# Selling house in UK - taxed in Spain?



## petelongman (Jul 20, 2014)

Hi All!
Moving to Spain to live and work next month and still trying to sell house here in the UK. Should have a good amount of equity on it when we do. Someone has said however that if we sell in UK when we are resident in Spain we will be subject to tax on the equity in Spain? Can anyone clarify this? Cheers!


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## xabiaxica (Jun 23, 2009)

petelongman said:


> Hi All!
> Moving to Spain to live and work next month and still trying to sell house here in the UK. Should have a good amount of equity on it when we do. Someone has said however that if we sell in UK when we are resident in Spain we will be subject to tax on the equity in Spain? Can anyone clarify this? Cheers!


:welcome:

when you are tax resident in Spain, you have to declare all worldwide income, so yes, you would have to declare it here - & yes, you would be liable to pay tax on the equity in the same way as if it had been property in Spain


precise rules vary from comunidad to comunidad, though, as to how that is calculated


if you are moving here next month, you won''t be tax resident this year - not until you have been in Spain 183+ days in 2015

your first tax return will be in May/June 2016


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## 90199 (Mar 21, 2010)

We sold our U.K. home before we became tax residents in Spain, therefor no tax to pay.


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## extranjero (Nov 16, 2012)

Hepa said:


> We sold our U.K. home before we became tax residents in Spain, therefor no tax to pay.


But what a lot of people don't realise is, that if they sold their house before moving to Spain, and spent more than 183 days in Spain, in that year, they still have to declare the profit on their house on their tax returns the following year.
Sell it and move to Spain after July 2 nd and it's fine.


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## Chopera (Apr 22, 2013)

The tax is not on equity, it is on the profit you make from when you bought it. I believe that if you sell in the UK and buy in Spain within a certain amount of months then you don 't pay tax anyway, because it is viewed as a residential property transaction. The problem arises if you sell in the UK, become a tax resident in Spain the same year, and then start renting in Spain. They view the profit you made on your UK home as being from an investment rather than residential property because you haven't sold it in order to buy somewhere else to live. Also, I think I read somewhere that this tax isn't applied if you are over 65 - but you need to check with an expert if this applies to you.


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## extranjero (Nov 16, 2012)

Chopera said:


> The tax is not on equity, it is on the profit you make from when you bought it. I believe that if you sell in the UK and buy in Spain within a certain amount of months then you don 't pay tax anyway, because it is viewed as a residential property transaction. The problem arises if you sell in the UK, become a tax resident in Spain the same year, and then start renting in Spain. They view the profit you made on your UK home as being from an investment rather than residential property because you haven't sold it in order to buy somewhere else to live. Also, I think I read somewhere that this tax isn't applied if you are over 65 - but you need to check with an expert if this applies to you.


I did actually say it was on the profits!
The roll over relief when you use the money from the sale to buy a property in Spain ,does mean you won 't have to pay cgt, true, but some use eg half and keep the rest as a sum to live on, In which case you would pay on the amount not invested.


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## Chopera (Apr 22, 2013)

extranjero said:


> I did actually say it was on the profits!
> The roll over relief when you use the money from the sale to buy a property in Spain ,does mean you won 't have to pay cgt, true, but some use eg half and keep the rest as a sum to live on, In which case you would pay on the amount not invested.


I was clarifying what the OP said so apologies if it came out after your post (I try not to quote posts if I can because it makes the thread rather long).

Another factor these days is the UK is going to tax property sold by non-residents (I think it comes in next year) so people have to be doubly careful about holding on to a UK property and then selling it after they become resident in Spain.


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## Horlics (Sep 27, 2011)

I think most people in the UK use the words "equity" and "profit" to mean the same thing (and both can be negative).


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## Chopera (Apr 22, 2013)

Horlics said:


> I think most people in the UK use the words "equity" and "profit" to mean the same thing (and both can be negative).


If they do then they are very wrong. In terms of property, equity is simply difference between the value of the house and the outstanding mortgage. 

If I buy a house for €500k with a €300k mortgage then I already have €200k equity in the property to begin with. 

If in 25 years time I have paid off the mortgage and the house is worth €600k then I have €600k of equity and (in theory) made €100k profit. If I sell for €600k then any tax would be applied to the €100k profit I make, not to the €600k equity I release.


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## Williams2 (Sep 15, 2013)

Chopera said:


> I was clarifying what the OP said so apologies if it came out after your post (I try not to quote posts if I can because it makes the thread rather long).
> 
> Another factor these days is the UK is going to tax property sold by non-residents (I think it comes in next year) so people have to be doubly careful about holding on to a UK property and then selling it after they become resident in Spain.


Just out of interest - for those Expats living in Spain - who have become Residents
of Spain but have little or no intention of staying longer than a couple of years
or so before returning to the UK to become permanent UK residents.

I assume the declaration of their former UK residential property will have little
or no effect on them - if as seems likely in such cases - the returning Expat waits
the required 183 days in the UK ( to get full UK Residency again ) before
selling he's British property.


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## Williams2 (Sep 15, 2013)

Also who Police's the Expats declaration of property abroad - as I was chatting
to one British Expat who recently made he's declaration - who said he was
frankly surprised that the Spanish Authorities don't ask for documentary 
proof of how much you paid for your house in England back in 1995 or
whenever you bought it and simply - took he's word for it - that he paid
x number of thousands of pounds for it.

He laughed that he could have declared that he paid - the value it was
today, as they never asked for any documentary proof on it !!
Which seems crazy to me !!!!


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## Chopera (Apr 22, 2013)

Williams2 said:


> Just out of interest - for those Expats living in Spain - who have become Residents
> of Spain but have little or no intention of staying longer than a couple of years
> or so before returning to the UK to become permanent UK residents.
> 
> ...


If you don't sell then there's no tax to pay. Well there's no tax on capital gains to pay. If you rent out the UK property, or its value pushes you over the limit for Spanish wealth tax then you might be liable for other taxes, but the OP was asking about taxes on selling a house in the UK.


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## Chopera (Apr 22, 2013)

Williams2 said:


> Also who Police's the Expats declaration of property abroad - as I was chatting
> to one British Expat who recently made he's declaration - who said he was
> frankly surprised that the Spanish Authorities don't ask for documentary
> proof of how much you paid for your house in England back in 1995 or
> ...


You generally don't have to provide proof of many things you declare on a tax return either. You can lie as much as you like. Provided they don't come after you. Then you have to prove everything.


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## mrypg9 (Apr 26, 2008)

Horlics said:


> I think most people in the UK use the words "equity" and "profit" to mean the same thing (and both can be negative).


Only very inexperienced people

Can you give an example of 'negative profit'? Most businesspeople surely use the word 'loss' as in 'P&L account'. Profit means excess return over outlay. Equity is a value or a share,which as you say can be either positive or negative.
So equity on a property is what is left, if anything, when debt is deducted from current value.


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## trixter2404 (Jul 22, 2014)

extranjero said:


> But what a lot of people don't realise is, that if they sold their house before moving to Spain, and spent more than 183 days in Spain, in that year, they still have to declare the profit on their house on their tax returns the following year.
> Sell it and move to Spain after July 2 nd and it's fine.


Sounds to me that the key here is calendar year and the midpoint being the start of July. Move between July 2 and the year is clear for tax purposes on your property sale. I am also in the process of selling in the UK and moving to Majorca so the tip on timing is very relevant. Thanks all


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## petelongman (Jul 20, 2014)

*Interesting feedback!!!!*



Chopera said:


> The tax is not on equity, it is on the profit you make from when you bought it. I believe that if you sell in the UK and buy in Spain within a certain amount of months then you don 't pay tax anyway, because it is viewed as a residential property transaction. The problem arises if you sell in the UK, become a tax resident in Spain the same year, and then start renting in Spain. They view the profit you made on your UK home as being from an investment rather than residential property because you haven't sold it in order to buy somewhere else to live. Also, I think I read somewhere that this tax isn't applied if you are over 65 - but you need to check with an expert if this applies to you.


So.....if we sell for less than we originally paid fot it, we don't pay the tax....we are likely to sell for 20K less than we paid - but we will still have about £90K equity in it once we have paid what we owe on the mortgage, So we should be ok then??? Can someone confirm this? Cheers


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## StewartL (Sep 5, 2013)

Correct there is no tax payable if you sell for less than you purchased the property for.


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