Taxes when selling
Aug 24th 2006, 10:15 am
#1
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Joined: Mar 2005
Posts: 16
Taxes when selling
Hi there, can anyone advise me what the tax position is when you sell your spanish home? I believe it is 35% for a non-resident, however does this change if the property is owned for more than two years? We moved out here a year ago, bought a property and applied for Residencia (which will not be finalised until August 2007). However we must now return to the UK. As all of our money is invested in the property we need to know the best way to sell it. It is better to try and sell now before we leave for the UK or to hold onto the property for another year, when of course we would no longer be spanish residents? Any suggestions please?
Aug 24th 2006, 11:43 am
#2
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Taxes when selling
Originally Posted by evacuateuk
Hi there, can anyone advise me what the tax position is when you sell your spanish home? I believe it is 35% for a non-resident, however does this change if the property is owned for more than two years? We moved out here a year ago, bought a property and applied for Residencia (which will not be finalised until August 2007). However we must now return to the UK. As all of our money is invested in the property we need to know the best way to sell it. It is better to try and sell now before we leave for the UK or to hold onto the property for another year, when of course we would no longer be spanish residents? Any suggestions please?
If you are resident the tax rate is currently 15% and for non residents it is 35%. This is likely to be changed to 18% for residents and non residents alike next year.
To be frank, assuming that you do not intend to return to Spain the cheapest option is to sell the house as non residents when 5% of the sale price will be witheld by the buyer on behalf of the taxman.
You are supposed to pay the CGT less the 5%. If you choose not to do so, I doubt that there will be any problems - that is precisely why they have this 5% retention.
If you wait until 2007 to sell, and assuming that these new tax rules go ahead, then the tax liabiliy will be almost halved and I also understand that the retention is dropping to 3%.
Aug 24th 2006, 1:42 pm
#3
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Joined: May 2004
Location: Guadalhorce Valley, Málaga
Posts: 1,059
Re: Taxes when selling
These are only proposals which have yet to pass through the Cortes.
The EU has directed that the CGT should be the same for residents and non-residents but they could standardise it at 35% for all of us.
However, if the rate is lowered for non-residents AEAT will be looking for ways of making up the shortfall and one proposal also being considered is that a non-resident will only be able to sell on production of a certificate from the tax authorities that non-resident taxes, ie notional income tax and wealth tax, have been paid each year during the period of ownership of the property.
The EU has directed that the CGT should be the same for residents and non-residents but they could standardise it at 35% for all of us.
However, if the rate is lowered for non-residents AEAT will be looking for ways of making up the shortfall and one proposal also being considered is that a non-resident will only be able to sell on production of a certificate from the tax authorities that non-resident taxes, ie notional income tax and wealth tax, have been paid each year during the period of ownership of the property.
