This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

CGT Sale of UK Property & Purchase of Spanish Property

dm1969
Posts:5
Joined:Wed Apr 03, 2019 3:57 pm
CGT Sale of UK Property & Purchase of Spanish Property

Postby dm1969 » Wed Apr 03, 2019 4:09 pm

Here’s a conundrum:

- bought UK property in 2006 for circa £300k
- it’s now valued at circa £600k
- mortgage practically paid off

I have rented it out for last 6 months as I am now based in Spain where I am renting.

I understand that if I sell the UK property and use the funds ( some of them) to invest in a property here ( to become my main residence) I would not be liable for CGT here in Spain.

Is my understanding correct?

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby wamstax » Wed Apr 03, 2019 8:26 pm

Please detail the uses (e.g. personal occupation; business use etcthe property was put to from acquisition to the present date. If any personal occupation please say if any other properties owned at the same time and their use during the periods owned
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

dm1969
Posts:5
Joined:Wed Apr 03, 2019 3:57 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby dm1969 » Thu Apr 04, 2019 8:29 am

Hi there - just to clarify the issue I am referring to is Spanish CGT. I have done the calculation on the UK Gov website and my exposure to UK CGT is little to none.

Thanks

jvenegas16
Posts:114
Joined:Wed Aug 06, 2008 3:49 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby jvenegas16 » Fri Apr 05, 2019 7:01 pm

If you are buying the property in Spain, Spanish CGT does not apply until you sell it. You will have a purchase tax to pay.
What you are referring to is when you come to sell the property in Spain being your main residence.

dm1969
Posts:5
Joined:Wed Apr 03, 2019 3:57 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby dm1969 » Fri Apr 05, 2019 7:39 pm

A new Spanish law came into effect several years ago which means that any resident in Spain has to declare all global sssets - wherever they are in the world - and are taxed suitably on them. Thus disposing of a UK asset while possibly free if CGT in UK is not free in Spain when you declare this asset or sale. Hence my question.

On researching more yesterday i have seen that main residence sale in any EU country and the reinvestment of this funds in main residence in Spain is free of CGT - well only the sort that is reinvested.

Anyone else know more?

jvenegas16
Posts:114
Joined:Wed Aug 06, 2008 3:49 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby jvenegas16 » Sat Apr 06, 2019 6:56 am

Thank you for clarifying.

As tax resident in Spain, you are taxable on your worldwide income in Spain, including the rental income from the UK. And that has always been the case.

In relation to your question, it is correct to say that if the proceeds of the sale of your main residence is reinvested into another property that will be your main residence, it brings the CGT liability to zero. It is not exempt, it reduces the tax liability down to zero. If not all the proceeds are reinvested, there may be some CGT liability.

I hope that answers your question.

dm1969
Posts:5
Joined:Wed Apr 03, 2019 3:57 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby dm1969 » Sat Apr 06, 2019 7:08 am

Thanks for your insight.

The question now is that I am currently renting out my “main residence” in the UK temporarily.

1. Once it is vacated by the tenants, there should be no issue in claiming this as my main residence when I come to sell it and purchase on Spain?

2. What happens if I decide to a) continuing renting my UK out and b) continue to rent in Spain? I’d have to declare the rental income i recurve in the Uk to tax authorities in Spain which is fine - but would I lose the ability to claim that the UK property is my main residence when I come to sell it and purchase here?

3. Equally, I believe that CGT is calculated as % of sale price - (original price+improvements+mortgage outstanding) - is that correct?

4. Equally, we’re talking about rules that are in place as both the UK and Spain are currently in the EU and therefore the two properties are treated as if they were in the same country. With a no deal Brexit - this all goes out the window, right? With a deal brexit, I’m guessing/hoping that this will still be respected?

Thanks!

jvenegas16
Posts:114
Joined:Wed Aug 06, 2008 3:49 pm

Re: CGT Sale of UK Property & Purchase of Spanish Property

Postby jvenegas16 » Wed Apr 10, 2019 5:15 am

The answer to your questions require a consultation, due to the number of options presented and the personal circumstances.

Briefly, the CGT is a % of the gain after annual exemption.

Regarding the main residence relief, we need to account for the rental relief and when the property may be sold. There is a last period of 18 months as deemed occupancy. It used to be 36 months.

In the event of no deal Brexit, the rate of CGT applicable in Spain may be affected, and any relief is subject to Double Tax Treaty between UK and Spain.


Return to “Capital Gains Tax, CGT”