CAPITAL GAINS TAX

Guys thanks a lot for  your response its all greatly appreciated! Firstly I am a woman LOL! But hey how were you to know. I don't understand about not declaring it we haven't even found a solicitor yet as my former solictor we used for the purchase has not replied to any of my emails they've had their money and now they don't want to help us any further so if any of you out there know any GOOD solicitors let me know thanks. Anyone got any idea how long it can take up to to sell a house in spain , yeah I know how long is a piece of string but if anyone has any experiences I would be interested to know. Are there any other tax's that would have to be paid when selling a house in spain I  mean basically I am selling it and wanting my money back I don't intend to purchase another property in Spain what will I have to pay out of my sale other than the CGT and solicitors fee's and the agents selling fee's? I did think about keeping it for another year well if it doesn't sell I will be but I was wondering if it would be better to keep it for longer for the investment side of it as I have heard that properties in Murcia are going up in value at quite a fast rate and particulary faster than other regions of Spain is this true?

Once again thanks guys

Cazzdrazz

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Think the question on taxes has already been answered so wil let one of the Murcia experts answer the piece of string thing!!

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You shouldn't pay agents fees for selling.  These are the responsibility of the buyer, not the seller.  The only tax you should pay is the Plus Valia which is, I believe, a tax on the value of the land and not the house(??)  I'm sure one of the knowledgable legal eagles on here will correct that.

If your agent is charging you for selling, change them because they make a fortune from the buyer.  When you put your house on the market, I bet you'll be surprised at how much it's advertised for.  And regards selling, if it's a good property and reasonably priced, it shouldn't take too long.  If it's overpriced (including the agents commission) it will take ages.  Have a look on the earlier threads.  My flat was up at €135,000 and when the agents marketed it, it was advertised at €162.000.  Never in a month of Sundays would it sell at that price.  I'm now keeping it and will sell it myself (through an internet advertising company) and show people around myself when I move over permanently, and at the realistic price of €135.000.  Remember, the buyer then has to add 7% on top for taxes.

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Cazzdrazz said she has a property on the market at 210k. Since I understand she's not here to market it herself, I'm guessing that's the price with the agent? Who pays the agent's fees? Is the glass half full or....? If the price with the agent is 210, their cut should be no more than 10.5k (5%). If you declared a purchase price of 160K, you will have paid 7% IVA (11,200) plus notary, land registry, probably lawyers fees, mortgage fees etc etc, (probably another 5k at least?), most of which will be deductible from your CGT liability - yes, even if you've only owned it a couple of months. The reulting 24k profit or so, assuming you get your selling price, would therefore attract a CGT of about 4k, which would probably be less than the 3% which will be automatically retained at the notary when selling, since you are (presumably) non-resident, so you will then need a gestor or lawyer to help you claim back the difference.

There is also "plus valia" tax on sales, which is like CGT but on the land value increase if any. There won't be, because you have only had it a short while, but you will still need to go through the motions of paying €0! Again, a gestor can sort this out for you, but as for paying a lawyer to actually oversea the sale, it's not really necessary, particularly if you have a decent agent, who should do all the necessary work for you as part of their extortionate fee! (even if the buyer is "paying" it!)

Bob, good luck with your sale, but in my experience, if you find a good agent (difficult but not impossible) it's much easier to sell that way. I've tried the private way, but the only time I got a sale as a result of my mobile number in the window, it turned out to be an agent anyway! In my book, a good agent is one who will be happy to take on your property for, say,a fixed fee of €5k, meaning it will be marketed at 140k, not too much over your "realistic selling price".

Smiley, you stole my signature. I could sue, but I know who I'm up against!

Gillespie - how about the Badger as tax inspector?! Now there's a thought...........

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If you are resident in Spain and of pensionable age you are allowed to sell your main residence after x years and transfer the funds back to another country free of tax.  X is either 2 or 3 years but can't remember if it's that amount of years after retirement age of just residencia.

As to the non resident position, now that the CGT is different from the UK no doubt Gordon Brown's successor will be after the difference

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Hi Rob please fogive me for the plaguarism (?) - no offence intended and I would never assume to be so impertinent as to put it in my signature - re the agents fees its an interesting conundrum as to who actually pays them - maybe with some kind of regulation (whoever knows when) this will become clearer - is it the seller or is it the buyer - normally here it seems to be the seller and as you rightly say works on a % of the sale price - however many agents make the numbers up as they go along - as in how much do you want to achieve from the sale - they then market it for whatever they want to add on - hence you can see the same property in several agents for sale at different prices. Thankfully there are some agents/brokers/auction houses out there with scruples that are realistic and want to do the job properly and get your property sold for you at a very fair rate of commission- question is finding them.

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Full marks for squeezing plagiarism (spell check working!) and conundrum into one post. Anyone for Scrabble?!

Yes, a conundrum indeed. The buyer pays the advertised price, and the agent gets a percentage of it before the seller gets his dosh, so the seller is paying the agent. Or, as is normally the case, the seller tells the agent how much he wants from the sale, and the agent adds his fee on top, so the buyer pays the agent. Six of one, half a dozen of the other...It really makes no difference which way you see it, but Bob's point was that the agent listing his property had slapped on so much commission for himself that there was no realistic chance of a sale. No good for Bob, no good for the thick idiot agent, and certainly no good for potential buyers. However, there is a small argument that if someone is willing to pay the inflated price, and the seller is willing to accept the figure he originally said he would be happy with, what the agent gets is really not important. EXCEPT, that this creates an unrealistic market, where unsuspecting buyers are paying over the odds, and raises serious doubts about the ethics of the real estate profession (as if they were squeaky clean before hand!) which does nobody any good at all.

My own (albeit limited) experience is that there are decent, honest, hardworking agents around who genuinely want to provide a professional service at a competitive price. Of course, not everyone is in a position to find out over a period of time who is reliable and trustworthy etc, and who to avoid, but my advice on this subject if you are selling, is to talk to individual agents about how they plan to market your property, and agree a figure for their commission in advance, either a fixed fee or a %, it's up to you. Remember, YOU are the client, so YOU call the shots. The agent needs you more than you need him - you have the property, and he can't sell it without you. If he (or she) doesn't want to play ball, move on to the next one. There's plenty to choose from !

Sorry, this doesn't seem to have much to do with CGT anymore

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May not have anything to do with CGT but it is absolutely spot on ...... again.

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Hi everyone,

I thought I new about capital gains tax but we have just been to see an estate agent and he says that if a property is sold by a resident or non resident there will bea 3% retention at the Notary´s office.  We have sold before and because we are residents have not had to pay  retention of monies for tax purposes.  The last time we sold was in August 2005 and we had to go the the Ayumiento in Torremolinos to get a form which stated that we were residents and our payment of taxes was up to date.  I know the tax laws changed in 2007 and wonder if everyone, resident or non resident, is now liable for the 3% retention.  I would also be interested to know what age men and women are not liable to pay capital gains tax.  This subject has been mentioned in this forum but at the moment no-one seems able to provide accurate information.  Hoping someone can help.  Thankyou in advance.

 

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The estate agent was WRONG! No retention for residents.  What has changed is that the CGT is now the same for residents & non-residents alike, i.e. 18% (previously 15% for res., 30% I think for non-res.)

BTW, was this agent in Torremolinos? And do you know what happened to Harry?

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Thanks for the reply Roberto.  On trawling the net I have found out that to be classed as a resident  for CTG purposes you have to provide the previous 3 years tax returns, an escritura in your name that is more than 3 years old or a certificate from your local town hall to say that you have been registered as living there for more than 3 years.  You will also need to prove that you intend to continue living in Spain by providing a contract to purchase a new home or a rental contract for at least one year.  Your Lawyer or asesoria will apply for an exempton certificate (O2) from the tax office to say that you qualify to be exempt from the normal retention of 3%.  You will still be liable to pay 18% tax on any profits from the sale but this amount is not due on completion but has to be declared on the next years tax declaration.  If within 2 years of the sale you invest all of the profits into another primary home you will not have to pay this tax.  Foreign residents aged 65 and over ae not liable to pay capital gains tax but will need to prove that they qualify to be treated as a Spanish resident.

Does this information sound correct to you?

Our Estate Agent was in Fuengirola and who is Harry?

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Hi nannyjersey, I think perhaps my original answer was a bit too simplistic (apologies!), and it seems your research has turned up a more complete answer.

As an EU resident of Spain, you should basically be treated the same as a Spanish citizen with regards to taxes etc., but of course as you have found out, you have to satisfy the relevant authorities that you are in fact a genuine, fiscal resident, i.e. that you do actually live in Spain and pay your taxes here. It used to be relatively easy for someone who owned a property here to simply apply for their residencia when they wanted to sell their property, thereby avoiding the unfair (according to Brussels) CGT on non-residents.

To comply with Brussels, the CGT payable by both residents & non-residents is now the same i.e 18%. For non-residents, 3% of the total sale price (not the capital gain) will be retained at the notary, in lieu of the tax due on the actual gain. For residents, as you have found out, as long as you have the exemption certificate (modelo 02) issued by Hacienda, you will not be liable for the 3% retention. The latest info I have on this says you need your previous year's tax return (which Hacienda will have a record of on their system anyway), proof of residency (residency card, now replaced with the stupid green certificate), certificate of empadronamiento from the town hall, and proof that you have another address where you intend to live, as you say, either a nota simple of the deed, or a long term rental contract, or purchase contract for a new home. I wil try to check if this is all still correct.

If you are selling your habitual residence & re-invest the proceeds within 2 years, or if you 65+, then you will be exempt from CGT.

So yes, basically, the info you found out as far as I know is more or less correct. Sack the estate agent, his answer was just as simple as mine, but fundamentally wrong!

Harry was an estate agent in Torremolinos who recently "done a runner". Nobody knows why, but at least one client's deposit went with him. Any news would be greatly appreciated on the local cafe gossip circuit!

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Further to my post below, I have just had a look at the website of the Agencia Tributaria, and astonishingly (not really?) it is very out of date. It still states that non-residents are liable for 35% CGT, that 5% will be retained at the notary, and strangely, modelo 02 doesn't seem to exist! So if you are about to sell a property, your best bet may be to pop by the office of Hacienda in Torremolinos just to check the latest requirements, and at the same time, ask them when they might wake up to the age of information technology!

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Hello Roberto,

Many thanks for taking the time to reply to my post.  I think that I am now clear about our position regarding CTG if we manage to sell our apartment.  My husband is 65 and I am 63 and we have just renewed our residencia with the stupid green form which is absolutely useless as proof of identity.  I hope I am right in thinking that because we own our apartment jointly only the 50% I own would be liable for CTG because my husband is 65 and not liable for CTG on his share of the property.

Take care,

nannyjersey

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I guess so?

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My dear panel of experts

Is this correct, You sell off plan then I still have to pay CGT on the profit made @ 18% and the buyer has to pay 7% Transfer Tax and 7% IVA on the investment.

Many thanks

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The taxes you quote are correct, however I think its the seller that pays the transfer tax, although its usually argued over!

Transfer tax of 7% (from which you deduct your ofiginall 7% payment of course!,)  the buyer pays 7% purchase tax.

If you are really really nice to the developer, then you may get him to cancell your contract and reissue it with the new buyer, but thats normally in the case of selling off plan where there is a loss involved!

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Thanks Rixxy, I have agreed to pay the 7% transfer tax  

Hopefully I can off set it against my CGT. I did ask that question about the developer cancelling the contract however apparently something has already been signed in the Notary's office even though its about 9 months until completion!

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