For reasons of age, my husband and I are going back to the United Kingdom, after living in Spain as tax residents for the last 15 years. We want to go back and sell our house in Spain. We have received conflicting advice on whether to sell the property before we leave Spain or not. Could you please inform us about what is the best thing to do? Thank you very much for your help.
Dear reader, thank you for your enquiry, although each case is different and we cannot advise you without studying the case, it is interesting to note:
.- If you are going to reinvest in another main home.
The rules of income tax for tax residents in Spain specify that profits from the sale of the habitual residence are excluded from capital gains tax, provided that the proceeds are reinvested in the acquisition of another habitual residence.
Fortunately, now this exemption it is also recognized for non-tax residents in Spain, and recently the Law on Income Tax for Non Residents was amended, adding the additional 7th provision, stating that tax residents in a Member State of the European Union who sell the property that has been their main residence in Spain, will be exempt from capital gains tax, if they reinvest the proceeds in another residence, even if it is not in Spain.
Therefore, in principle, you could return to your country, and before the time fixed by the law, sell your residence in Spain, reinvest in another residence, and not have to pay Capital Gains Tax.
.- If you are not going to reinvest and you are over 65 years old.
More doubts exist if you are not going to reinvest the money and you are older than 65 years.
If this is the case, the Law 35/2006 of Income Tax of Individuals, applicable to tax residents in Spain, says that the profits resulting from the sale of the principal residence of a person over 65 would be exempt from capital gains tax, without the need to reinvest etc. Understanding that it would be considered as main residence, the ones that are at the time of the sale, or anytime during the two years preceding the date of transmission.
Unfortunately non-residents tax rules have not included this exemption for people over 65 years old, and non tax residents in Spain, even if resident in the European Union, who sell which was their main residence, located in Spain. We believe this is an error of the legislator and causes a clear discrimination.
Therefore, given the above, if this is your case and you are over 65 years old, it would be advisable to sell the property while you are still tax resident in Spain, to benefit from the exemption.
If you want to buy or sell in Spain, please contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
Alicante, Denia, Costa Blanca Marina Alta
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