The Capital Gains Tax rules changed last year and the way I understand them it now works like this - can anyone confirm or deny? Maybe Maria?
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. In order to ensure that they get their slice, the Hacienda insists that 3% of the total purchase price is withheld at the time of completion. If your CGT liability , plus any other outstanding taxes (wealh tax etc) actually comes to less than this, then you can claim it back. if what you owe is actually more then in theory they can chase you for it but in practice so far they do not seem to have the time or the inclination to do so.
Any input welcome. If someone could tell me that you pay no CGT under any circumstances on your main home, as in UK, I would be deliriously happy!