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Where Taxpayers and Advisers Meet

Living in Spain, sold UK house (prev main residence)

chrissx
Posts:12
Joined:Thu Apr 14, 2016 1:21 pm
Re: Living in Spain, sold UK house (prev main residence)

Postby chrissx » Sun May 01, 2016 11:51 pm


I understand the worldwide income issue and declaring assets but I would think that any tax payable would not be on total sale of property, in other words there must be allowances for main residence surely and cgt only paid on profit.
Sorry I mean this link http://www.abacoadvisers.com/spain_expl ... -tax-spain? (Sorry don't know how to make it clickable)

The link above is to ABACO advisors. Have a read through the questions and answers. This one may be of interest ....

#57 Submitted by Laura on Sun, 17 Jan 2016 reply
Hi, we bought a property in the UK in Dec 1999 for £55k. We lived in it until Jan 2008 when we moved to Spain. We rented in Spain initially and then bought a property in June 2012 which we now live in. The property in the UK is now worth about £175k. As we are tax resident in Spain, I know we will have to pay CGT if we sell it, but how is this calculated? Can we offset the years we lived in the UK property as it was our primary residence (as you can in the UK)? I know we can deduct purchase costs and any improvements etc but I have barely any invoices for this so the gain would not be reduced much in this way. Also, is there any deduction for mortgage interest? Thanks
#58 Submitted by Suzanne O'Connell on Tue, 19 Jan 2016 reply
Dear Laura
Unfortunately you are not able to offset the years that you lived in your house when it was a primary residence. Neither can you deduct for mortgage interest. As you mention, you can deduct purchase cost and any improvements but you must have the invoices for the improvements you've made. 

kilrail
Posts:6
Joined:Sat Apr 09, 2016 9:42 am

Re: Living in Spain, sold UK house (prev main residence)

Postby kilrail » Mon May 02, 2016 8:43 am

Of course since we have legally declared the asset on the 720 form , we have had to declare that it is sold. From the information coming through it doesn't look too good.

But the figures actually are purchase price £141,000 and selling price £165,000. However, we spent £22,000 on an extension but like the example shown, we have no receipts or at least I can't find any although we did have them at the time from the builder. They were in a folder at the house but seem to have disappeared from the loft where they had been stored. There are details of planning permission etc though and if the builder is still in business maybe we could obtain copies.

On that basis it would seem there would be very little tax to pay anyway.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: Living in Spain, sold UK house (prev main residence)

Postby Peter D » Mon May 02, 2016 10:34 am

Under the new regulations non residents now pay CGT based on the value of the property in April 2015 and deduct that from the sale value sales and legal fees are deductible. There are alternative method. Read :
https://www.gov.uk/guidance/capital-gai ... in-or-loss
You mentioned mortgage interest. If you rented the property out then the interest was an allowable expense as a revenue item.
Regards Peter

chrissx
Posts:12
Joined:Thu Apr 14, 2016 1:21 pm

Re: Living in Spain, sold UK house (prev main residence)

Postby chrissx » Mon May 02, 2016 11:07 am

Of course since we have legally declared the asset on the 720 form , we have had to declare that it is sold. From the information coming through it doesn't look too good.

But the figures actually are purchase price £141,000 and selling price £165,000. However, we spent £22,000 on an extension but like the example shown, we have no receipts or at least I can't find any although we did have them at the time from the builder. They were in a folder at the house but seem to have disappeared from the loft where they had been stored. There are details of planning permission etc though and if the builder is still in business maybe we could obtain copies.

On that basis it would seem there would be very little tax to pay anyway.
My understanding from my Spanish accountant is once you have submitted a 720 form you only have to submit another if your assets in any of the categories change significantly so yes you would have to submit another form making hacienda aware you have sold the property.

As you say the key here is receipts for the improvements that should solve the problem.

The reason I originally posted on your thread was that I am living in Spain while renting my UK house originally with the intention of returning but things have changed and I want to live in Spain. The profit on my house is quite large and recent changes to CGT laws in Spain mean I can't even reduce the taxable profit by the time owned I get hit on the entire gain. I was hoping there was another way but since taking further advice there appears not so I will deregister in Spain and live in the UK for a while.

Good luck with your situation looks like you have a solution.

Regards

kilrail
Posts:6
Joined:Sat Apr 09, 2016 9:42 am

Re: Living in Spain, sold UK house (prev main residence)

Postby kilrail » Mon May 02, 2016 4:16 pm

If I was in your position I would certainly do the same as the tax would be considerable. I am amazed that there is no recognition of private residence when in UK but I guess that's their prerogative. Another fair way would be that the value was adjusted to the date when you became a Spanish tax resident but again I guess that is not in their interest.

Bernersennen
Posts:1
Joined:Sat Nov 19, 2016 9:56 am

Re: Living in Spain, sold UK house (prev main residence)

Postby Bernersennen » Sat Nov 19, 2016 10:14 am

I am in the same position.
We became Spanish residents recently. We plan to sell our house in France in a couple of years (during 20 years our main residence). In France we won't pay any tax. But if we pay CGT in Spain on our capital gain, this would cost us a lot of money. This would cost us about EUR 40,000 spanish tax.

When this is what we need to pay in Spain on the profit from our house in France, we won't let this happen!!!!
We will de-register in a couple of years, go back to France and live there for 3 to 4 years (to be on the safe side) and sell our house and return OR NOT to Spain.

This spanish law is unfair. When we bought our house in France, we planned to keep it for 25 years so that we don't have to pay CGT in France. Therefor we did not keep all the invoices regarding renovations. And now, Spain, who has nothing to do with our house in France (because the taxes regarding real-estate are due in the country where the house is located) will force us to pay 40,000 EUR or more on the profit in Spain. No way!!
Very nice that you can offset the tax you paid in the country where the house is located against spanish CGT, but when you don't pay anything, you pay the full amount in Spain. This gives me a bad feeling.

chrissx
Posts:12
Joined:Thu Apr 14, 2016 1:21 pm

Re: Living in Spain, sold UK house (prev main residence)

Postby chrissx » Sun Nov 20, 2016 6:32 pm

Unfortunately that is the law. I leave for the UK next month and will be deregistering and hope to sell next year my house in UK. I will not be registering for tax in Spain for a number of years as leaving for just one year does invite problems. I know many people who have lived permanently in Spain for many years and have never paid a penny in tax in Spain and of course they don't get these problems. It does make you wonder sometimes if honestly is the best policy.


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