Last updated on June 30th, 2020 at 09:27 pm.
When you are moving between countries, the tax implications of selling your property can be confusing. It’s generated some of the greatest number of questions on our forums. Here we try to answer some of the questions regarding CGT in Spain for you.
However, we would like to remind you that taxes in Spain can be complicated and you could be subject to fines or penalties if you miss a deadline or don’t do your taxes properly. Advisably, you should seek fiscal advice from an expert to avoid possible complications.
CGT in Spain: Q&A
The answer is, yes. You must pay capital gains tax or CGT in Spain on the difference between the sale price and the purchase price of your property. This is classed as income and is declared on your resident tax declaration along with the rest of your annual income before the end of June, if you have been residing in Spain for over 183 days.
Provided you become resident in a different year to when you sold your property then you will save on the capital gains tax or CGT in Spain. If you sell, for example, in 2020 and move to Spain in 2021 as a resident then there will be no capital gains tax to pay. However, if you move out in the same year, then there will be.
Unfortunately, no. The mortgage and debts are not deducted from the profit you made between buying and selling the property. However, when calculating CGT you can submit information about VAT, large home improvements and any legal fees you incurred and these can be taken into account. So too can the fees involved in selling your property, such as those of your estate agent.
It is possible to have extensions and new buildings taken into account when CGT is being calculated. However, you will need to be able to show the official receipts for the work you’ve had done and that you have the correct licences in place.
The extensions will also need to have been legally registered in the UK, although this is very hard to justify in Spain. What cannot be taken into consideration is any general work you have had done for wear and tear over the years.
You are exempt from paying CGT if you are over the age of 65, you are a pensioner and if you have been a tax resident living in the property sold for over three years.
Presuming that you are a resident, the good news is that this will mean that you do not have to pay this tax.
You can also be exempt from paying it if you have been a fiscal resident in Spain for three years or more and are buying another home to live in even if you are below the age of 65. However, you must have invested the full amount from the sale and then live in your new property for a minimum of another three years. Otherwise the CGT in Spain can still be charged to you.
Yes. You will still have to pay CGT in Spain and then make a tax declaration in the UK. The good news, however, is that under the double taxation treaty, the tax you have paid in Spain can be deducted from what you must pay in the UK. In other words, you will not have to pay twice.
Yes, non-residents must pay CGT. At the current rates this is 19% of the profit you have made on the sale although you can also deduct costs incurred in the purchase including VAT, Land Registry fees, notary fees, transfer tax and legal fees. Costs can also be deducted from the sale leaving you with a net profit.
After the sale of your property, 3% of the current sale price will be retained by the lawyer acting on behalf of the buyer and this will be paid to the tax office in the name of the seller on Tax Form 211. This is just in case the tax authority may find it difficult to contact you after the sale.
Once your capital gains tax liabilities are settled then you will either receive a refund or have to pay outstanding tax. In order to retrieve any money you must submit form 210H to the tax office within three months of the sale along with the last four years of non-resident income tax. Don’t expect your money back straight away. It can take up to a year to be returned.
Help with capital gains tax in Spain
Navigating the taxation system of a foreign country can be an intimidating task – especially if you don’t speak the language. Furthermore, as many people who live in Spain know, Spanish bureaucracy can be particularly challenging. However, if you want to sell your home, Ábaco Advisers is here to help. At Ábaco Advisers, our team of experienced fiscal and taxation experts can help you make sure you follow regulations. For more information, without obligation, fill out this form and we will offer you a free consultation. We can give you the advice you need in the language of your choice.
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18 comments
13 July, 2020 12:50 pm
I am in the process of selling my flat and luckily I will make around a £200,000 profit. I would like to move to Spain before the end of December 2020 and become a resident before the uk withdrawl from EU.
I understand that if I sell before I become a resident I wont pay CGT in Spain?
Am I right in reading that if I sell after I move and become a resident and I reinvest part of the profit in a property in Spain, say £150,000 will I then only be paying CGT on £50,000 or still £200,000?
I am hoping to retire and live of the profits as I am not of pension age.
Many thanks
Kelly
14 July, 2020 8:24 am
Hi Kelly,
If you sell the house before coming to Spain and you are non-residents in Spain, there is no capital gains tax, but you cannot be in Spain more than 183 days this year and the residence must be at the end of the year or much better next year.
With kind regards,
Ábaco Advisers
18 July, 2020 11:10 am
In a question asked in the FAQ’s regarding CGT and moving to Spain from the uk in the same year you state “if you sell, for example, in 2020 and move to Spain in 2021 as a resident then there will be no capital gains tax to pay. However, if you move out in the same year, then there will be” That is actually misleading as there is no split year treatment in Spain and you can only be a tax resident after 183 days in a calender year. Therefore if you sold your UK property, say in September 2020 and moved to Spain at the end of October 2020 you cannot possibly be a tax resident for 2020 as you have been a tax resident in the UK for more than 6 months
20 July, 2020 4:23 pm
Hi John,
Correct you are not a Tax Resident if you move to Spain in October 2020 (provided prior to that you were not in Spain early in the year for example you have been here and just not applied for Residece untill October).
With kind regards,
Ábaco Advisers
26 November, 2020 7:31 pm
Does CGT in Spain reduce over the number of years you have owned the property
1 December, 2020 11:32 am
Hi,
There is a deduction but only on properties purchased before the 31st December 1994.
Please do not hesitate to contact us should you have any further queries.
With kind regards,
Ábaco Advisers
23 July, 2021 9:45 pm
I am British and have lived in Tenerife for 10 years, fully legal now with TIE
I am 70 years old and receive a UK state pension and a civil service pension from the UK
I am about to inherit a property in the UK from my estranged husband (by default as he did not make a new will after our marriage and is therefore declared intestate, and I am the sole heir).
The property was in his name only and I have discovered he took out an Equity release releasing 122,000 pounds on the property. The property is valued at 225,000 pounds, leaving me with 105,000. The original purchase price was 59,000 pounds.
I have calculated that I will have some 37,000 euros CGT to pay here in Spain, less costs involved with the sale. I have a buyer lined up.
Is there any allowance/discount on the CGT for the fact that I am a pensioner, as there is is a non resident sells a property in Spain?
26 July, 2021 9:55 am
Hi Rita,
There are no allowances or discounts on Capital Gains Tax when a property is sold and the same applies for Residents as Non Resident, there are some benefits but these only apply to your Residential Home here.
For more information do not hesitate to contact us at info@abacoadvisers.com
With kind regards,
Ábaco Advisers
22 August, 2021 6:15 pm
For attention of Oscar Paoli,re comments made on september 23rd 2020.
I was concerned to read your comments to my query in relation to CGT on sale of UK property.You stated that I would have to give up my residency,sign off the padron and medical card system if I returned to UK for 2 years to sell my UK property without paying CGT to Spain.I understand that as a 10 year TIE card holder I can leave Spain for up to 5 years without losing my residency.Obviously my fiscal residency would change and I would ensure that the Spanish tax office were made aware of my absence from Spain however my general residency status is protected for 5 years should and when I decide to return after selling the UK property.In addition the British consulate in Madrid confirmed I would not lose my entitlement to the Spanish medical card as that is also protected.I would of course have to notify them I am temporarily out of Spain for 12 to 24 months.As far as the padron is concerned I still retain a holiday home in Spain which will be my secondary home until I return from UK to re-establish my “fiscal residency”.and main residency again.Do you see any problems with that approach?
1 September, 2021 4:53 pm
Hi Thomas,
As of our understanding the possession of the card makes you a resident in that country, if you stay for a long period such as two years for example, this condition is not met, in addition, the immigration law establishes maximum times outside of Spain, taking into account sporadic absences, but in your case, since you have been living in another country for two years, we understand that the residence card must be canceled.
We would recommend take the matter closely with an expert lawyer in this matter to better assist you in your case.
With kind regards,
Ábaco Advisers
18 March, 2022 4:25 am
I am 58 from the USA. I have a business that I plan to close in mid-June 2023 and would like to sell my home by June 31st, 2023, and then apply for a NLV move to Spain soon after (I will not have a place to live in the USA after I sell my home).
1st. Do I have this in the right order?
a. Close business
b. Sell house
c. Apply for a NLV?
2nd. Do I have to have a rented apartment in Spain before I apply for a NLV?
3rd. If I move to Spain (after I am approved , hopefully in July or August) will I have to pay capital gains (in Spain) on the house I sold in June?
I am SO confused as to what to do! Any advice would be greatly appreciated!
Thank you!
18 March, 2022 10:00 am
Thank your for contacting us. Unfortunately we do not deal with this process ourselves. Nevertheless, we would recommend you to speak with our relocation adviser collaborator David Ruiz. He will go through everything with you. If you wish to contact him directly please send him an email at david@torreviejatranslation.com
With kind regards,
Ábaco Advisers
4 January, 2023 9:12 pm
Hi, we purchased a property in Almeria last September (22) with the intention to sell up and move over permanently on NLV’s. Our house sale here in the UK completes at the end of January (23). As we will have sold our main residence in the UK before applying for residency and moving to our new Spanish home are we right in thinking we are not liable to CGT ?. If we have got this wrong, would we avoid paying it by waiting till next year (24) and would we be able to use our Spanish property this year without creating any further issues ?
Many thanks
Richard
5 January, 2023 9:30 am
Hi Richard,
If you sell in 2023 and become residents in 2023 you would be liable to Capital Gains Tax, if you wait till 2024 to become residents you can use your property under the regulations for entrance into the UK and for 2023 you would declare as non residents.
With kind regards,
Ábaco Advisers
29 April, 2023 6:00 pm
We bought our apartment in 1989 through a UK company. We have completed a uk tax return for the last 33 years in the UK. The company has been a nonprofit company, supported by the directors. We have a tax exempt certificate from HRMS (uk tax authority). We currently have a large sum in a director loan account which we can offset against Capital Gains in the uk. Is it possible to pay our CG in the uk not Spain?
2 May, 2023 10:39 am
Hi Richard,
Under the double taxation treaty as the property is located in Spain you will have to declare the sale here for Capital Gains Tax and then deducted any Tax due here against any liability you may have in the UK.
With kind regards,
Ábaco Advisers
14 May, 2023 6:09 pm
Hello.
A little help please. How long does a POA last in Spain?
Best regards
Richard
15 May, 2023 12:44 pm
It will depend on how it is written, normally it is open in time, and others both parties agree on a time of validity that could be any time agreed upon.
With kind regards,
Ábaco Advisers
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