Cgt query

If you sell your  only house, being resident, paying income tax etc in Spain, over 65, and have lived in the property for more than 3 years, then move back to the UK  having spent less than 183 days that year in Spain, are you still entitled to the concession whereby you pay no cgt.

Camposol, see Roundtownews today, Costa Calida Edition, Legal page by Baos Ass. They address the question.

Saludos

I read that article earlier, it said it was a grey area. I would have thought that as long as you were a resident, over 65 etc at the time of signing the contract, you would pay no cgt, even if you did return to the UK after completion.

Also, the earlier part of that article contradicts the info about  cgt, in that it states no cgt is payable if the proceeds are invested in an annuity, whereas other forums and the CBA Spain have stated that the position re cgt is as it's always been ie: if you are 65, tax paying resident, and lived  oon the house 3 years you do not pay any cgt, and it is not conditional on being invested in an annuity.There are some changes to cgt, but it does not affect this particular concession.

It was also mentioned in a blog on EOS.

I have read nothing which has changed the status quo.  i.e. tax resident, principle home, over 65 and lived in property for at least 3 years.  No CGT.

If you move back to the UK having not spent more than 183 days in the calendar year, then you are not tax resident. It's itrelevant when you signed the contract, it's the date of completion that is the relevant date. The investment in an annuity is introduced on the 1st January 2015 as part of the tax changes. 

If if you do move  before you are tax resident then you still qualify for the reinvestment relief if you buy another property in the UK.

So, if completion takes place while you are resident, over 65 etc, if you go back to the UK,before the 183 days are up, you still qualify for the concession?

this thing about having to invest in an annuity with the proceeds, in order to avoid the  cgt  is confusing.

in the blogs of EOS, a statement  from the Cituzens Advice Spain said that the situation will continue as before, you do not have to invest in an annuity!

this has been stated in other expat press, yet now it is being contradicted.most people will need the money from the house sale in order to buy another house or whatever, so it needs to be clarified once and for all.

Campo:   tax resident, principle home, over 65 and lived in property for at least 3 years.  No CGT.

Sell the property and you can go anywhere, whenever you like, if you have qualified.

So what about the proceeds having to be invested in an annuity-has this been reported wrongly?

Kathyslad said  The investment in an annuity is introduced on the 1st January 2015 as part of the tax changes.

But that does not apply to the 65 etc

The ability to transfer the proceeds of any asset sale ( so for example a second property) to  an annuity free of capital gains if you are over 65 is a new tax concession from 2015. The concession of the proceeds of the sale of your habitual residence  remains as it was I.e exempt, nothing has changed.

Just to clarify  you claim the capital gains relief through submission of your  normal tax return ( modelo 100) whereas if your are non resident it is submitted through the Form 210.

If you return to the UK before 183 days then you are non -resident, if you return on day 184 then you are tax resident, and will need to submit a tax return.

Thanks Kathysklad for clarifying that.

I do not want to complicate matters, but for the sake of clarity,  if one comes to Spain to work or in intending to make Spain your new home, then you are tax resident from day one and must register on the EU Citizens Register.   If you ask for just an NIE in those circumstances  it will not be allowed, you will required to register on EU Citizens Register.    I have been present several times at the National Police office when this had happened.

If you come as a visitor, but stay permanently for 90 days,  then you must register on the EU Citizens Register.  If you spend a total of more than 183 in any year, then you automatically become tax resident

Kathyslad: "if you do move  before you are tax resident then you still qualify for the reinvestment relief if you buy another property in the UK."

Am I right in thinking this is new for 2015 too? Previously, if reinvesting all the proceeds from the sale of your principle residence in another property in Spain (regardless of age, years lving inthe property etc.), you would be exempt from CGT; but under EU law (freedom of movement of people & capital etc.) this will now also apply if buying another property anywhere in the EU? 

If this is the case, I think it's only right - BUT, I wonder exactly how Hacienda will figure out if you have indeed reivested the proceeds in a property in another country (UK for example) - without a catastral reference to check the details, I can see them simply ignoring / disbelieving anyone who claims this exemption, and pursuing them for tax they don't owe - bit like they go for extra tax on property transfers they simply deem to have been too cheap.

Apparently it has always been the case that if you reinvest your sale proceeds in another property, it can be anywhere in Europe, but it this is something not generally known, and it was generally assumed to be Spain only.I don't know if it has to be your main residence or a second home .

Surely it should not be hard to prove to the Spanish tax office that you have spent the proceeds on a house in the UK, bank statement, deed of sale etc.

Whilst Camposol is correct that it has always been believed that this relief applied, mainly becuase the tax legislation was silent on where the property was situated.

However, the revised legislation for 2015 is now quite specific, so there is no doubt. As I read the legislation there will be some new regulations setting out how to claim the relief, if it's reinvested after the sale. If it's reinvested before the sale then the legislation says you can claim the relief as part of the submissions. As I read it there will be no change to the 3% retention, so I guess you will claim the relief on a revised Form 210. I would presume that a Land Registry reference or suchlike will be required, although as long as you have the address anyone can check the details at the Land Registry.

"...some new regulations setting out how to claim the relief, if it's reinvested after the sale". I would assume you "claim" it by presenting the details of the sale and subsequent purchase on your next annual IRPF declaration. You can (or could) defer it for two years - I think there's an option to check on the IRPF for this. Presumably this is to allow you time to find a new property. It does present the rather confusing situation though, that you may be presenting a resident's tax return in Spain, two years or more after leaving the country, and clearly no longer being a tax resident here. How does that work?