Pips are squeaking!
 

As if they aren't penalising ex pats enough, I read in today's Round Town News that Rajoy is planning to put and end to one of the few advantages of being tax resident here- exemption from CGT when selling a house, when over 65, tax resident, lived in the property for 3 years.comes into force 2015. A huge blow for those moving back to UK or selling, then renting.
Details are still not known eg whether it applies to main residence or second home.
The only way to avoid it apparently is to buy another property, but does it apply if it is within Europe?
Another way is to invest it in a bank led " pension" scheme which would not be appropriate or appealing, or indeed safe for the large amount of money involved
Anyone able to shed light on this.
If it is as appears, these measures, and other tax changes will put yet another nail in the coffin of Spain, as people will be put off investing or moving here.
Strangely there is not a mention of it in the other expat press.
Another thing I want to know, when a non resident sells a house, 3% is withheld to cover cgt and other taxes due? I would imagine That 3 % would not cover the cgt, so do sellers ever receive a bill for the additional amount?
If not, then there is indeed a benefit to not being resident!

Re: Pips are squeaking!
 

They are discussing a lot of tax changes at the moment, so I don't think it is set in concrete yet.

Another think they have talked about is scrapping the indexation allowance against CGT totally. If you bought a house pre 1987 it is totally tax free at the moment - this could go, making the situation really serious for long term owners.

With regard to the question of whether it is the main residence or a second one, I assume it applies to both, as there currently is no over 65 or reinvestment relief on second homes.

As far as I know, the reinvestment relief applies to buying another home that becomes your new habitual home and this can be anywhere outside Spain. There is nothing in the tax guide to contradict this.

As for paying the 3%, yes, you are still liable for the full amount, but I don't think they chase it up. If you are a resident then the best bet will be to sell up and tick the box on the income tax declaration where you declare the gain, but invoke the option to not actually pay it as you intend to reinvest within 2 years. If you then become non resident and leave the country and don't reinvest, then they will have to chase you for it - whether they will or not is anyones guess, but I doubt it.

Re: Pips are squeaking!
 

It would be more realistic to set the retention at 10 % then! at least the Hacienda would have more chance of getting the cgt, wonder they haven't thought of that.
These changes are to come in April next year year, so why don't we have the full picture.

Re: Pips are squeaking!
 

The 3% retention fee is deducted by the notary when you sell and held by Suma until they have established you have paid all the necessary property taxes on the sale.

It is then returned to you, intact, but sometimes with quite a long delay of a couple of years or so. They don't usually respond if you query the delay in the meantime.

Re: Pips are squeaking!
 

What I am saying is that no way would the 3% retention cover the cgt! plus if the Hacienda delves, they may find the the seller was in fact resident when stating non resident; that would mean4 years of income taxes, possibly fines for not submitting a 720 if applicable, plus the cgt.
Needs to be far more than 10%!
Seem it pays to live here illegally.

Re: Pips are squeaking!
 

"Seem it pays to live here illegally."

There are lots of illegal things that pay. The trouble comes when the law catches up with you.

Re: Pips are squeaking!
 

Does the Hacienda ever catch up with these smug tax evader? It seems the risk of it happening is so small, people are prepared to take the chance.
Let's hope that when they do, they make an example of them, to the extent it will put all the other would be evaders off!

Re: Pips are squeaking!
 

I don't know if they catch them. I do know I wouldn't like to live with the stress so I wouldn't put myself in that position.

Re: Pips are squeaking!
 

It's January - where did you read April? Certainly not in the RTN.

Re: Pips are squeaking!
 

Neptuno you really do come across (it may be un intentional) as very anti anyone who is non resident, I could understand if it was just those that pretend to be but are in fact full time and not paying their dues. But it seems to me even those that pay all they are due. I wonder just how many pay all taxes and fail to recoup the 3% retainer ? Possibly just as many as owe them tax ? I notice at the start as soon as you think you may loose something you are aghast! Yet seem to think any non resident should have a 10% retainer on selling which to me is silly. How many people exactly who have bought and sold in the last 8 years will have a capital gain. Some people just want to remain non resident and some don't for their own reasons, constant griping about either way is for me is petty and mean spirited.

Re: Pips are squeaking!
 

The only non residents that I am describing are those living in Spain full time and live as non residents ie: not paying their taxes here, living under the radar and abusing the health system, and yes their years of non payment of taxes needs to be addressed.A retention of 3.% will not cover years of tax evasion.
I have nothing against non residents who have property in Spain and pay their dues.
If they have nothing to fear, they will get their retention refunded- right?

Re: Pips are squeaking!
 

I must be thinking of some other changes coming in in April next year.

Re: Pips are squeaking!
 

Governments like to spend money. Particularly this one, whose political character has always been dominated by self-servitude (from all parties) rather than sensible economic policy. The EU sings a very similar tune, although not quite to the same extent. The population is always the one who bears the burden of excessive government spending.

Ever noticed that not one politician ever suggests tax relief with cuts in frivolous spending as a way to stimulate or even balance the economy? No, it's always a debate about how to increase taxation whilst cutting spending... and what do you know... taxes have only increased in the past few years, social spending cut ... all at a time when the population could least afford it.

Right, then.

"tax greed". I just can't think of a better term for it.

Re: Pips are squeaking!
 

Well could I suggest then that reference is made to "those illegally claiming to be non resident" so as not to tar true tax paying non residents with the same brush, which is how it comes across.

Re: Pips are squeaking!
 

[QUOTE=Neptuno;11362694, they will get their retention refunded- right?[/QUOTE]

I have heard that some have struggled I also believe it is not that straight forward (I don't personally know) . No doubt someone will be able to enlighten us.