Selling In Spain and Taxation problem

[casey]

Hey Guys,
Please could someone out there help me?? I have posted this question on here before but I have had some new info recently.
We are hoping to put our house on the market next month, with view to returning to the UK by the winter.
The problems that I have are tax.
We have been living in Spain for 2 yrs but have never applied for our residencia, which obviously makes us non resident. When we sell our property, people have told us that we will have to pay 35% Capital Gains tax I understand that as non residents the notary will hold back 5% right from the start, but then we need to pay another 35% later. Has anyone sold in the last few months, that can help. One suggestion that I have had is that we hand over the 5% then do a runner, but I would've thought the notary would take all tax owing at the start??
Is this tax lower if we become residents???
If this is the case and we do have to pay all this in tax then we'll never be able to afford a property in the UK!!!!
A solicitor has told me that the 35% is nonsense and that people tell you that to scare you????
For example said house sold for 400,000 euros what on earth would the tax be then, this seems very high.
I understand it was introduced to stop people doing runners but there must be a solution otherwise we'll never get out of this country!!!!!!

Really grateful for as much advice as possible

Thanks

[jonathan]

Hey Casey,
I sold last year as a non resident. Don't be scared. It's not that bad at all.

The reason they withold more tax as a non resident is precisely because people often do a runner. By withholding the % of the selling price, rather than the 35% CGT, it works out more or less the same so you don't get another bill for CGT after you've sold.

You can claim back the tax, at least part of it. You are charged the 5% on the day and then you get your solicitor to start the proceedings to claim back. To do this is a tad complicated and takes a while.

In short you apply to pay CGT. You'll be given a bill of the difference between the 5% and the 35% CGT. There isn't usually a difference at all. You can deduct from that bill any money spent on significant improvements to the property, the estate agents fees and other sales related fees. Make sure you have receipts for everything and make sure the agent has paid plus valia and that he gives you a receipt for his fee. Don't pay him in cash. It'll probably piss him off but you have more of a chance of proving that you paid him which can be a sticking point later on.
Keep in touch

[Glyn the Lawyer]

Hi,

The laws regarding CGT frequently alarm but are in essence straightforward.

At the time of sale 5% of the declared price will be retained and paid to the Hacienda within 30 days using modelo 211. As a seller you should then file modelo 212 and pay any additional tax or apply for a refund. Actual tax due is normally calcuated by your lawyer or gestor and put basically it equates to 35% of the difference between the purchase price + costs and the declared price at the time of sale less sale costs. In reality the 5% retained is often more than the actual tax due but should a seller fail to file modelo 212 the hacienda will not automatically return monies due.

Please however be aware that the law is changing from next year.

regards

Glyn Moran
Partner
CB Legal & Fiscal Consultants
Tel.: +34 966 472 660 / +34 699 838 795 / Fax: +34 966 472 510
info@legalandfiscal.com / Costa Blanca Legal and Fiscal
Apply for our free full 26 page legal guide at guidebook@legalandfiscal.com

CB legal & Fiscal Consultants represent clients across Spain. A full list of members is available on request.

[anna2]

Depending on the region, as little as 3% will be withheld on sale. CGT is now 18% for non-residents.

[Glyn the Lawyer]

As I indicated in my message posted more than one year ago (dated 07-11-2006 ) the law would be changing and indeed it now has (more than a year ago). The retención is now 3% and CGT is 18%.

This is a state tax payable through modelo 211 after Completion. Modelo 212 still applies for filing of non-resident CGT returns.

G Morán

[harrybloke]

I was wondering whether anybody would be able to answer my question or direct in the right area. My father & mother in law own a holiday home in spain. Last year my father died & we are still trying to sort out the property. A will has been written leaving the property to the survivor however I have heard that my mum in law would have to pay inheritance tax. is this correct? Thanks Ann

[michaelbush]

Originally Posted by harrybloke

I was wondering whether anybody would be able to answer my question or direct in the right area. My father & mother in law own a holiday home in spain. Last year my father died & we are still trying to sort out the property. A will has been written leaving the property to the survivor however I have heard that my mum in law would have to pay inheritance tax. is this correct? Thanks Ann

Was the will a Spanish Will? I believe that under Spanish law the sons also have to be included in a will. That normally will diminish each persons liability to CGT. Hopefully Glyn can clarify this more.

[Mark pmp]

Hi Harry,

If the inheritance is not declared for a period of 5 years from the date of death then there is no tax to pay.

Kind Regards

Mark

The Property Mortgage Partnership SL

Hotel Barcelo, Guadalmina Alta,

San Pedro de Alcantara, 29678.

Marbella, Malaga, Spain



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