plus valia- capital gains tax

Subject: can this be avoided

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User Profile chirp Posts 1 Level New Member		Posted Sat Nov 2004 15:54:47 Can you help me please - we are in the final stages of purchasing a 400,000 euro villa and the vendor's agent has demanded that we split the purchase price 50:50 black money:white money ie only £200,000 euro is to be declared as the purchase price with the rest being paid in cash - I dont want to do this nor do I want to lose the property - any suggestions would be welcome please.
User Profile netbroker Posts 1 Level New Member		Posted Sun Nov 2004 20:42:54 Can anyone throw any light on the subject. I'm a resident in Marbella and have owned a commecial local since 1985 which I payed for with costs approx. 18,000.000 pts (108,000€). If I sell the property in 2005 for 750,000€. What will I have to pay in Plus Valia? What
User Profile david Posts 228 Level New Member		Posted Wed Jun 2004 16:10:57 would only have to pay 15% CGT rather than 35% as a non-resident This, I believe, is correct. In order to be a resident in Spain you need to spend more than 6 months a year here, although if you still have a residence permit then you should be OK. From the sound of things you should be able to sell the house as a resident, although you should consult a decent property lawyer before doing so (for example www.manzanares-es.com or www.gva-abogados.com are two good companies I have used in the past!)
User Profile David Alexander Posts 1 Level New Member		Posted Wed Jun 2004 15:03:39 I read with interest the e-mail exchange concerning plus valia /capital gains tax and I have a related question to ask. I have worked in Madrid for the past ten years and have a house on the coast which I bought two years ago although I have never lived in it. Recently I returned to the UK and although I still have a valid Spanish resident's permit, I am now resident in the UK for tax purposes. I understand that a resident of working age in Spain would only have to pay 15% CGT rather than 35% as a non-resident. Is this the case and if so, would I have to return to Spain and again become resident for tax purposes to benefit from the lower CGT? If this is right, how long would I have to live in Spain and would I have to live in the house? Another point worth mentioning is that the house is actually the only property that I own, whether in Spain or elsewhere, and this might have a bearing on the matter. I would really appreciate it if you're able to answer these questions. Like everyone, I'm looking to hold on to as much of my capital as possible without getting the taxman on my back!
User Profile pathfinderspain Posts 8 Level New Member		Posted Wed Jun 2004 23:34:50 you should be very careful if you are considering not declaring the full amount. The tax office may have been quite lacking years ago but thy are getting tighter and tighter. Alss a sum as large as 50000 would be picked up on for sure, I know people who have maybe not declared 10000. Take into account that the plus valia is to be paid by the seller though often this is negotiated. Nor is the plus valia that high. On a property bought say 25 years ago for 25 million pesetas would incur a cost of say 150.000 ptas. The tax is calculated on the land price. Your other taxes, paid by the buyer would be the transfer tax at 6% (ajd) and stamp duty about .5. Then you have fixed notary charges and land registry fees. Your bigtax is the capital gains tax which is calculated on the profit from the house. You are exempt if: you are above 65 years of age and a resident for at least 3 years, you are exempt to declare the capital gains. - If you have got capital gains on selling your permanent dwelling (and only residents have a permanent dwelling in Spain) and you reinvest the proceed from the sale in another permanent dwelling, the costs of purchase of the new dwelling can be deducted from the gains on selling the first - You have the right to add costs of purchase to the value declared in the purchase and to deduct the costs of sale from the value declared in the new escritura ( - If you have more than one escritura (for instance one for the land and one for the house, or one for land and house and another one for an extension), separate calculations must be made for the part of total value represented by each of the escrituras If you are not exemp then here's how to calculate it: You Start With The Value Declared In Your Escritura In all cases you start with the value declared in your "escritura de compra/venta" (title deed of purchase/sale). To this value can be added the costs of acquisition, (the transfer taxes paid - IVA or ITP -, notary fees and registration costs). Allowance For Inflation Then on the total costs of buying the property, you apply the coefficients for inflation. Since the inflation varies every year, it is logical that the coefficients are being determined in the yearly state budgets. The Additions To Be Made For Inflation In the state budget for 2002 the following coefficients were established: For properties bought in 1997: 1,1016 For properties bought in 1998: 1,0802 For properties bought in 1999: 1,0608 For properties bought in 2000: 1,0404 For properties bought in 2001: 1,020 For properties bought in 2002: 1 Deduct Sales Costs From The Sales Price Declared In The New Escritura Then you take the sales price declared in the new escritura, and you subtract the sales costs (advertising costs, sales commissions, costs of a lawyer and 75% of the municipal Plus Valia Tax). Finally, Deduct The Value Of Old Escritura From Value Of New Escritura (adjusted for costs) Subtracting the value in the old escritura + registration costs, from the value in the new escritura - the sales costs, you have the brut capital gains. Now for the painful bit Flat 35% Tax If Non Resident If you are non resident in Spain, you pay a flat 35% tax on capital gains I hope this is of help. We are a company who specialise in relocating to spain. www.relocatingtoandalucia.com Kind regards Danny Pathfinder pathfinderspain@hotmail.com
User Profile jonny guitar Posts 1 Level New Member		Posted Tue Jun 2004 16:33:19 Hi all, I was wondering if anyone has had any experience selling up a house in Spain to return to the UK. Specifically, I was wondering about the 15% Plus valia tax which one has to pay on any profit made on a house sell. Some unscrupilous aquaintances tell me that noone around here ever declares the real selling price of a property to avoid paying much of this tax, but I ask what would these people do with say 50000 Euros in cash (so called black money) if they were returning to the Uk, could they deposit it in a UK bank no questions asked?, or what Any possible suggestions as to how these shameful criminals may operate would be appreciated. Thanks. jg

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