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.

Re: Pips are squeaking!
 

It's only refunded if all taxes have been paid.
If not , then non refund, and possibly additional payment required!
In future I will refer to these tax evaders as Illegal Non Residents In Spain-INRIPs

Re: Pips are squeaking!
 

Thank you, yes I understand one would only get back any amount not owed and that any excess may be sought from them wherever they be. Although I do remember reading somewhere someone who owed no tax struggling to get the retention back. No doubt one needs to use a solicitor which entails further cost. It should just be retention for x amount of time with any money not owed paid back into your bank account, without the non resident having to chase thier money. After all it seems that the Spanish authorities can get into ones bank account easily to take money owed (or so we are lead to believe) so why not to pay a person what they are owed.

Re: Pips are squeaking!
 

What changes? Tax changes almost always apply from January.

It also now seems from other reports that the RTN report may be seriously flawed - don't believe everything you read in the expat rags until it is confirmed from reliable sources.

Re: Pips are squeaking!
 

Unfortunately it would seem that the attributes and efficiencies suggested for Spanish bureaucracy don't always come to fruition in reality. A close friend had owned his property in Spain for over 12 years and during this time had never paid any taxes on it arguing that it was unfair to be charged a tax on something that had never happened (he had never rented out his property). Whether or not you agree that was his stance.
When he sold over two years ago, the 3% was retained by the Notary. Six months ago he received all the money back plus interest of 8% of the money as the tax office hadn't paid it back quickly enough.

Re: Pips are squeaking!
 

I can see your friends view re the non resident tax I too have never rented our house out. I pay my non resident tax it is not much to be honest but it is with reluctance for the same reason as your friend. I too thought the 3% retainer would be lost but having read a bit more on that one it seems really to only cover for CGT I may be wrong. They do however say that part of the non resident tax is because the government have to pay for infrastructure to enjoy using your property I.e. roads airports etc but the main thing is imputed rental, sounds a bit like covering all bases really as one already pays for local amenities and of course IBI.

Re: Pips are squeaking!
 

Yes, the 3% is just for CGT.

If the seller has not paid the local taxes and NR income tax, this usually comes up prior to the sale and the back taxes and any fines have to be paid before the sale can proceed.

I understand that is what is supposed to happen but what happens in practice may be different (as always!)

Re: Pips are squeaking!
 

I thought that non residents werent allowed access to the health system apart from emergency treatment when they have to use either travel insurance or UK EHIC (where the cost of treatment is refunded by UK NHS).

Re: Pips are squeaking!
 

Correct, but this is what I mean by abuse.some residents, who class themselves as non resident use the EHIC as some form of health cover when there is an emergency.
For other medical care and prescriptions, it's a budget airline flight back to the UK!
How thy get away with it, I don't know.
With regard to non resident taxes, even if you don't rent it out you have to pay imputed rental tax, ie charged as if you do.
Is that not correct Fred?

Re: Pips are squeaking!
 

Yes, you do have to pay it.

There again, many NRs don't bother and get away with it. It tends to get picked up when you sell though.