Spain Explained

CGT in Spain: We answer some of the most common questions

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.

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CGT in Spain: Q&A

I have just sold my house in the UK and I’m planning to move to Spain as a resident next month. Will I have capital gains tax to pay?

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

I sold my property in the UK last year and have been renting for the last six months. Next year I’m moving out to Spain. Do I still have to pay capital gains tax on the property I sold?

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

I’ve sold my property in the UK and I understand that I will have CGT to pay on the profit I’ve made. However, I also had a substantial mortgage and a number of debts to settle. Is this taken into account in the calculation? 

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

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I made a large profit on my house when I sold it in the UK. However, I had carried out a number of home improvements to it, including extensions and outbuildings. Can I deduct for these? 

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. 

I am in the process of selling my property in Spain and moving to a smaller one. I am 70 years old. Will I have to pay CGT in Spain? 

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.

I have just sold my Spanish property to move back to the UK. I am investing the money I received in a permanent home there. Must I still pay CGT to the Spanish authorities?

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

I am a non-resident. Must I pay capital gains tax when I come to sell my property in Spain?

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.

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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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4 comments

Kelly Warner

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

Oscar Paoli

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

John

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

Oscar Paoli

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