and the 35% CGT. There isn't usually a difference at all. You can deduct from that bill any money spent on significant improvements to the property, the estate agents fees and other sales related fees. Make sure you have receipts for everything and make sure the agent has paid plus valia and that he gives you a receipt for his fee. Don't pay him in cash. It'll probably piss him off but you have more of a chance of proving that you paid him which can be a sticking point later on.

Your Spanish solicitor should be aware of all this and will discuss it in detail with you.

In my experience and of others I know 'a while' means don't even think about looking for your 5% back for at least 2 years and even then things will have only started moving.

Manana eh????????

It takes at least a year but you do get it back eventually. My parents got theirs back in 8 months and I'm just coming up to a year and word is that it'll be with me soon. Or at least eventually.

The party buying the property have to pay the tax office the 5% of the 'escritura' value in the case of a sale by a non resident. The Notario's job is to make sure that the tax is understood and is deducted from the payment made at time of the 'handing over of the keys' ceremony in his office. The CGT for Non Residents is 35% of the GAIN. You can make various additions to the original escritura value by way of costs of purchase and any major modernisation costs for exmple but I think these would need to be 'receipted' so that the tax office can see that VAT/IVA or whatever has been paid when paying the originals. Also the costs of selling such as the agent's fee and other fees at lawyer or notario can be deducted from the price that you sell AND that's in the escritura. The balance is the Gain.
It appears to me that many Spanish people underdeclare the value in the 'escritura' when selling and buying especially in the more rural parts. It is an established practice. If there is any return from the tax office from the original 5% deposit made by the buyer, then you would need to fill our your tax form and claim it back pronto. If there is an additional amount payable you are supposed to pay that within a certain period, but not sure if it's one year or less. If anyone can understand Spanish Laws and can translate, the regulations pertaining to this are contained in : http://noticias.juridicas.com/base_d...-2004.html#a14

Real Decreto 1776/2004, de 30 de julio, por el que se aprueba el Reglamento del Impuesto sobre la Renta de no Residentes.

You cannot now avoid the 5% retention merely by taking out residencia. You also have to obtain a certificate of fiscal domicile from your local tax office.

When the 5% retention is made by the purchasers they have one month in which to pay it to the tax office using form 211. You then have a further three months in which to submit your actual capital gains tax return (form 212) and if it is a negative figure you should get the refund in anything from eight months to a year. If it is positive you should pay the difference at the time you make the declaration. If you 'do a runner' you may be tracked down by the British Inland Revenue on behalf of the Spanish tax authorities. This is rare but is becoming increasingly likely.

As Nige says, the tax payable is on the difference in the value declared when you purchased and the value declared when you sell from which you can deduct taxes and legal fees provided you have a proper receipted account from your lawyer both when you purchased and when you sell. You can also deduct the estate agent's commission provided you can persuade him to give you a receipted account.

There is also a coefficient which is applied to the purchase price depending upon the year of your original purchase.

If you bought the property for 200,000 and sold it for 210,000, then your capital gain (profit) is 10,000. You pay capital gains tax only on the 10,000 capital gain (profit).

You would indeed be unlucky if you only made a profit of €10.000,00 on the sale of a property and, anyway, in the example given by above (and I appreciate it is a simplified example) no capital gain would be made at all. Don't forget that you can deduct legal fees and expenses from the selling price and add them, plus the coefficient, to the purchase price. In this cse the transfer tax alone would represent much more than the profit made making the gain a negative amount resulting in the refund of the whole of the 5% retention.

The main problem with CGT is when that when the seller originally purchased he may have been persuaded to declare a value which was much less than the actual amout paid. Although this represents a saving of 7% on the difference at the time it does mean that the CGT of 35% when he sells will be unrealistically high.

undefined If you bought the property for 200,000 euros and sold it for 250,000 why not get the purchaser to pay you 30,000 euros in cash and put only 20,000 euros through the books thereby saving you having to pay capital gains tax on 50,000 euros and only pay CGT on 20,000 euros. Or is this illegal or too easy?

Its what everyone in Spain does, but they are cracking down on it so somebodys gonna get stung...

Do what the Spanish do, sell the furnature not the house got it!! every body in spain pay's less tax.