Property capital gains tax

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05 Dec 2011 12:00 AM by ihs61 Star rating. 14 posts Send private message

Hi

My mother is hopfully selling her house in Alicante, her and my step father (now dead) have owned it fo almost 8 years, when he died 2 years ago she inherited his half (all done legally via a spanish lawyer) and has full title in her name.

She is a Spanish resisident (well on paper) as she spend most of her time in the Uk.

On paper she paid 220,000 Euros for the house (+ 20K under the table) and is selling for 180,000, with the sale price being 40K less than the purchase price (all provable) will she have to pay capital gains tax.

Regards Ian

 





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06 Dec 2011 12:38 AM by claire T Star rating in Torremendo, Orihuela. 688 posts Send private message

EOS Supporter

Hi Ian - as there is no capital gain there will be no capital gains tax to pay. 

She will have to pay Plus Valia tax which is a local tax and can vary widely from area to area.  If she is a FISCAL resident (ie pays taxes in Spain) then she won't have to pay a 3% retention, but from your post she will probably be liable for this.  If the retention is taken, just make sure that her lawyer claims it back for her - it can take a while but it should be repaid fi she is up to date with her taxes.

Hope the sale goes well for her.



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Claire



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06 Dec 2011 9:31 AM by ihs61 Star rating. 14 posts Send private message

Hi Claire

Many thanks for your informative reply, one thing I don't understand is what classes as paying taxes in Spain ?

She and my step father moved to Spain after they had retired so they have not at anytime payed income tax.

They have paid all the taxes up to date connected to home ownership ie council tax/ bins etc, so will this count ?

Many thanks

Ian





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06 Dec 2011 1:39 PM by johnzx Star rating in Spain. 5242 posts Send private message

IHS61

I understand that just because there is no capital gain does not mean there will be no capital gains tax to pay.  

 

 That is, whilst the declared price may not be higher than the previous declared price, that does not mean they are the true figures.

 

 If the Tax Authorities, from their tables, believe / decide the property was worth more than the declared price then I understand they will impose a tax.   And, as you show people do dishonesty show incorrect figures !

 

You said, On paper she paid 220,000 Euros for the house (+ 20K under the table) and is selling for 180,000, with the sale price being 40K less than the purchase price (all provable) will she have to pay capital gains tax.  Thus you ‘prove’ that your parents were dishonest when they declared the purchase price.  That may be punishable if you were to choose to prove that point !





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06 Dec 2011 3:09 PM by ihs61 Star rating. 14 posts Send private message

Hi, many thanks for the replys.

The 20K 'under the table' payment was done in sterling (bankers cheque, cashed on the UK) and done prior to the meeting with the solicitor, as the previous owner was returning to the UK.

The exchange was done at 220,000 euros, and the new sale will be for 180,000 euros

Why is nothing easy !





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06 Dec 2011 3:26 PM by johnzx Star rating in Spain. 5242 posts Send private message

You ask why is nothing easy. 
 
Well by your parents making a false declaration eight years ago when they purchased the property (thereby almost certainly committing a criminal offence) your parents and the seller created the complication. 
 
 If everyone was honest and declared the true sum, then I guess, as probably in the UK, the tax authorities would always accept what is  declared  as being the correct figure. As people are often dishonest the tax man needs to ‘try harder’ to obtain what is due.
 
In your particular case, public funds were defrauded 8 years ago,  as the correct tax was not paid upon the purchase and that dishonest situation has probably continued yearly as subsequent tax returns have been based on a lower figure than they should have been.
 
Can’t blame ‘the system’ for that.
 
Bit like a bank robber blaming the bank he robs.
 





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12 Dec 2011 7:58 AM by mariadecastro Star rating in Algeciras (Cadiz). 9419 posts Send private message

mariadecastro´s avatar

 If there is no gain, there is no capital gain... obvioulsly



_______________________

Maria L. de Castro, JD, MA

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Director www.costaluzlawyers.es

El blog de Maria



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