cgt on Spanish property sale

cgt on Spanish property sale

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A client of mine was left a property in Spain in 1985 (she owns it jointly with her brother). since then her uncle has resided there rent free. he moved to a hospice a few years ago. She, the owner, is a spanish national who has been resident in the UK for more than 10 years. she has never owned another property and has been renting privately all the time she has been in the UK.

she is now going to sell the property. She appears to be exempt from cgt in Spain having held the property for so long.

is there, though, any tax liability in the UK?

any help much appreciated.

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Euan's picture
By Euan MacLennan
09th Mar 2012 14:24

Spanish domicile?

I am no expert, but I think that if the client is domiciled in Spain (or at least, somewhere other than the UK), she will only be liable to UK CGT if she remits any of the gain to the UK.  She would then have to decide whether to pay the RB charge of £30,000 or accept UK taxation on the entire gain.

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By Steve Knowles
09th Mar 2012 16:16

Half share

Regardless of the domicile issue, if the gain is plit with her brother, she may not have much if any CGT liability once expenses are taken off and the annual exemption is taken into account.

Double Taxation Treaties generally allow for Capital Gains on property to be taxed in the country of residence, but you would need to check the specific agreement with Spain.

 

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By jvenegas16
11th Mar 2012 12:56

Exempt?

The CGT liability in Spain may be low, but it is not exempt. The transitional rules for properties acquired prior to 31 December 1994 will be considered, which will be applied to the gain made prior to 20 January 2006. Any enhancement expenditure will need to be taken into account too. The purchaser will withhold tax at 3% as your client is non-resident in Spain. Then your client will have to claim a tax repayment or pay the extra amount of CGT due, whatever is the case.

Your client is resident in the UK, but she is non-domiciled in the UK, therefore no capital gains tax is to be charged on the gain from the disposal of the asset situated outside the UK (in this case, Spain), except to the extent of any amounts received in the UK in respect of that gain.

 

Juan Carlos

 

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