Capital gains tax - allowable acquisition costs

Hi

I wonder if anyone can help me or point me in the right direction.

A few years ago I inherited a property which I now need to sell but I´m trying to find out about capital gains tax and in particular what are allowable acquisition costs.

When I inherited the property I paid the following costs but I´´m not sure which costs can be claimed and knowing the tax payable is important in terms of agreeing sale price etc.

- Solicitor

- Notary

- Property registry fees

- Inheritance tax  + surcharge + interest

- Plusvalia

I know initially there is a 3% retention but then the rest of the tax has to be paid!

Also I´m  not using the same solicitor that handled the inheritance as he does not speak reasonable English so I am also looking for a recommendation for a solicitor in the Malaga area to handle the sale and CGT tax etc.

Thanks

JoJo

 Dear JoJo,

By law, you have to pay plusvalía and 18% as capital gain tax

Kind Regards,

Mar Durio
Calle Ancha 30, 2º
E-11201 Algeciras
(t) +34.956.092.687
(f) +34.956.092.697
m.durio@costaluzlawyers.es
www.costaluzlawyers.es

Hi Jo Jo

I think the previous poster mis-understood your question and to be honest you have asked a very good question which for you and the benefit of others I will do my best to answer and share the knowledge which is what forums like this are all about.

I am not 100% sure but I believe your allowable acquisition cost is calculated as follows:-

Property - based on the price declared in the escritura when you accepted the inheritance.

Inheritance tax - this can be claimed but  not any surcharge/interest for late payment.

Solicitor's fees - I believe strictly speaking these should not be claimed but many do try claiming - not sure why they cannot be claimed - anyone care to comment?

Notary - can be claimed.

Property/land registry fees - can be claimed.

Plusvalia tax - cannot be claimed - again not totally sure why not - again anyone care to comment?

All these costs are added and you can claim indexation/inflation relief - you need to locate tables.

Also in calculating your net proceeds of sale you can deduct any estate agents fees paid.

The difference between your net proceeds of sale and your indexed acquisition cost gives you your chargeable gain which is then taxed at 18%.

As a non-resident when you sell the property there is a 3% retention based on full selling price. You will also have to pay plusvalia tax on sale but should not be too much if only recently paid also on the inheritance.

Depending on the sums you will either get a refund or partial refund of the 3% CGT retention or have to pay additional tax.

If claiming a refund the tax authorities will pick up on any unpaid income or wealth tax returns so you might want to consider bringing these up to date - can save time if chasing a refund!

If claiming a refund it will take appox 6+ months because the tax office look at the transaction from every angle to see if there is any reason not to process the refund. If you are very lucky then maybe 3 mths?

Also it's a good idea to check that any values declared in this or previous transactions were equal or above the published minimum acceptable values as published by the Junta Andalucia - otherwise expect problems.

Also don't forget to check out your UK or home country CGT rules which may be slightly different in calculating gain/loss. Although you will usually be able to claim as a credit Spanish CGT tax.

I will PM you a reputable Malaga firm who will be able to advise on both Spain and UK or other EU country tax positions and also do the legal work for you. There's a lot of issues to consider and you need to make sure whoever you instruct knows their game and most importantly can explain everything to you in a language you understand.

If anyone has anything else to add or even disagree with my posting please feel free to comment.

Hi,

I have made the experience that any costs connected to the acquisition of the property can be deducted. As such I include the solicitor costs (provided that there is a formal INVOICE for these services), the plusvalia (if you have got the bill you can deduct it).

Anyway, if the tax office sent for inheritance tax purposes a complementaria (a letter stating that the value of the assets is higher), then you can take that value as acquisition value.

good luck,