New CGT Rules

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!

In essence what you describe reflects the current position. Residents over 65 yrs old selling their principal residence of three years are not liable for capital gains tax. Residents who reinvest all of the proceeds of sale to purchase another principal residence can get capital gains tax relief, provided they have lived in the property for 3 years or more.

If they use only a portion of the proceeds from a property sale, they will get a percentage relief up to the amount reinvested.

For non-residents a retention of 3% is applied to the declared value at the time of sale. The tax rate is 18%. Where the amount retained exceeds tax due a seller can apply for a return of the difference although based on present experience the Hacienda seem unwilling to return monies and the process can be lengthy with sellers being required to present numerous documents and either attend in person at the applicable office or appoint a lawyer or accountant to represent them.

In any event a seller is required to prepare and file modelo 212 following sale (whether they are entitled to a refund or not) although in practice many neglect to do this.

Hope this helps.

Thank you very much Glyn.  I thought it was like that but was rather hoping not as we have made a significant gain by doing a lot of work ourselves which therefore has no appropritate receipts, and are not reinvesting all the proceeds.  It seems a shame that we are therefore going to be paying tax on our own hard work!!

jane

Hi everyone,

We have just been to see our lawyer and he has informed us that anyone selling a property will be stopped 3% capital gains tax at the notary irrespective if they are residents or non residents.  We went to the Agencia Tributaria in Torremolinos and after 17 days received our Residencia Fiscal en Espana which said that we are residents and up to date with our tax.  Apparently we need to have it stated on this certificate the details of the property we will be selling.  Our lawyer thinks that unless we have a contract of sale for another property or a rental agreement he did not think they would issue this to us.  We have lived in Spain for 7 years and paid our income tax (including capital gains) during this time.  It will be difficult to have 3% stopped at the notary because when it was included in our income tax we were able to pay it in two instalments in the following tax year.

Has anyone else who is a resident been in this situation or got any more information.

Thanks

Tax, tax and more bloody tax. Is this all we exisit for these days, to pay tax??? (Not just in Spain)

Sorry about that but I am really fed up of paying all these taxes which usually go to fund people (including MP's and MEP's)  and projects I don't support......

Rant over, have a nice day/evening

Poppyseed