Advice on capital gains

Posted: Tue Nov 1, 2022 12:51am

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swcoulthurst

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I know we will have to seek proper legal advice on this, but just trying to get my head around it.

We are resident in Spain and have been for almost 4 years. We own a property that we purchased almost 19 years ago. We are considering selling our main residence and downsizing. Even though we have owned the property for so long, the amount of capital gains we would make is not massive due to the past crash in the market. Obviously there is the cadastral value to take into account and the brown envelope payment that happened at that time! That will no doubt inflate the profit we may make. I understand that if we sell and reinvest the profit in another property as our main residence then we do not pay the capital gains on the original. Is this true and if so how does it work? Obviously we would be purchasing the new property soon after the sale. Do we pay it and claim it back or do we defer the payment? If the purchase is before the next tax submission is it taken care of in that submission?

Any help and advice would be greatly appreciated.

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Posted: Tue Nov 1, 2022 9:25am

killjoy

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Posted: Tue Nov 1, 2022 9:25am

Capitals reinvested within 2 years from property sales are exempted from capital gains tax.

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Posted: Tue Nov 1, 2022 11:02am

dinnerout

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Posted: Tue Nov 1, 2022 11:02am

killjoy wrote on Tue Nov 1, 2022 9:25am:
Capitals reinvested within 2 years from property sales are exempted from capital gains tax.

But main residence only I believe?

Steve

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Posted: Tue Nov 1, 2022 11:13am

killjoy

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Posted: Tue Nov 1, 2022 11:13am

Hope this will help you: https://www.agenciatributaria.es/static_files/Sede/Procedimiento_ayuda/GF07/FAQ_GF07.pdf.

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Posted: Tue Nov 1, 2022 11:55am

swcoulthurst

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Posted: Tue Nov 1, 2022 11:55am

dinnerout wrote on Tue Nov 1, 2022 11:02am:
But main residence only I believe?
Steve

Thanks for the confirmation. But it does say our main residence. Has been since relocating here almost 4 years ago.

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Posted: Tue Nov 1, 2022 12:05pm

dinnerout

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Posted: Tue Nov 1, 2022 12:05pm

swcoulthurst wrote on Tue Nov 1, 2022 11:55am:
Thanks for the confirmation. But it does say our main residence. Has been since relocating here almost 4 years ago.

Yes, but if you read the post I was actually replying to....it wasn't specific so I was just offering clarification. Not to you, to him.

Posted: Tue Nov 1, 2022 12:33pm

Kimmy11

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Posted: Tue Nov 1, 2022 12:33pm

Hi swc,

I read recently that there are plans to consolidate CGT at a national level, because rules set by many of the regional governments have negated the bulk of tax due 😄 Nevertheless, it appears that the 2022 rules are still favourable to Spanish tax residents selling their main residence:

https://www.bcn-advisors.com/en/the-new-capital-gains-tax-in-spain-in-2022#:~:text=For%20Spanish%20tax%20residents%2C%20the,any%20gain%20over%20%E2%82%AC200%2C000.

Kind regards,

Kim

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Posted: Tue Nov 1, 2022 2:06pm

swcoulthurst

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Posted: Tue Nov 1, 2022 2:06pm

Kimmy11 wrote on Tue Nov 1, 2022 12:33pm:
Hi swc,
I read recently that there are plans to consolidate CGT at a national level, because rules set by many of the regional governments have negated the bulk of tax due 😄 Nevertheless, it appears that the 2022 rules are still favourable to Spanish tax residents selling their main residence:...

Read more...

...
https://www.bcn-advisors.com/en/the-new-capital-gains-tax-in-spain-in-2022#:~:text=For%20Spanish%20tax%20residents%2C%20the,any%20gain%20over%20%E2%82%AC200%2C000.
Kind regards,
Kim

It is still clear as mud though 🙄

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Posted: Tue Nov 1, 2022 2:34pm

Kimmy11

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Posted: Tue Nov 1, 2022 2:34pm

Hi swc,

I think it's pretty straightforward if you're aged 65 or older! 😄 But as the AEAT charge CGT according to your overall annual income, I don't think you'll get a specific answer on here.

As you're tax resident in Spain, you would need to declare the sale in your annual tax declaration. For example, if you sell before the end of this year, you would have to declare it on your Modelo 100 and pay any tax due no later than the submission deadline of end June 2023. Although I believe that, over a certain amount, you can pay the tax in 2 instalments, in June and November.

Kind regards,

Kim