# taxes payable on house sales



## barbara preston (Sep 8, 2007)

Can anyone answer my questions on what taxes would be payable should we sell our Spanish property? We are British, retired, resident in Spain and have owned our house for the past 9 years or so and paying taxes in the UK. Should we sell our house what taxes would we be liable for if a) we bought another property in Spain b) we rented a property in Spain or c) we left Spain to live elsewhere in Europe? Any accurate info. will be most appreciated. Thanks in anticipation.


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## Tallulah (Feb 16, 2009)

barbara preston said:


> Can anyone answer my questions on what taxes would be payable should we sell our Spanish property? We are British, retired, resident in Spain and have owned our house for the past 9 years or so and paying taxes in the UK. Should we sell our house what taxes would we be liable for if a) we bought another property in Spain b) we rented a property in Spain or c) we left Spain to live elsewhere in Europe? Any accurate info. will be most appreciated. Thanks in anticipation.


Hello Barbara.

The answer would be relatively straightforward - unfortunately it is made hugely complicated by your statement "and paying taxes in the UK". For some reason, it seems to be commonly believed that there is a choice of where tax is paid. There isn't!!! What there is is a double taxation treaty - so that if you pay tax in the UK on a particular transaction because it is automatically paid at source, or whatever, then this will be taken into account when you do your tax declaration in Spain. 

To answer your question re tax payable on principle property sale - if the money is reinvested in your next primary property, there should be no tax to pay. Otherwise there is the normal capital gains (ganancia patrimonial) based on cost of purchase vs cost of sale - and I'm not sure in this particular ganancia patrimonial if changes made recently also apply. This is where a flat 18% is paid on profits as opposed to the past system of normal tax (20% plus or whatever your tax band is) and deductions for years of ownership, etc.

The bad news : is that all your worldwide income should have been declared to the Spanish authorities from day 184 of being in Spain (when your residencia commenced) and when you left the UK for tax purposes. This could take some sorting out and might be complex due to the lack of income tax payments in Spain for the last nine years. Please note by income, I mean any income - be it bank interest, policy payments, investments, normal government pensions, company pensions, private pensions, etc etc.

It might be a good time now to talk with a Gestor and get an official point of view.

Kind regards,
Tallulah.


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## barbara preston (Sep 8, 2007)

Hello Tallulah, thanks for the information, it sounds like a bit of a minefield? Do you think it likely that we shall have to pay any back tax in Spain? We are returning in a few weeks time after spending a year in France and will seek the advice of a Gestor as you suggest. Incidentally, I note that you live in Galicia, how do you find life there? We are wishing to leave the south as the heat, dust, flies and litter are becoming very difficult for us to bear. Any info. would be most appreciated. Best wishes, Barbara


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## Tallulah (Feb 16, 2009)

barbara preston said:


> Hello Tallulah, thanks for the information, it sounds like a bit of a minefield? Do you think it likely that we shall have to pay any back tax in Spain? We are returning in a few weeks time after spending a year in France and will seek the advice of a Gestor as you suggest. Incidentally, I note that you live in Galicia, how do you find life there? We are wishing to leave the south as the heat, dust, flies and litter are becoming very difficult for us to bear. Any info. would be most appreciated. Best wishes, Barbara


You have a particularly unique situation - in that you've stated you've paid tax to the UK when you shouldn't have been. In theory then one can assume correctly or otherwise that you were not resident here in Spain and in fact still resident in the UK. Otherwise, why would you pay tax in the UK?? This mix of actual vs. supposed residency and therefore also resident for tax purposes, plus the added complication that you have just mentioned re. a year in France, means that a fair ammount of unweaving will have to be done or should be done by a professional in possession of all the facts to avoid any of the, I'm sure many, pitfalls that could be present. I fear only an international Gestor Financial would be the person best equipped to deal with your situation and thereafter you will have some decisions/choices to deal with.

Having said all that, you wouldn't be the first to own a property abroad and hop to and fro.  I think that therefore a lot will depend on your status of residency at each point on the history that you mention and things might be much simpler if, for example, you have never left residency in the UK, as frontiers for passport stamping etc no longer exist. Obviously there are trackable records should anyone wish to look - bank transactions, local procurements with cards, service company records, etc - but primafacially you wouldn't be the first to be actually living in Spain although registered as resident elsewhere. Sorry to go on!! But as I said a bit of a minefield with lots of details required to get a clearer picture via a professional able to juggle all the facts!!

In my own humble opinion and please do not even think of it as professional in any form - it's simply my own knowledge - the tax to pay issue should not be too arduous (although the route to get to the bottom line might be a bit) - given that the double taxation treaties will prevent you paying tax twice, so if you do have to pay tax in Spain, the tax paid in the UK will be taken into account. That however, I fear, cannot be said for any sanciones (fines) that Hacienda may impose for 9 years of non tax declaration....though I do seem to recall something regarding 7 year backtrack, but this might be for legitimate cases and not failure to declare. Again....job for a professional who will also have to deal with any taxes issues raised by the region where you live if you are in an automous region...there are also local tax variations.

As for living in Galicia (an autonomous region made up of four provinces : Lugo, La Coruna, Orense and Pontevedra) - we absolutely love it here. We moved here four years ago - my hubby is originally from here. It hasn't the heat and dust of the South - but more rain hence the greenery - beautiful scenery and blue flag beaches - too much to mention on a post so please see the link I've added below for your interest.

GALICIA-TURISMO-TURGALICIA

Kind regards,
Tallulah.x


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## Guest (Aug 18, 2009)

When you go for the completion at the Notary there should be a retention of 3% of the 'declared' value of the property. This is set off against any capital gains tax you may need to pay in Spain. I know many non residents who have sold here and only paid the 3% and the balance was never requested. 

If the actual CGT (@18%) is less than the 3% you can claim the overpaid amount back.

Best of luck getting it sorted out.


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## Guest (Aug 18, 2009)

A couple of other costs to take into account on the sale of the property -Plus Valia (tax), a local 'artificial' capital gains tax payment not likely to be particularly high (sometimes paid be purchaser or 50-50 subject to contract/custom) and possibly a contribution to the Notary fees which are based on the value of the transaction (again this is subject to the contract and local custom).

Typically in total not more than 2000 euros but depends on various factors. Also there was a wealth tax (which I think has recently been abolished) that should have been paid during ownership (before it was abolished) which I think needs to be accounted for at the time of sale.

Whoever is handling the sale (lawyer or estate agent) should be able to give you an idea based on local practice in your area.


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