CG on Spanish property disposal

CG on Spanish property disposal

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Client who was widowed about 10 years ago, purchased jointly back in 1980, a holiday appartment in Spain, which has just been sold this month.

Purchase cost was £20,000 and there has been about £2000 receipted that has been spent on it to enhance it. Sale proceeds are net £118457.

The property has been let out over a number of years, but only modest income received, but it has been returned by the client.

Are there any reliefs out there available to minimise CGT? as I 'only think' some relief connected to the rental connection maybe available?

Any help most appreciated

Replies (8)

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By jvenegas16
21st May 2015 16:03

There is

In your client's circumstances there are coefficients which are no longer applicable since 01/01/2015, but due to a temporary provision for properties acquired before 31/12/1994, it would apply to this case.

Was the rent ever declared in Spain? Was the annual tax on the deemed rental income declared and paid on the property?

 

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Replying to Cheshire:
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By Speedwaysquashman
21st May 2015 17:34

I believe that it was only returned and I assume from this declared on the clients UK tax return

Am I learning that if a property is officially rented out in Spain, an annual tax should have been paid to the Spanish authorities?

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By Anne Robinson
21st May 2015 16:18

Do you have to review your base cost for the value of the deceased share at probate value?

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By pjones
21st May 2015 16:33

No Relief

No reliefs due unless it has ever been PPR however given you note this was a holiday apartment, this is unlikely.

Actual cost does not matter in this case - 50% of the CGT base cost will be 50% of the value of the apartment at March 1982 - you will need a valuation at this date.

50% of the base cost will be probate value on husbands death 10 years ago.

You will need to establish these values to obtain the capital gain arising.  Client does of course have an annual CGT exemption to offset.

Will have an element of Double Tax relief Spanish Tax paid on the sale  you will need to get Spanish advice on this.

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By jvenegas16
21st May 2015 17:43

Correct!

That is correct, even if the property is not rented out, there is an annual return to submit and pay the tax due.

Your client would have not submitted the CGT Return yet. I guess that your client has had a withholding tax from the sales proceeds which would be claimed against the actual CGT liability.

On the sale your client would have paid another tax for the increase of value of the property. Any related tax can also be deducted, I forgot to say. And, of course, the enhancement expenditure.

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Replying to Roxy81:
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By Speedwaysquashman
22nd May 2015 08:28

Thank you.This is most helpful

So what tax can be offset under double taxation?

The tax on increased value of the property +  the witholding tax from the sales proceeds?

Am I right that the annual return each year irrespective of whether the property is rented out, cannot be claimed under double taxation against the final UK

CGT liability.

 

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By jvenegas16
22nd May 2015 10:49

Clarification

Let me clarify.

Does your client have modelo 211 from Spain? That is the one for the withholding tax, however, your client must file an actual CGT Return where the actual tax liability will be assessed and either paid or refunded (depending on the amount of withholding tax already paid to the Spanish tax authorities, as it will be the difference). That is the liability that you will need for double taxation relief against the CGT computation in the UK.

If the Return has been submitted, your client should have modelo 210, which is the one you need. A copy of Modelo 211 would have been given to your client by the purchaser, confirming the amount withheld and paid to the tax authorities. That form has a reference needed to complete modelo 210.

If you want me to look into that for you, please e-mail me at [email protected] 

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By jvenegas16
22nd May 2015 17:36

CGT

The rate of Spanish CGT for 2015 is 20% (19% in 2014)

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