Selling a house - Tax implications.

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gerryh
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Selling a house - Tax implications.

Postby gerryh » Tue Sep 19, 2017 5:15 pm

I thought I was beginning to understand the tax implications of selling a house here in Spain.
I have two friends who recently sold their house here in Spain and now live in rented accommodation.
They are both over 65, have owned and lived in the house, in Andalucia, for more than 3 years and are resident.
Their solicitor charged them €680 for getting them an exemption from paying CGT on the sale of their house.
I thought it was automatic given their circumstances?
They have now been told that unless they "do something with the money" from the sale of the house before June2018 they will be taxed on it????
What tax and why?
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Gerry
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Re: Selling a house - Tax implications.

Postby Gasman » Tue Sep 19, 2017 5:31 pm

I expect El Cid will come on soon with chapter and verse, but residents over 65 do not have to pay capital gains on their principal residence in Spain, as I understand it, and the question of the need to reinvest it in another property to become their principal residence does not arise either.
I am suspecting dodgy solicitor here ... why did he have to charge them that kind of fee anyway!
I just wonder if they have to have been residents for 5 years rather than 3 ???

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gerryh
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Re: Selling a house - Tax implications.

Postby gerryh » Tue Sep 19, 2017 5:42 pm

I believe they have been resident for at least 10 years.
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Re: Selling a house - Tax implications.

Postby El Cid » Tue Sep 19, 2017 5:45 pm

But have they filed tax declarations?

Sid

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Re: Selling a house - Tax implications.

Postby gerryh » Tue Sep 19, 2017 6:15 pm

Yes they have. Both tax resident. That is why I am confused as to the need to apply for an exception, for CGT, and still be liable to some other tax than CGT
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Re: Selling a house - Tax implications.

Postby El Cid » Tue Sep 19, 2017 6:22 pm

Sadly, it looks like the "solicitor" is talking rubbish. The over 65 exemption is absolute, you do not need to reinvest it and anyway, if you were reinvesting in a house you have 2 years to do it.

Sid

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gerryh
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Re: Selling a house - Tax implications.

Postby gerryh » Tue Sep 19, 2017 7:36 pm

That's my thoughts is that the solicitor is talking rubbish.
But as they are clearly exempt from CGT, having unnecessarily paid €680 for the exemption, what can possibly the the further tax that they could be liable to pay?

Sorry to carry on about this but I want to make sure I fully understand the tax laws so I can document them for my wife to refer to when I die and she is left to sort out our affairs.

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Re: Selling a house - Tax implications.

Postby El Cid » Tue Sep 19, 2017 7:44 pm

It could just be the CGT if they don't reinvest it, but that again is rubbish. If they have an exemption then it's exempt.

I'm getting to the point where I do not trust ANYthing a so called professional says. If even the man in the tax office talks rubbish about government pensions what chance have you got!!!

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Re: Selling a house - Tax implications.

Postby Miro » Wed Sep 20, 2017 2:02 am

Something doesn't make sense there. The "solicitor" charged them €680 for getting them an exemption from CGT, which they automatically get anyway and don't have to apply for - and then tells them that unless they "do something" with the sale proceeds by a certain date, the exemption that he charged them for will be invalid anyway. What doesn't make sense to me is, why on earth did your friends use a solicitor at all, let alone this crook? Or, perhaps there's more to this story. Maybe they have simply misunderstood what they have been told?
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: Selling a house - Tax implications.

Postby gerryh » Wed Sep 20, 2017 7:22 am

Hi Miro
I shall be speaking to my friends again soon.
As you say, either the solicitor is incompetent/ rip off merchant or they have got confused with what they have been told.
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Re: Selling a house - Tax implications.

Postby Miro » Wed Sep 20, 2017 9:08 am

A lot of people do get confused about CGT & plus valia; it wouldn't entirely surprise me if the €680 was the PV, and the stuff about reinvesting the funds was just misinformation or lost in translation.
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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gerryh
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Re: Selling a house - Tax implications.

Postby gerryh » Wed Sep 20, 2017 9:17 am

That thought had occurred to me and it was one of the things I was going to ask them.
Whether or not the €680 was for Plus Valia.
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Re: Selling a house - Tax implications.

Postby Miro » Wed Sep 20, 2017 9:28 am

The other thing that occurs to me, is that a) solicitors, either in Spain, UK or anywhere else, are not usually tax experts, so he may simply be ignorant of the over 65, tax resident rule on CGT, and b) if your friends sold at a loss, could he have been talking about an exemption from plus valia? To claim that back could well be a lengthy (costly) process.
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.

susanspain
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Re: Selling a house - Tax implications.

Postby susanspain » Wed Sep 20, 2017 6:48 pm

We have an excellent tax advisor (who even thinks to 'ask they questions you hadn't thought of!'
If your friends need any advice (she is not expensive and first consultation is free),then drop me a PM.

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Re: Selling a house - Tax implications.

Postby El Cid » Wed Sep 20, 2017 6:50 pm

Where are you based and where is the advisor?

Sid

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gerryh
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Re: Selling a house - Tax implications.

Postby gerryh » Fri Sep 22, 2017 8:59 pm

Spoke to my friends today.
They paid the Plus Valia, as expected.
They were charged, screwed for, €680 by their solicitor who handled the house sale to get "exemption" from paying CGT. :thumbdown: :thumbdown: :thumbdown:
As we know, over 65 you don't pay CGT so no need of an "exception".
Their gestor, who handles their tax returns, told them that they had 2 years to "re invest their proceeds from the house sale", to avoid paying tax (CGT). Yet another "expert" who doesn't understand the Spanish tax system and laws. :thumbdown: :thumbdown:
I suggested that they don't use that solicitor or gestor in future but use ones who know the Spanish tax laws.
I'm glad I, wherever possible, handle my own tax and legal affairs.
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Gerry
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Re: Selling a house - Tax implications.

Postby Miro » Fri Sep 22, 2017 9:06 pm

My advice to your friends would be to register on A.com asap - can't put past mistakes right, but may avoid future ones, with a little help from our friends :D
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.

El Cid
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Re: Selling a house - Tax implications.

Postby El Cid » Fri Sep 22, 2017 10:11 pm

gerryh wrote:
I'm glad I, wherever possible, handle my own tax and legal affairs.


I totally agree Gerry. It’s the only way to ensure you get it right.

Sid

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Re: Selling a house - Tax implications.

Postby fincalospinos » Sat Sep 23, 2017 8:34 am

Slightly off topic, but this week the Junta de Andalucia has changed the law regarding Inheritance Tax.
As of 1st January 2018 spouses and children will not have to pay IH on any estate that is valued less than 1 Million Euros, this apparently accounts for 95% of estates in Andalucia.
Hardworking resident !!

El Cid
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Re: Selling a house - Tax implications.

Postby El Cid » Sat Sep 23, 2017 9:53 am

To be exact, it is not estates of up to a million, it is a personal exemption of one million for each child and for the surviving spouse. So, for a family of 6 with 4 children the total exemption would be 5 million. This means that in terms of the lowest rates of IHT, Andalucia has moved from near the bottom of the list to the top.

If only they would do the same for Income Tax!

Sid


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