Talk Quesada forum

Hi all, just after a bit of advice concerning the sale of my property in the UK and capital gains tax in Spain. As a non resident of Spain, if I sell my house in the UK in December of one year ,and then move to my house in Spain in the January of the next year, will I have to pay capital gains tax in Spain from my UK property sale?

No. That's what we did. Just make sure you don't become a resident until your house sale has gone through and it's not in the same year as you sold.

Thank you very much marcliff for your very quick response

Please, what’s happened to the link on here to YouTube. It was so funny? And so apt.

Thinking of selling my uk house and have yet to obtain residencia...so, before getting residency
should I keep the house and rent it for income,thus keeping a foothold in the uk should we decide to move back?.
Or ,
if I do sell will there be capital gains tax on a 300k sale,and if so how much in uk v Spain. .advice from those who have done this recently please..

People always advise to keep a foothold in UK if possible, in case things don't work out. You'll pay UK income tax on any rental income so I think you will need to do two tax returns, UK and Spanish one .

Re the capital gains, am also keen to know of anyone's practical experience on this, in case we decide to sell UK property in the future. I realise and accept there'll be spanish capital gains due on it, but wondering how big a hit, are there allowances for length of time owned etc or even ( wildly optimistic thought) when is the valuation point from which ' gains' are counted... might it be from the time you became fiscally resident in Spain ? ( that's probably wishful thinking on my part.). Of course I know for a definitive answer I need to consult a tax advisor but good to know from anyone with experience of doing this...

Nothing beats selling your property in UK before you become a resident. If the house in UK is your main home then there is no CGT to pay in UK nor in Spain.
If you retain the house in UK and rent it then you will be liable to income tax on the rental income both in UK and Spain. Because of the dual tax agreement, then any income tax you pay on rent in UK can be offset against the amount you would be liable for in Spain.
You will also be required to complete an annual Modelo 720 (declaration of foreign assets) in Spain. You won't be taxed on the value of the asset (ie, the property), just any income arising from it.
Be aware that the rules in UK changed in 2015. If you are selling your property in UK and it is not your main home (eg, your Spanish one is) then you will be liable for CGT in UK which could be as much as 28%.

Now the good bit. Yes, you are liable to CGT in Spain but your CGT liability in Spain will only be calculated on the gain made between the time you became tax resident in Spain and when the asset is disposed of.

So if your property is valued at 200,000 in UK when you became resident but is now worth 250,000 then your CGT liability will be on 50,000 regardless of how much you paid for the property in the first place.

Obviously, if you want to keep a house in UK as a backstop then that is your personal choice. You should always make the decision on your circumstances and wishes and not simply on the tax liabilities.

If the tax implications are your main concern then selling the property in UK before you become a resident is the way to go. If keeping a backstop is your main concern then just be aware of the tax implications.

Edited to add:
If you become resident in Spain and retain your UK property, get the UK property valued and keep hold of the valuation. When you come to sell, the difference between that valuation and what you sell it for will be what you are liable to CGT on in Spain.
In UK, the CGT will be based on the difference between the price in April 2015 (when the loophole was closed) and what you sell it for.

marcliff wrote:
Now the good bit. Yes, you are liable to CGT in Spain but your CGT liability in Spain will only be calculated on the gain made between the time you became tax resident in Spain and when the asset is disposed of.

Thankyou ! This is just what I thought might be too much to hope for....

Personally, I'd keep the property in the UK if you can - either in your name or by gifting it to your children.
Property prices in the UK are rising all the time and it seems unlikely that this trend will reverse, even if the Brexit debacle goes ahead and if (worst case scenario) it triggers another global downturn.
On the other hand, property prices in Spain are fairly static. The Spanish banks are still sitting on lots of repossessions that are now fairly worthless because they've say empty for 8-10 years, yet they have them as assets on their books at pre-crash prices. The banks have no incentive to sell, as they have properties on their books at 250k that would probably only sell for 50k, wiping 200k off their balance sheet.
Sooner or later the EU banking regulators will start requiring the banks to have proper independent valuations of these assets and when they do the banks will realise thet the game is up and start off-loading them on to the market and taking the hit on their balance sheets.
If the banks survive this then the market will be flooded with cheap property that appeals to the doer-uper market and once renovated they'll be competing with the other property that's available, this driving prices downwards (again). If the banks don't survive this hit then it's 2008 all over again, but I'd guess that the Spanish economy will take more of a hit as a result of their banks failing.

So, property in the UK will almost certainly continue to appreciate in value, whereas the best case scenario is that property in Spain will appetite a a much lower rate, but could well fall in value (in my opinion).

Better to pay CGT on the profit you make on your UK home than make no profit at all.

Just my 2p worth....

Pete.