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I received my residencia just a few months ago. I havent yet got round to applying for fiscal residencia Although I travel between 3 countries, my children in one, my family in another and me in spain I am intending to spend just over 6 months here. However, I think I may have done the wrong thing or rather may have timed it wrongly! I intended to sell my property in the uk but now have been told by my lawyer that I will have to pay income tax on the sale as the money I receive is classed as income. I also intend to buy a second property here in spain with money from savings as i would like a bigger property in live in but I am told that if I sell my first property, after buying the bigger place, it will also be classed as income and taxed. HELP am I now just a CASH COW for the spanish tax authorities and should I cancel my residencia?
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You are regarded as fiscally resident if you spend over 183 days in Spain, whether you apply for fiscal residency or not.Don't sell your house in UK after buying your home in Spain on it., as you will pay CGT, not income tax
If you sold your house in UK first, then used the money to buy your home in Spain you would not have to pay CGT. If you only used some of the money to buy the house, you would pay CGT, on the unused amount.
You still declare the sale of your house in UK and apply for "roll over" relief.
I'm surprised your solicitor didn't advise you to do this in the first place.
This message was last edited by camposol on 06/12/2013.
This message was last edited by camposol on 06/12/2013.
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That is just the way it works....in Spain and here, in the UK. You could choose NOT to be a cash cow for either Country. Keep your place in the UK and rent it out. You will have to pay tax on the income from it (after the usual deductions) but, should you decide to sell your Spanish home, classed as your main residence, this shouldn't attract tax. Then, if you go and live in your home in the UK, this will automatically become your main residence. And, don't buy a second place in Spain until you've sold the first one. What's the point? What you will have to contend with in Spain, however, is the so-called wealth tax on everything you own in both countries.
By the way, I do stand to be corrected if I am wrong on anything I've written here. We don't seem to be able to keep up with the changes in Spain as far as them trying to get some money into the ever-depleting coffers.
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Mag
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Unlike the UK you do pay CGT on your main home in Spain, unless you are over 65, tax resident and have lived in it for more than 3 years.
Enen if you keep your UK home and don't rent it out you will be charged as if you have-"imputed income"
People often do not realise that if they sell their uk house before moving to Spain in the same year,before July 2nd, they will pay pay CGT in Spain the following year.If you sell your UK house after you've moved to Spain, you'll pay CGT on it as well, unless you follow the route in my previous post.
Yes, we are well and truly cash cows, frequently milked, and don't get me started on Inheritance tax!
The best thing to do is to spend less than 183 days in Spain, and use your UK house as your main home.
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Meggie, …………… should you decide to sell your Spanish home, classed as your main residence, this shouldn't attract tax ……………………
(I guess I am getting crotchety in my old age, but why do people seek to give advice when they do not have the knowledge to do so? When it is wrong, it is so misleading and confusing for those seeking advice).
Meggie you are referring to UK not Spain.
As Camposol says, in Spain CGT applies to your main home too, with the exception as quoted.
Quoting what happens anywhere else in the world, when the matter refers to Spain, is worse than useless.
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Thanks for the advice It looks as if I should cancel my residencia and spend more than 6 months in the uk. I have a small flat here and dearly want a bigger one. It is difficult to sell here so I decided to buy the bigger one before selling the smaller one. Also because I found one I really like and am able to fund it. I will however make a loss on the sale of my small flat. Does that still mean I pay tax? I am making a capital loss not a gain. To make things clear ..... Situation = I have 2 houses up for sale. One uk one spain. On sale I will make a loss on both. I have agreed to buy bigger apartment in spain and paid small deposit. I have spanish residency 2 months. Not yet applied for tax residency.
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Once you have been in Spain 183 days you are tax resident automatically, even if you have not yet registered on the system.
I am confused-are you saying you now have 2 homes in Spain and 1 in the UK?
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Yes. Well I own 1 in uk and 1 in spain outright. Both are up for sale. And I recently put small deposit on a 3rd which I intended to purchase. My intention was to have my main residency here in a nicer bigger apartment and sell off the other 2.
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In that case you'll end up paying cgt on both the uk and Spain properties then.If you sold the one in Spain first you could use the proceeds towards the bigger flat but you would still pay cgt on the difference. If you keep the uk one you'll pay tax whether or not you rent it out.If you can't sell the one in Spain, you'll pay taxes on that too IBI and imputed income tax.
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Residency, fiscal residency, UK, Spain......if the OP is making a LOSS on both sales, isn't it safe to say he will not be liable for CGT anywhere?
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"Get your facts first, then you can distort them as you please"
Mark Twain
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How did I know that you, Johnx, would reply telling me that I shouldn't give advice when I didn't know what I was talking about...should I get something wrong (which I readily admitted could be the case)? If only we were all as knowledgeable as yourself.....we wouldn't have to ask questions on this site. Can we not offer advice and allow others to offer better advice without smug remarks concerning our lack of knowledge. It seems not.
I'm out of here....AGAIN. This site isn't what it used to be.
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Mag
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Meggie, I never make a comment unless I am sure I am giving the correct advice. I accept that others will not always agree and that sometimes they may correctly an error which I have inadvertency made. But I never make a wild guess for the sake of saying something, as I know that people who need to know deserve more than that.
Sorry, but in the post you made, giving info based on UK law about a Spanish situation, was totally incorrect. That was not 'giving advice which might be corrected' it was a guess and it was wrong.
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I think someone should read Meggie's first reply post again because she / he mentioned Spain 5 times and the UK only 3 times, the biggest emphasis being on the laws in Spain, therefore what ever way you try to dress it up to suit your own purpose the answers that were given by Meggie related in the main to Spain and its tax laws, the comparison's made were to show how we differ slightly with tax laws.
As for maybe Meggie making a mistake over this then perhaps its best to remember...…The person that never made a mistake...…Never made anything.
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Koekje
I am sorry but, apart from warning against wrong advice, I will not even attempt to advise you on this as, although I do have a certain knowledge, your problem appears so complex, it will take a qualified professional to give you safe advice.
Good luck.
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Is it that complex? My advice would be to a) ignore all the unqualified BS given here and b) consult another lawyer/gestor, perhaps one who can explain/understand the difference between income tax and capital gains tax. 
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"Get your facts first, then you can distort them as you please"
Mark Twain
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