House SWAP between countries, Spain UK Germany Holland, etc

Can I exchange my property in Spain for a property in another country, and if so what are the tax implications in each country?

This transaction is known in Spain as a permuta and is becoming increasingly common due to the difficult housing market in the whole of Europe.

We will concentrate on explaining how this system works in both the UK and Spain; but this will be similar in other countries, France, Germany, Holland, etc.

There are many people who wish to move in either direction but are unable to do so as they cannot sell their house. I appreciate that it may not be straightforward finding a buyer in each country who wishes to proceed simultaneously on this basis, but the mechanism for doing so does exist.

Essentially the conveyancing process will run its course in the normal way in each country although the key is to make the two transactions interconnected, that is to say completion in the UK is dependent upon the deed being signed before a Notary in Spain. The standard searches will be carried out in each case and once they are complete it will be possible to proceed to exchange of contracts in each country.

It goes without saying that an English solicitor will need to be involved as well as a Spanish lawyer. Well I would say that, wouldn´t I (!) but it is absolutely true that professional undertakings will need to be given between the two countries and the two legal systems have to interface seamlessly.

Regarding the taxes payable, each property will be treated separately and the purchase price agreed in each case. Where there is a difference between the price of the two properties this can be settled at time of completion, and one should ideally aim to agree a price for both properties in either euros or sterling from the outset in order to simplify matters. There is an inherent currency fluctuation risk although this can be minimized by buying forward if desired.

Finally, the result of a house swap between countries is likely to be an appropriate time to review one´s Wills. I have promised in the past not to refer to Wills in every article, but the issue is one of real importance here.

It is quite common that a person´s English Will makes totally different provisions to their Spanish Will because the assets in each country are so different. The change of a person´s address alone does not mean that a new Will should be signed; but the change in the location of the person´s assets is the relevant factor here.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

White & Baos
Tel: 966 426 185