First post and a question

Hi folks, Im an eye on Spain virgin so please be gentle with me. I lived in Spain for several years but have been back in the UK for 17 years now,  my question is regarding a family member who owns a property, she is considering selling and re investing in possibly 2 smaller properties. Effectively, no money would be taken out of the country so how is she affected tax wise. She is a non resident but pays all the things she has to. I understand if she takes any money out of the country she is liable for tax but what are the differentials? can anyone put me straight? Its not an urgent thing she is only considering it.  Thanks in advance. Charlie

I think you are speaking about capital gains tax.

You friend will have to pay capital gains tax on the chargeable gain at 19% .

The chargeable gain is basically the differnece between selling price and purchase price but she will be able to adjust the purchase price to claim indexation/inflation refief based on the number of years she has owned the property - that could reduce the tax liability.

It does not matter what she does with the money - take it out of the country or re-invest - she will still have to pay capital gains tax.

If she is non-resident then she will not be able to claim any roll-over relief.

Also being non-resident she will initially face a 3% retention and if due a refund then it could take 6 to 12 months to secure.

Thanks for that! obviously got my lines crossed as I was sure her liability for tax would be lessened if the money stayed in spain, must have made it up myself. I really appreciate the help and have a few more queries to throw into the hat later so please watch this space. Cheers Charlie

Is he/she was a resident and one of the houses was a permanent home, there would be tax deductions if reinvested along the following two years after the sale.

Why doesn't she register for residencia, sell & buy & then de-register. Or stay registered . She'd still have a 3% retention though as she wouldn't have had a fiscal certificate for three years.

If the property has been owned for a number of years then there may be very little tax to pay.

The first thing she needs to do is quantify the tax payable.

Of course your friend must also bear in mind she is UK tax resident and domiciled and must also consider her UK tax situation - Spanish tax may not be the only tax she has to pay. But  she will get credit in UK for any Spanish tax already paid as there is a double tax treaty between the two countries.

She should discuss with a UK/Spanish tax advisor an clarify both Spanish & UK tax/situation.