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Selling foreign property???
Rtype
Posts: 101 Forumite
I could not afford to buy a property in the uk so decided to buy abroad instead, after months of research i bought a 2 bedroom 2 bathroom villa in spain.
I went 50/50 with my flatmate and the plan was to sell it after 5 years or so to then have a deposit for somewhere over here (hopefully).
It has gone up considerably in around 3 1/2 years and i am now starting to look at property in this country to get an idea for the location, rough prices etc...
The question i have is this;
My flat mate wants to buy me out when i do decide to sell but will i have to pay tax on the gains that its made??
If so do i pay the tax in spain or the UK??
Is there any way round it if i do have to pay CGT?? i.e. Can my flatmate just give me XXX amount in this country and i then just sign the villa over to him in spain??
Many thanks
I went 50/50 with my flatmate and the plan was to sell it after 5 years or so to then have a deposit for somewhere over here (hopefully).
It has gone up considerably in around 3 1/2 years and i am now starting to look at property in this country to get an idea for the location, rough prices etc...
The question i have is this;
My flat mate wants to buy me out when i do decide to sell but will i have to pay tax on the gains that its made??
If so do i pay the tax in spain or the UK??
Is there any way round it if i do have to pay CGT?? i.e. Can my flatmate just give me XXX amount in this country and i then just sign the villa over to him in spain??
Many thanks
Nice to save.
0
Comments
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Hmm. Bit of a difficult one. The norm in Spain is that the purchaser retains 5% of the sale price to cover at least some of the sellers Spanish CGT if they're a non-resident. I presume the same principal would apply to a buy-out but I'm not certain. You couldn't *just* sign it over in Spain you'd need to have the transaction notarised and one of their duties is to ensure that the retention is made, and if the purchaser doesn't make the retention, the amount due can be charged against the property. Spanish lawyer time, me thinks!!Rtype wrote: My flat mate wants to buy me out when i do decide to sell but will i have to pay tax on the gains that its made??
If so do i pay the tax in spain or the UK??
Is there any way round it if i do have to pay CGT?? i.e. Can my flatmate just give me XXX amount in this country and i then just sign the villa over to him in spain??
As you are a UK resident AFAIK UK CGT is payable and you should declare the gain following the end of the tax year in which it happens. You can deduct your personal allowance, £8.8K after 6/4/06, taper relief if you've owned long enough and I'm almost sure any Spanish CGT paid can be offset against any tax owed here.
HTH & BoL.0
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