# Cgt lol - legal advice



## Megsmum (Sep 9, 2012)

Emailed law firm



> we are selling our house here in the UK - our primary residence which we bought in 2003
> 
> The gain from the original price and the expected selling price will be 150K.
> 
> ...


response



> No, you do not have to pay CGT in Spain, as the sold property is located in UK and is subject to BritishTax And Propety Law. Spain has no competences there.
> 
> Regards,





> Follow up clarifyer
> 
> ? even if I am tax resident in Spain
> 
> ...


? 


Reply



> Yes, as I indicated in my previous post, if the sold property is located in the UK, the sale will be taxed in the UK, regardless on the destination you have for the profit.
> 
> The Spanish Tax office will ask where the funds come from but won´t tax them.
> 
> Regards,


Go Figure

Welcome to the wonderful world of the Spanish system Llane:


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## mrypg9 (Apr 26, 2008)

cambio said:


> Emailed law firm
> 
> 
> 
> ...



That's what I thought and it seems perfectly logical. We sold our house which we had lived in and our business premises after leaving the UK and paid only what was due under UK rules.


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## extranjero (Nov 16, 2012)

*Cgt*

That proves that a little knowledge is a dangerous thing, following all the posts stating the opposite.
Thanks for finding that out-it will come as a huge relief to many!


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## Megsmum (Sep 9, 2012)

extranjero said:


> That proves that a little knowledge is a dangerous thing, following all the posts stating the opposite.
> Thanks for finding that out-it will come as a huge relief to many!


My only caveat as is with all things Spanish - check it yourself with someone legal and then makie your own decision I dont want anyone coming back in a year with tales of CGT bills based on my posts -


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## mrypg9 (Apr 26, 2008)

extranjero said:


> That proves that a little knowledge is a dangerous thing, following all the posts stating the opposite.
> Thanks for finding that out-it will come as a huge relief to many!


Some people enjoy worrying, as I said.

Sometimes using a bit of common sense helps. Spanish laws and rules may be a little complicated at times but Spain isn't Outer Mongolia, although the way some British immigrants see it, it might as well be.


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## rewdan (Feb 23, 2010)

we are in a similar situation, about to sell our house in the Uk and move to Spain, already putting the kids into school. Would like to know what your legal advice was.

Our capital gain in the uk has a 100% exemption as it was our home but an exemption is different to zero rated, therefore if I am resident for tax in Spain that year, surely it's possible that they charge me the difference I paid/didn't pay in the uk (under the double taxation treaty). Which would then be taxed on 100% of the gain.


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## gus-lopez (Jan 4, 2010)

extranjero said:


> That proves that a little knowledge is a dangerous thing, following all the posts stating the opposite.
> Thanks for finding that out-it will come as a huge relief to many!


The little difference is " once I have GAINED residency" 
Try Asking the same question with " I am a spanish resident, & tax resident" .You are liable for CGt on it. The same as if it was the other way around & you live & are resident in the UK.


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## gus-lopez (Jan 4, 2010)

rewdan said:


> we are in a similar situation, about to sell our house in the Uk and move to Spain, already putting the kids into school. Would like to know what your legal advice was.
> 
> Our capital gain in the uk has a 100% exemption as it was our home but an exemption is different to zero rated, therefore if I am resident for tax in Spain that year, surely it's possible that they charge me the difference I paid/didn't pay in the uk (under the double taxation treaty). Which would then be taxed on 100% of the gain.


Unless you tell them, they won't know that you had a house. All you will have is a pile of money earning interest.
Never offer answers to questions that have not been asked .


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## rewdan (Feb 23, 2010)

gus-lopez said:


> Unless you tell them, they won't know that you had a house. All you will have is a pile of money earning interest.
> Never offer answers to questions that have not been asked .


I guess the problem is just in case they find out, we don't want to take the risk as the gain is quite big. If that means we go back to the uk for more time and not spend 183 days in Spain then we would rather do that than take the risk. Problem is that our kids are in school in Spain so we will look like we should be resident.

We both have buisnesses in the Uk, and at the moment 2 houses, one rented out, one up for sale. All our families are in the Uk as well so we have ties there but our kids are in Spain so that is our concern.


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## gus-lopez (Jan 4, 2010)

rewdan said:


> I guess the problem is just in case they find out, we don't want to take the risk as the gain is quite big. If that means we go back to the uk for more time and not spend 183 days in Spain then we would rather do that than take the risk. Problem is that our kids are in school in Spain so we will look like we should be resident.
> 
> We both have buisnesses in the Uk, and at the moment 2 houses, one rented out, one up for sale. All our families are in the Uk as well so we have ties there but our kids are in Spain so that is our concern.


I would have thought that with children in school here, regardless of still a UK resident & owning & running businesses there, both tax regimes would look upon it as" centre of economic interests" & regard you as Spanish tax resident. 
HMRC might put up a bit of a fight as they could be losing a lot of income , but normally children in school = tax resident.

Theer was a case in the UK , last year I think, where the millionaire hadn't been in the UK for some years but still their but was tax resident elsewhere. The courts found that as all the children went to P/schools & used the house for living, his centre of economic interest was the UK & he was liable for all the back tax!!


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## Megsmum (Sep 9, 2012)

rewdan said:


> we are in a similar situation, about to sell our house in the Uk and move to Spain, already putting the kids into school. Would like to know what your legal advice was.
> 
> Our capital gain in the uk has a 100% exemption as it was our home but an exemption is different to zero rated, therefore if I am resident for tax in Spain that year, surely it's possible that they charge me the difference I paid/didn't pay in the uk (under the double taxation treaty). Which would then be taxed on 100% of the gain.


I emailed a law firm dealing with tax. Because I am not in Spain I really do not feel able to "offer" advice etc, at the moment I am simply repeating what I have been told. 

If we do not sell in 2013 we will make sure we do not become tax residents until 2nd July 2014 just to be sure.


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## rewdan (Feb 23, 2010)

I think we will do the same, I have now spent many hours researching the subject and the best bet at the mo would seem to be what you have said. The problem at the mo seems to be that the new DTA hasn't been through both parliaments so it's unlikely that anyone (professional) will give an open opinion yet, doubled with the HMRC Uk resident test for tax still not being available, it's limbo land. 
My way forward is that I am not even on the market yet in the uk for selling my house. So we shall wait and see what happens.
Oddly in my situation, I have owned my house in Spain for 13 years and never been question about residency, always up to date in the uk and in Spain with my non res taxes so I can't see it changing overnight


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## extranjero (Nov 16, 2012)

*cgt*



rewdan said:


> I think we will do the same, I have now spent many hours researching the subject and the best bet at the mo would seem to be what you have said. The problem at the mo seems to be that the new DTA hasn't been through both parliaments so it's unlikely that anyone (professional) will give an open opinion yet, doubled with the HMRC Uk resident test for tax still not being available, it's limbo land.
> My way forward is that I am not even on the market yet in the uk for selling my house. So we shall wait and see what happens.
> Oddly in my situation, I have owned my house in Spain for 13 years and never been question about residency, always up to date in the uk and in Spain with my non res taxes so I can't see it changing overnight


On other legal forums I have read that if you move sell your main residence in UK, move to Spain before July the same year, you will NOT have to pay cgt on the sale of the UK house, even though you are regarded as being tax resident for the whole of 2012, although still a tax resident of UK when it was sold;Does anyone know the truth on this?


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## el pescador (Mar 14, 2013)

Does cgt work the same way like in the uk?
Ie. if you make a loss one year you can include that on next years figure?

Lets say its stocks and shares.


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## rewdan (Feb 23, 2010)

extranjero said:


> On other legal forums I have read that if you move sell your main residence in UK, move to Spain before July the same year, you will NOT have to pay cgt on the sale of the UK house, even though you are regarded as being tax resident for the whole of 2012, although still a tax resident of UK when it was sold;Does anyone know the truth on this?


I would love to know if anyone has the answer


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## extranjero (Nov 16, 2012)

I bet most people move to Spain without a thought about this;only now is it coming to light with the advent of 720


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## Aron (Apr 30, 2013)

el pescador said:


> Does cgt work the same way like in the uk?
> Ie. if you make a loss one year you can include that on next years figure?
> 
> Lets say its stocks and shares.



Stocks and shares are different. Each year you pay tax on the dividends. As for the shares themselves, you only pay CGT when you sell them, if you make a profit. Having said that, you can make money on shares up to a certain limit before paying CGT


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## extranjero (Nov 16, 2012)

*cgt*



rewdan said:


> I would love to know if anyone has the answer


See belegal.com and go to the section on taxes. The answer about paying cgt is opposite to other answers given, but I bet it is the one we want to see!


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## JaneyO (Sep 24, 2012)

extranjero said:


> See belegal.com and go to the section on taxes. The answer about paying cgt is opposite to other answers given, but I bet it is the one we want to see!


 I went to that site, it looks very useful, but I couldn't find the bit you refer to above, can you paste the answer here?


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## rewdan (Feb 23, 2010)

i am looking at it now, you will find it in the forums


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## CapnBilly (Jun 7, 2011)

extranjero said:


> See belegal.com and go to the section on taxes. The answer about paying cgt is opposite to other answers given, but I bet it is the one we want to see!


I wouldn't be relying on that, it's clearly wrong advice. This link from Blevins clearly states the opposite http://www.blevinsfranks.com/EN/news/104/608?newsCategoryPK=0

This is another one from Blevins http://www.blevinsfranks.com/EN/news/104/949?newsCategoryPK=0


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## rewdan (Feb 23, 2010)

so who is right? Blevinsfranks or Patricia from Lawbirds. Truth is I don't think we will find out in the short term, I am no legal eagle but my guess is that this subject needs to go to court and until it does we won't know


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## CapnBilly (Jun 7, 2011)

rewdan said:


> so who is right? Blevinsfranks or Patricia from Lawbirds. Truth is I don't think we will find out in the short term, I am no legal eagle but my guess is that this subject needs to go to court and until it does we won't know


I think I would put my money on Blevins. I don't think it needs to go to court, you just need proper legal advice. I could post other links from law sites which say the same thing as Blevins.

Forums are great for getting advice, but when it comes to it costing you hard cash, I would definitely be taking advice, to be on the safe side, IF I was intending to be resident when I crystallised the gain. Otherwise I would make sure that I was non-resident at the time. I would definitely not be risking it.

There was thread on here last week about a report in the Costa Blanca News about a resident being told that he would have to pay CGT on a UK property sold in January 2013, unless he became non resident. It was reported as a consequence of completing the modelo 720, which it wasn't, but clarifies the position as I posted.


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## Megsmum (Sep 9, 2012)

CapnBilly said:


> I think I would put my money on Blevins. I don't think it needs to go to court, you just need proper legal advice. I could post other links from law sites which say the same thing as Blevins.
> 
> Forums are great for getting advice, but when it comes to it costing you hard cash, I would definitely be taking advice, to be on the safe side, IF I was intending to be resident when I crystallised the gain. Otherwise I would make sure that I was non-resident at the time. I would definitely not be risking it.
> 
> There was thread on here last week about a report in the Costa Blanca News about a resident being told that he would have to pay CGT on a UK property sold in January 2013, unless he became non resident. It was reported as a consequence of completing the modelo 720, which it wasn't, but clarifies the position as I posted.


exactly which is why we will not e taking the risk, we will ensure we are not resident in any tax year that we sell, even if that delays the move


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## rewdan (Feb 23, 2010)

I still feel unsure either way, however I will not be taking residency in Spain unless I am 100% sure they cant tax the pofit on my uk main residence. too much to loose if it only delays my stay in the uk for another year


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## xabiaxica (Jun 23, 2009)

rewdan said:


> I still feel unsure either way, however I will not be taking residency in Spain unless I am 100% sure they cant tax the pofit on my uk main residence. too much to loose if it only delays my stay in the uk for another year


you don't 'take residency'

if you're here 90 days consecutive then you are considered resident, whether you register or not

if you are here 183 days in a calendar year you are tax resident 

you can of course choose not to spend 90 consecutive days, nor 183 days in a calendar year, here


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## extranjero (Nov 16, 2012)

*cgt*



CapnBilly said:


> I wouldn't be relying on that, it's clearly wrong advice. This link from Blevins clearly states the opposite http://www.blevinsfranks.com/EN/news/104/608?newsCategoryPK=0
> 
> This is another one from Blevins http://www.blevinsfranks.com/EN/news/104/949?newsCategoryPK=0


I looked at the Blevins link-it states about selling your UK house AFTER you become a tax resident;What if you sell it i UK before you move to Spain. Even if you move in eg May and become resident, you were NON resident when you sold it in UK.


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## CapnBilly (Jun 7, 2011)

extranjero said:


> I looked at the Blevins link-it states about selling your UK house AFTER you become a tax resident;What if you sell it i UK before you move to Spain. Even if you move in eg May and become resident, you were NON resident when you sold it in UK.


In Spain, you're either resident or not for the whole year. That's why I said you need proper professional advice. You're trying to argue from a logical and moral standpoint, and when you've been resident for a few years, you'll realise that it doesn't work like that in Spain. If you want to risk it, then good luck to you.


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## extranjero (Nov 16, 2012)

*cgt*



CapnBilly said:


> In Spain, you're either resident or not for the whole year. That's why I said you need proper professional advice. You're trying to argue from a logical and moral standpoint, and when you've been resident for a few years, you'll realise that it doesn't work like that in Spain. If you want to risk it, then good luck to you.


Luckily I don't have this problem, and I have been in Spain a long time; I know someone thinking of moving here and it does concern him as he has been given conflicting advice.(haven't we all!)I've directed him to Blevins Franks so he can talk to them


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## extranjero (Nov 16, 2012)

Is it true that if the uk property was bought before 1986 it would be exempt from cgt anyway?


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## rewdan (Feb 23, 2010)

extranjero said:


> Luckily I don't have this problem, and I have been in Spain a long time; I know someone thinking of moving here and it does concern him as he has been given conflicting advice.(haven't we all!)I've directed him to Blevins Franks so he can talk to them


can you keep us posted how your friend gets on?


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## rewdan (Feb 23, 2010)

xabiachica said:


> you don't 'take residency'
> 
> if you're here 90 days consecutive then you are considered resident, whether you register or not
> 
> ...


Thats exactly what I meant, I won't take tax residency as I will remain in the uk for 183 days


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## extranjero (Nov 16, 2012)

*cgt*

Do you think the average ex pat understands the implications of this when they move here? There must be thousands who sold up in UK and moved here before 2nd July and are living in blissful ignorance, and it doesn't help when "experts" have opposite views!


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## rewdan (Feb 23, 2010)

extranjero said:


> Do you think the average ex pat understands the implications of this when they move here? There must be thousands who sold up in UK and moved here before 2nd July and are living in blissful ignorance, and it doesn't help when "experts" have opposite views!


Exactly my own thoughts, do we have to wait and see if an existing expat that sold up and moved to Spain gets a bill from the Hacienda and either pays it or doesn't have to pay it. Chances are it would never be reported anyway so how would anyone know the truth unless they had first hand experience.


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## rewdan (Feb 23, 2010)

rewdan said:


> Thats exactly what I meant, I won't take tax residency as I will remain in the uk for 183 days


On reading the tie breaker rules in the JTA between Spain and the Uk, being in Spain for 183 days does not necessarily make you tax resident in Spain if you can prove tax residency in the Uk under those tie breaker rules.

It's not easy, huh!


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## Megsmum (Sep 9, 2012)

extranjero said:


> Do you think the average ex pat understands the implications of this when they move here? There must be thousands who sold up in UK and moved here before 2nd July and are living in blissful ignorance, and it doesn't help when "experts" have opposite views!



Exactly, which is why I posted the original question. We were unaware of this and if the house had not sold this year but in 2014 it would not have occurred to me about the CGT on the house. Because I have had 3 different legal opinions for us the sensible thing is to ensure we are not tax resident in 2014, Which is what we are planning now, it delays the actual physical move for a few months, but hey we have the rest of our lives


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## rewdan (Feb 23, 2010)

cambio said:


> Exactly, which is why I posted the original question. We were unaware of this and if the house had not sold this year but in 2014 it would not have occurred to me about the CGT on the house. Because I have had 3 different legal opinions for us the sensible thing is to ensure we are not tax resident in 2014, Which is what we are planning now, it delays the actual physical move for a few months, but hey we have the rest of our lives


same for us, just a shame my kids have just started school in Spain and are loving it, but if I need to bring them back here to the Uk and wait a while then I will


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## CapnBilly (Jun 7, 2011)

There's a letter about this topic in the Euro Weekly News this week, with a response from David Searle. He caveats his response by saying you should seek legal advice ( don't we all), but essentially he says it should be declared for CGT.


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## extranjero (Nov 16, 2012)

CapnBilly said:


> There's a letter about this topic in the Euro Weekly News this week, with a response from David Searle. He caveats his response by saying you should seek legal advice ( don't we all), but essentially he says it should be declared for CGT.


So, what implications does it now have for those in that situation who moved to Spain years ago?


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## CapnBilly (Jun 7, 2011)

Well, I would have thought that if it was over 5 years ago, then it's probably outside the statute of limitations, and you're okay. If not, then you have two choices. Either declare it now, and take it the hit, or wait to see what happens, if anything. The risk increases if you still have assets over €50,000 and declared them on the 720, and your report showed them as being received during the four years. So for example, if you reported an account over €50k when you were a resident, you may get asked to provide evidence of the source of funds.

Whether you get investigated or not is anyone's guess.


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## JaneyO (Sep 24, 2012)

CapnBilly said:


> Well, I would have thought that if it was over 5 years ago, then it's probably outside the statute of limitations, and you're okay. If not, then you have two choices. Either declare it now, and take it the hit, or wait to see what happens, if anything. The risk increases if you still have assets over €50,000 and declared hem on the 720, and your report showed them as being received during the four years. Whether you get investigated or not is anyone's guess.


I thought they had abolished the statute of limitations when they brought out that modelo 720 legislation? Have I got that wrong- it often happens!


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## CapnBilly (Jun 7, 2011)

You might be right on that. . That's certainly the case for assets you didn't report, but I'm not 100% clear on assets you reported.


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## Aron (Apr 30, 2013)

JaneyO said:


> I thought they had abolished the statute of limitations when they brought out that modelo 720 legislation? Have I got that wrong- it often happens!


That is nothing new, either in Spain or the UK if fraud is suspected. You're legally bound in the UK and Spain to keep financial paperwork for 4 years plus the current year.


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## JaneyO (Sep 24, 2012)

Aron said:


> That is nothing new, either in Spain or the UK if fraud is suspected. You're legally bound in the UK and Spain to keep financial paperwork for 4 years plus the current year.


No arguments about the past 4/5 years, just wondered if they can now go back as far as they like on anything eg cgt, that is the question.


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