Re-investing House Sale Money

Information and questions about the Law in Spain and Andalucia.
Miro
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Re: Re-investing House Sale Money

Postby Miro » Fri Jan 02, 2015 11:51 pm

Good idea - except that there won't be any tax due since I'll be using all the sale proceeds to buy another place. So will the fine still be 20% (of nothing)?
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Re: Re-investing House Sale Money

Postby El Cid » Sat Jan 03, 2015 12:08 am

You would only be exempt if you followed the procedure to declare the gain, ask for the two year moratorium and then declare the reinvestment when, within two years, you declare the new purchase.

When you make the declaration of the gain it generates a tax bill. That tax does not need to be paid if you declare your intention to reinvest the proceeds. If you subsequently reinvest the money and make the correct declaration then the tax is cancelled. If you don't follow the procedure then the original tax is due plus any fines for late payment.

Sid

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Re: Re-investing House Sale Money

Postby Miro » Sat Jan 03, 2015 12:16 am

Right, but what is the "correct declaration", since I may no longer be a fiscal resident by the time I reinvest?
Don't worry about what people think, they don't do it very often

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Re: Re-investing House Sale Money

Postby El Cid » Sat Jan 03, 2015 9:17 am

Normally it would be the annual RENTA declaration.

If you want to do that while being non resident I suppose you can still use the PADRE program to generate a declaration which only shows the new house details. However, if they have not been chasing you, that could open a can of worms. I would be inclined to sit tight and wait and see what happens if you don't do anything.

You could also get a gestor that you have used before what the procedure is, or if he doesn't know, he could ask the tax office what the procedure (if any) is.

That's about all I can suggest as I have never actually heard of an example of anyone avoiding CGT in this way.

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Re: Re-investing House Sale Money

Postby Unicorn » Sat Jan 03, 2015 5:53 pm

If you sell, as a resident, and you would be liable for cgt, according to the tax people. Say you take the 2 year option, is it all the proceeds or just the gain that has to be re-invested?

And the over 65 thing of not paying cgt, does that still apply with the new rules?

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Re: Re-investing House Sale Money

Postby El Cid » Sat Jan 03, 2015 7:11 pm

You have to reinvest all the proceeds. If you only invest part of the gain the tax is reduced prorata.

Yes, the over 65 allowance applies under the new rules, but remember that you must have lived in the property for three years continuously for it to qualify as your habitual residence. That is why non residents cannot get the exemption, even after the EU forces Spain to have the same tax rates for residents and non residents.

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Re: Re-investing House Sale Money

Postby Unicorn » Sat Jan 03, 2015 7:44 pm

Cheers Sid.

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Re: Re-investing House Sale Money

Postby scampicat » Mon Jan 05, 2015 7:42 pm

Answering a few questions before I read any further.

CAR: The car was brought over from the UK in 2004, registered onto Spanish plates,, taken back to the UK in December 2011, registered onto UK plate in May 2012 and then sold in June 2012. DVLA said they would send notification of this to Trafico eventually, so we did nothing else. Then we got a demand from the Ayuntamiento for Spanish car tax for 2013 (sent to my Spanish address, the new owner forwarded it). I emailed them the documents that I had from DVLA, they then sent me another demand, I sent them the documents again and have heard nothing from them for about six months.

They do not know my address, all this communication was by e-mail.

HOUSE: We were fiscally resident in Spain when we sold our house in 2012. We payed any taxes we were asked for at the time, we had made a negligible capital gain. There was no black money involved in the sale. We are just about to buy another main home in the UK and I was just asking what the time limit was in case the Hacienda decides we owed them some tax like the car people did.

Hope this clarifies.

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Re: Re-investing House Sale Money

Postby El Cid » Mon Jan 05, 2015 8:21 pm

The problem you had with the car tax is because it has nothing to do with Trafico.

It's a local tax administered by the town hall and they need to notified when you move or sell it or take it out of the country. Trafico won't tell them.

I can't see them chasing you for it.

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Re: Re-investing House Sale Money

Postby gerryh » Tue Jan 06, 2015 9:10 am

El Cid wrote:The problem you had with the car tax is because it has nothing to do with Trafico.
Sid

Surely when you do a change of ownership notification to Traffico they send details of the new owner to the local town hall where the new owner lives?
I have never informed my local town hall that I have sold a car or bought a different one.
At car tax time they have always had the correct car details.
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Re: Re-investing House Sale Money

Postby El Cid » Tue Jan 06, 2015 10:11 am

You obviously have more faith in Trafico than I have.

They have, in the past, issued me with a 5 year licence when I had applied and paid for a 3 year one. On my latest licence my nationality is now Spanish!

They may have got their act together recently - let's hope so, but Scampicat was in a very different situation as it was a UK car that had been registered in Spain. It is quite likely that the DVLA didn't inform Trafico. Actually the owner should advise Trafico if the car is leaving the country permanently.

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Re: Re-investing House Sale Money

Postby Miro » Tue Jan 06, 2015 10:46 am

Miro wrote:
scampicat wrote:We sold the car (in the UK) in June 2012. I sent them the documents saying this. They then later asked us for car tax from January 2013. :crazy:


Assuming (??) you are talking about a Spanish registered car - are you sure the transfer was correctly completed? Who are "they"? Tráfico, or your (old) town hall?


You've answered my question then - you did not inform your town hall of the transfer, and as Sid says, I would have no confidence in Tráfico letting them know - that is, assuming DVLA have even informed them. Tráfico may still have the car registered to you (and accumulating fines for no ITV?)

Re: the house sale in 2012 -
scampicat wrote:We were fiscally resident in Spain when we sold our house in 2012. We payed any taxes we were asked for at the time, we had made a negligible capital gain...


Just curious (because I hope to be in a similar position before too long), but did you therefore submit a renta declaración in 2013 (for the 2012 fiscal year), or not bother since you'd left Spain? Presumably there was no 3% retention, since you were fiscal residents?
Don't worry about what people think, they don't do it very often

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Re: Re-investing House Sale Money

Postby gerryh » Tue Jan 06, 2015 11:25 am

Sid and Miro
Are you saying that when you have bought or sold a car you have gone to your local town hall and informed them that you have bought or sold a car?
I have bought and sold 7 cars here so far.
On all occasions registering the change of ownership with Traffico has resulted in my local town hall being informed of the fact.
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Gerry
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Re: Re-investing House Sale Money

Postby Miro » Tue Jan 06, 2015 11:36 am

Well, now that I think about it....I haven't sold a car for over 10 years, but no, I don't remember informing the town hall. But the fact remains that scampicat's old town hall didn't know that the car was sold - so either Tráfico don't know, or haven't passed the message on. And that doesn't surprise me. All I'm saying is that if I was selling a car today, I would let the town hall know - just to be sure. But I'm a belts & braces kinda guy - too many bad experiences to be any other way. :cry:
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

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Re: Re-investing House Sale Money

Postby El Cid » Tue Jan 06, 2015 1:10 pm

Gerry, I have only ever bought new and the last time the old one was scrapped under Plan Pive.

I'm sure you are right and it has worked for you, but as I said, I would never trust traffic to do anything right when it involves another party.

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Re: Re-investing House Sale Money

Postby Laslomas » Wed Jan 07, 2015 5:03 pm

Back onto the re-investing house proceeds query - should I start looking over my shoulder for the authorities catching up with me? I sold the house I had lived in as a resident for 10 years, in May 2013. It was originally in joint names, until my husband died aged 67. Long story short, transfer to one name was done and all sorts of payments made, plus valia on the inheritance etc. then it was sold. All done through a lawyer and no retention was made for CGT. I have moved back to UK and re-invested the whole amount into my new property. All the years I was in Spain I made a tax declaration, but since leaving I have done absolutely nothing and have had no contact with the tax authority. I am hoping that other than the fact that I have not informed anyone, I do not owe anything. Once in the UK it never entered my head to try to inform the Spanish tax people - I found it stressful enough doing those sorts of things when I was actually in their country. Yes I have stuck my head in the sand - so how bad could it be? Should I be concerned?

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Re: Re-investing House Sale Money

Postby scampicat » Wed Jan 07, 2015 5:52 pm

Thanks all for your replies.

To reply to some of them:

No we did not let the Town Hall know we had transferred the car (because we were in the UK when it happened and have not been back to Spain since) - DVLA said they would let Trafico know and we thought that was enough.

There was no 3% retention when we sold the house as we were fiscally resident (but never had to pay any tax). Our lawyer told us how much tax we had to pay, and what taxes, and paid it on our behalf from the proceeds. We did not send any more tax returns in to Spain.

(In fact I have just found the completion statement - we paid plusvalia tax. We actually didn't make a capital gain by the time all the improvements, updating of documents and selling fees had been set against it).

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Re: Re-investing House Sale Money

Postby infoseeker » Thu Jan 08, 2015 2:41 pm

Laslomas- when you moved backed to the UK, had you been resident in Spain for more than 183 days?
If yes, then the following year you still need to send a tax return for the past year.
What did you think would happen about your tax?
Presumably you had an accountant -what did they say, when you told them you were moving back?
Also if you had previously submitted a 720 assets form, you might have to submit another one, as, if you transferred the the house proceeds back to the UK bank, then your funds would have increased by more than 20 k euros, which is one of the criteria for resubmitting.
My accountant told me some people do go back to the UK Who should be submitting a tax return for the previous year, but don't do anything about it, just leave it to chance- may have worked years ago, But not in this age of pressing keys on computers to get instant info on you.
Anyway, would you really want to worry about an unwelcome letter from the Spanish tax man?

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Re: Re-investing House Sale Money

Postby Laslomas » Thu Jan 08, 2015 8:20 pm

I returned on 22nd of May of 2013. I had previously used a gestor and the two years prior to leaving, after my husband died, I was below the threshold to pay tax. I was told the 720 form was for assets outside of Spain of which I had none, and I think that declaration only started the year I left with less than 183 days living in Spain. I left Spain in the May and at the end of June the house sale completed and the money was transferred to me in UK. I did not complete a tax return for 2012 (that should probably have been done at the time I was stressed out with the move), and it would have been a nil return anyway.
Keeping my fingers crossed.


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