I have been looking though old threads for info. about CG tax and tax declaration. I found some info. which I copied and have pasted below and have a few questions about it...
By the way, I am British, have lived in Spain since 2002, work a few hours a week as a private English teacher but am paid in cash so no contract or nominas (wage slips).
"Capital Gains tax -If you are a resident you pay CGT on your main home only if you do not reinvest ALL the proceeds(not just the gain) in your next main home in Spain. If you do no reinvest it all, you pay 18% on the gain (with some rather paltry allowances) .That is unless you are 65 in which you are exempt.
If you are non-resident, you are liable to the 18% on all the gain, regardless of whether you reinvest any or all of it."
Q1. Am I classed as a resident if I have a NIE card but don't declare and have never declared at the tax office? ( I have lived here with a NIE card and had a property here since 2002).
Q2. Assuming the answer to the question above is NO, if I want to sell my property for about €200,000 (originally bought for €145,000 inc. purchasing costs) with an outstanding €87,000 mortgage to date, does that mean I will have to pay 18% on €113,000 (a staggering €20,340?!!).
Q3.My plan is to sell my property and reinvest most or all of the money into a smaller and cheaper one (my aim is to try and get rid of my mortgage) - with my current status in Spain (ie with a NIE card but not declaring or having never declared tax) does this mean it makes no difference whatsoever if I reinvest the money or not as I will be taxed 18% whatever?
Q4. If the answer to question 3 is that I will be taxed 18% whatever, then will declaring at the tax office make me an offical resident in Spain? Will this mean I will get CG tax relief If I reinvest the money from my property sale?
Q5. If I should declare at the tax office, will they ask me about previous years? Should I declare the cash in hand work I do or say I don't work at all as there is no proof that this work takes place. Could I get into trouble?
I would really appreciate any advice or help anyone could give me.