Demob

Good afternoon forum, I beg your forgiveness for this dry tax question I have, but still it's a query which I hope a member here would be kind enough to answer for me.

I am aiming to establish myself in the Costa Blanca by December of this year and then to apply for Spanish residency as soon as is practicable.

My UK property, which is my only real estate asset, is currently on the market but has not yet received an offer.

I have spent a while searching the forum and other sources to familiarise myself with the basics of the Spanish capital gains rules but have a lingering query around the sale date used in the calculation of Spanish capital gains tax.

Could someone please clarify which date that a disposal is deemed to have taken place for Spanish capital gains tax purposes when in relation to UK real estate? In Scotland, for domestic tax purposes we judge the disposal date to be when the concluding missive is sent, being the point after which neither party can remove themselves from the now legally-binding contract without penalty. I believe this is the same as the completion date in England and Wales.

I’m trying to determine whether the Spanish use this same point in time, or if their date for capital gains tax purposes is perhaps the moving in date?

So that I don't land myself with an unnecessary CGT bill, itwould be greatly appreciated if a forum member could advise me on this issue so I can know if the moving in date I agree to with this property has to occur before the end of the transition period on the 31st December or whether this can be allowed to take place at some point in 2021, as long as the missives are concluded before the transition period ends.

Thank you!

tebo53

Are you familiar with all the other necessary requirements such as minimum monthly income and healthcare for when you apply for residency?

Steve

Moses2013

Don't forget that Spain loves tax:
As a tax resident in Spain, a person has to declare all of their overseas assets (over certain levels) as well as the income from these assets. Anything sold, such as a property or investments (ISAs, shares, bonds, etc.), and even a lump sum from a pension which would be tax free in the UK, will be taxable in Spain and this is where there is a potential tax nightmare.

Our advice is usually to sell before becoming tax resident in Spain, if selling is feasible and practical. If you are eligible to take a tax free lump sum, do so before becoming tax resident in Spain. ISAs are also taxable in Spain and although there are ways to legally avoid taxes whilst holding this type of investment, things can become very complicated.

Chipmonk

If you sold your uk property before Jan then you shouldnt need to declaré the sale in your spanish tax even if you have residency before Jan. If you sell after Jan then you would declare that in your 2021 tax declaration and face GCT.

Fred James

To be fair, you are only taxed on 60% of the lump sum.

Moses2013

That's generous.

Demob

Thanks for the responses all, I appreciate the tips given.

I did acquaint myself with the Spanish system as much as possible, including those important matters mentioned by tebo53 and Moses2013. It's certainly fair to say this move is not being made to benefit us financially.

Thanks Chipmonk, your explanation there is as I understand the situation; I just wanted something a bit more definitive about when the sale is actually considered to have taken place, according to the Spanish tax system. I did expect to have sold my property by this stage, so it's the point in the calendar we find ourselves which means I'm taking a strong interest on the actual date of the sale.

In the UK for UK CGT purposes, the disposal date would be the date when contracts are exchanged (England and Wales), which I'm hoping to occur in 2020. The completion date and date of payment may be quite a bit later, potentially falling into 2021, depending on what's agreed earlier.

I just don't want to be charged Spanish CGT if I end up completing and receiving proceeds in January, after I've settled in Spain. May have to be quite a bit more aggressive with pricing to force the issue.

Chipmonk

I should imagine that the point when the money arrived in your account would be the initial start date for the taxman in Spain as that is when your uk bank would be obliged to pass on the information. It would then probably require you to argue that the sale date was earlier.

bolton wanderer

It is....If correct, the lump sum would be 40% tax free. Or have I read this wrong?

Fred James

Correct.

Keithtoon

Do you pay CGT in Spain if over 65?

Fred James

Not on your primary residence where you have lived for 3 years

Chipmonk

But this only applies to Spanish property not to UK property?

Keithtoon

Hi all,
It must be old age as I get confused!!!
We have lived in my UK home for over 20yrs.
In 2021 we hope to sell this UK home to move to Spain Oct/Nov 2021.
I will be 65 so do we all agree there is no CGT to pay?
All the best
Keith.

snikpoh

You should be OK as you may not be considered tax resident in Spain until 2022. Your sale in UK should therefore not attract any CGT in either country (IMO)