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Buying and selling in Spain

Posted: Fri Sep 23, 2022 4:50pm
16 replies788 views5 members subscribed
Petedaniel

Posts: 17

1 helpful points

Location: Benidoleig

Joined: 7 Aug 2021

I was hoping to move to Benidorm as we are now getting older and I don't want to have to get a Spanish driving licence. But my lawyer now tells me that as I have spent more time in the Uk than in Spain( mainly due to Covid). in the last 5 years  I will have to pay about 43,000 euros in tax on the sale of my house, it seems I am not now a fiscal inigrant, as I intend to spend about the same amount as I get for my home on another in Benidorm is it correct that I will have to pay so much I have lived here over 40 years and I do have a TIE?. I still have 5% of the sale price to pay to the Estate Agent and 1000 Plus to the Lawyer. Pus other fees . I am not so sure we want to move at all.

Relyat

Posted: Fri Sep 23, 2022 6:12pm

Relyat

Very helpful member

Posts: 720

673 helpful points

Location: Denia

Joined: 12 Jul 2018

Posted: Fri Sep 23, 2022 6:12pm

Petedaniel wrote on Fri Sep 23, 2022 4:50pm:

I was hoping to move to Benidorm as we are now getting older and I don't want to have to get a Spanish driving licence. But my lawyer now tells me that as I have spent more time in the Uk than in Spain( mainly due to Covid). in the last 5 years  I will have to pay about 43,000 euros in tax o...

...n the sale of my house, it seems I am not now a fiscal inigrant, as I intend to spend about the same amount as I get for my home on another in Benidorm is it correct that I will have to pay so much I have lived here over 40 years and I do have a TIE?. I still have 5% of the sale price to pay to the Estate Agent and 1000 Plus to the Lawyer. Pus other fees . I am not so sure we want to move at all.

Where do you pay tax? 

This may be of interest to you, but your tax residency is important. 

https://www.white-baos.com/en/purchase-and-sale-of-the-main-home-in-spain-tax-benefit-in-the-capital-gain-tax/

Petedaniel

Posted: Fri Sep 23, 2022 11:31pm

Petedaniel

Original Poster

Posts: 17

1 helpful points

Location: Benidoleig

Joined: 7 Aug 2021

Posted: Fri Sep 23, 2022 11:31pm

Relyat wrote on Fri Sep 23, 2022 6:12pm:

Where do you pay tax? 

This may be of interest to you, but your tax residency is important. 

As my pension is only 7009 Euros I do not submit my tax as it is not required.

Relyat

Posted: Sat Sep 24, 2022 8:55am

Relyat

Very helpful member

Posts: 720

673 helpful points

Location: Denia

Joined: 12 Jul 2018

Posted: Sat Sep 24, 2022 8:55am

Essentially, capital gains may not be payable if they are reinvested in a main residence. 

The retention of 3% of sale against unpaid tax need not happen 

This is the case for a resident of Spain. 

In your case I think that there may be some question over these matters given the amount of time you have spent outside of Spain and that the tax office may have no record of you, given what you have said about tax returns. 

Your residency, in all forms, relies on your physical and fiscal presence. 

If I were you I would be taking advice from a qualified tax professional. 

killjoy

Posted: Sat Sep 24, 2022 9:34am

killjoy

Super helpful member

Posts: 2560

1462 helpful points

Location: Orihuela Costa

Joined: 4 Nov 2017

Posted: Sat Sep 24, 2022 9:34am

Most important: whoever told you about taxes should know that all amounts obtained from selling a property and reinverted to another property are tax exempted. I'm really upset about how some "·subjects" take advantage of the (ignorant) expats. 

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Petedaniel

Posted: Sat Sep 24, 2022 1:37pm

Petedaniel

Original Poster

Posts: 17

1 helpful points

Location: Benidoleig

Joined: 7 Aug 2021

Posted: Sat Sep 24, 2022 1:37pm

killjoy wrote on Sat Sep 24, 2022 9:34am:

Most important: whoever told you about taxes should know that all amounts obtained from selling a property and reinverted to another property are tax exempted. I'm really upset about how some "·subjects" take advantage of the (ignorant) expats. 

Thank you for your advice I will have to apeal this disision

Kimmy11

Posted: Sat Sep 24, 2022 3:20pm

Kimmy11

Legendary helpful member

Posts: 5846

10902 helpful points

Joined: 8 Aug 2017

Posted: Sat Sep 24, 2022 3:20pm

Hi Petedaniel,

If you don't mind me asking, how old are you?  If you're over 65 years old, as a resident in Spain you are not required to pay Capital Gains Tax, so long as you've lived in the property as your sole, main residence for a minimum of three years prior to its sale.  Also, as Relyat has suggested, if you purchase another home as your sole, main residence using the proceeds from the sale of your current property that you also used as your sole, main residence, you are legally exempt from paying CGT.

Have you ever submitted a tax return in Spain, and have you submitted one in any of the last 5 years?  All too often, Spanish lawyers will suggest that a client who earns less than the taxable threshold does not need to submit an annual tax return.  This is poor advice, especially once a UK citizen resident in Spain becomes a pensioner, as your earnings are linked to the amount you are expected to contribute to the cost of prescriptions, so it's beneficial for low income earners to submit at least one tax return as it could result in a prescription charge of 10% being reduced to zero.  Most importantly in your case, it proves that you are tax resident in Spain.

The crucial point is whether or not you are still tax resident in Spain?  Do you know precisely how long you have been out of Spain in the last 5 years and do you have documentation to prove it, such as travel documentation?

Kind regards,

Kim

Petedaniel

Posted: Sat Sep 24, 2022 5:46pm

Petedaniel

Original Poster

Posts: 17

1 helpful points

Location: Benidoleig

Joined: 7 Aug 2021

Posted: Sat Sep 24, 2022 5:46pm

Kimmy11 wrote on Sat Sep 24, 2022 3:20pm:

Hi Petedaniel,

If you don't mind me asking, how old are you?  If you're over 65 years old, as a resident in Spain you are not required to pay Capital Gains Tax, so long as you've lived in the property as your sole, main residence for a minimum of three years prior to its sale.  Also, as Relyat has sug...

...gested, if you purchase another home as your sole, main residence using the proceeds from the sale of your current property that you also used as your sole, main residence, you are legally exempt from paying CGT.

Have you ever submitted a tax return in Spain, and have you submitted one in any of the last 5 years?  All too often, Spanish lawyers will suggest that a client who earns less than the taxable threshold does not need to submit an annual tax return.  This is poor advice, especially once a UK citizen resident in Spain becomes a pensioner, as your earnings are linked to the amount you are expected to contribute to the cost of prescriptions, so it's beneficial for low income earners to submit at least one tax return as it could result in a prescription charge of 10% being reduced to zero.  Most importantly in your case, it proves that you are tax resident in Spain.

The crucial point is whether or not you are still tax resident in Spain?  Do you know precisely how long you have been out of Spain in the last 5 years and do you have documentation to prove it, such as travel documentation?

Kind regards,

Kim

Hi, Kim thank you for your illuminating advice I have not paid tax in Spain for many years as I am now 86 years old and stopped working 26 years ago. I have been living in my village for over 40 years and my present address 26 years as I spent so much time in the UK, I could draw a small pension in Spain for the time I was working But It would cause me other problems so I never bothered You asked my age I am 86 years old and lucky I am still fit. As I was In the UK when I should have changed my driving Licence I missed out, but would be quite happy to, just keep my Uk licence and not drive in Spain if I was to be living in Benidorm I would not need a car there. My problem is that if I have to pay a large Tax Bill I would not be able to move as I have been living on my savings now for a long time . as to my Status, my TIE is only 3 months old . Once again thank you for your interest Peter   

Relyat

Posted: Sat Sep 24, 2022 6:32pm

Relyat

Very helpful member

Posts: 720

673 helpful points

Location: Denia

Joined: 12 Jul 2018

Posted: Sat Sep 24, 2022 6:32pm

Peter. 

From your answers it would appear that yours is a complicated situation. 

Driving licence. This should have been exchanged for a Spanish one within 2 years of you becoming a resident, 40ish years ago. In any event, as you realise, you cannot exchange it now and there is the question of it's validity given your residence in Spain. It makes no difference if you live in Benidoleig or Benidorm to the legality of driving. 

You've been living here for many years, supporting yourself on your savings. If you were to request the Spanish tax office to consider you fiscal resident, I wouldn't be at all surprised if they asked you some questions concerning your life here and your finances. 

Obviously I have no idea what the problems are that you mentioned, but by not claiming the pension and submitting tax returns, you now find yourself with other problems. 

I do think that you need to take professional advice. 

Petedaniel

Posted: Sun Sep 25, 2022 1:18am

Petedaniel

Original Poster

Posts: 17

1 helpful points

Location: Benidoleig

Joined: 7 Aug 2021

Posted: Sun Sep 25, 2022 1:18am

Relyat wrote on Sat Sep 24, 2022 6:32pm:

Peter. 

From your answers it would appear that yours is a complicated situation. 

Driving licence. This should have been exchanged for a Spanish one within 2 years of you becoming a resident, 40ish years ago. In any event, as you realise, you cannot exchange it now and there is the question of it's validity given your residence in Spain. It makes no difference if you live in Benidoleig or Benidorm to the legality of driving. 

You've been living here for many years, supporting yourself on your savings. If you were to request the Spanish tax office to consider you fiscal resident, I wouldn't be at all surprised if they asked you some questions concerning your life here and your finances. 

Obviously I have no idea what the problems are that you mentioned, but by not claiming the pension and submitting tax returns, you now find yourself with other problems. 

I do think that you need to take professional advice. 

Hi Kim once again I thank you for your interest in my problem, I have had a Spanish Licence since I arrived here but was unable to renew it as i was stuck in the Uk, I did ask a friend to attempt to renew it for me and sent the licence with the correct sum of money. but It seems he was not that good a friend as he spent the money and failed to renew my licence.just one of my many problems.As to taking professional advice, this is how I got to be informed of the large tax bill I was expected to pay. Peter 

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