Struggling to understand CGT

Information and questions about the Law in Spain and Andalucia.
Marina
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Re: Struggling to understand CGT

Postby Marina » Mon Oct 08, 2012 7:40 pm

I've been reading through some old posts but I'm unclear as to whether CGT can be reinvested in another European country.

If we leave Spain, can we reinvest in the UK?

What proof of reinvestment would be required if we stay in Spain? If we reinvest in the UK?

Do we have to produce paperwork or tick a box?

I'm still struggling to get my head around having to pay CGT on the difference between our Fiscal Value and the sale price.( 480,000 difference.) I don't see how we can reinvest a profit that we haven't made. :?

I'm quite happy to pay CGT on the difference between what we bought for and what we sell for, but the rest is giving me nightmares.

Beachcomber
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Re: Struggling to understand CGT

Postby Beachcomber » Mon Oct 08, 2012 9:47 pm

Sid has posted in the past that, according to Blevins Franks, you can reinvest in another country but I think AEAT says no. I suppose we won't know for sure until there is an attempt at a prosecution and the case goes before the European court.

Is your purchaser going to declare the required amount? Have you been to the Town Hall to query the valor catastral?

If the property you subsequently purchase is less than the amount of the current sale you still have to pay CGT on the difference.
Let's go Brandon!

Marina
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Re: Struggling to understand CGT

Postby Marina » Mon Oct 08, 2012 10:57 pm

It looks as if we are about to lose our purchaser ( the second one) because the purchase tax (calculated on the Catasral Value) is ridiculous.Even without the threat of a future CGT bill.

I'm not sure, even if they go ahead,that we'll come out with enough to invest anywhere. This is why I'm wondering what we need to provide as proof of investment.

It would seem that if we do everything correctly, the 275,000 equity in the property will be totally wiped out by the costs of selling and paying the tax owed.

If there is anyway around this, I would really appreciate knowing.

Beachcomber
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Re: Struggling to understand CGT

Postby Beachcomber » Mon Oct 08, 2012 11:07 pm

Have you queried the valor catastral with the Town Hall?
Let's go Brandon!

Marina
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Re: Struggling to understand CGT

Postby Marina » Mon Oct 08, 2012 11:38 pm

No, my Spanish isn't up to it.

Our lawyer is querying it, but he doesn't hold out much hope.He has also said that it could take
" Quite a while".

We have been advised (by a different lawyer) that if we have a sales contract, we have a chance at getting a reduction, but it may be mid way. Certainly no where near the real value.

All I can see from this situation is that we will lose everything.

I have heard people say " No profit, no CGT", but that doesn't fit this situation with a high Catasral Value. It seems we are being forced to declare a profit that we haven't made. I've never been dishonest, but now I'm being asked to put something on an official form that isn't true! And it's going to cost me money to do so! :crazy:

As the situation stands, we couldn't even sell as a distressed sale. Whatever we do, the CGT is against us, even though we won't be making the profit that we must declare.

Our land alone is being valued as higher than the market value for the whole lot.

Thank you for trying to advise. Your help is very much appreciated.

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Re: Struggling to understand CGT

Postby Parilla » Wed Oct 10, 2012 6:23 am

From all the explanations above, you can't help but conclude that this is not the imposition of a Capital Gains Tax. It is simple theft.


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