Are you considering selling your UK property before or after moving to Spain?
Understanding Spain’s capital gains tax (CGT) rules can help you avoid unnecessary tax burdens and plan your finances efficiently.
Here’s a breakdown of what you need to know, with practical examples and strategies to keep your taxes in check.
Capital gains tax in Spain is applied to the profit you make when selling a property or other significant assets. The tax rate varies based on the profit amount:
Deductible expenses, such as legal fees, notary fees, and acquisition costs, can reduce the taxable gain, lowering your capital gains tax liability.
You can find out more about the complexities of Spanish Capital Gains Tax here.
Your CGT obligations in Spain on UK property will depend on your residency status:
Spanish Tax Residents: If you spend more than 183 days in Spain in a calendar year, you are considered a tax resident and must declare capital gains worldwide, including UK property sales.
Non-Residents: If you do not qualify as a Spanish tax resident, CGT only applies to property sales within Spain. However, the UK may still impose taxes on your sale.
The key takeaway from this is that timing your move strategically could help you avoid unnecessary taxation.
If you arrive in Spain later in the year and stay under the 183-day threshold, you may avoid triggering Spanish tax residency for that tax year, potentially saving you from Spanish Capital Gains Tax on your UK property sale.
Several exemptions and strategies exist to lower or eliminate Spanish Capital Gains Tax when selling your UK property:
As previously mentioned, certain expenses can be deducted from your taxable gain, such as:
If you sell your primary residence and reinvest the proceeds into another main residence in Spain, you may qualify for a full exemption from Spanish Capital Gains Tax.
Spain and the UK have a tax treaty to prevent double taxation. If you pay CGT in the UK, you may claim a tax credit in Spain, reducing your overall liability.
Spanish residents can offset capital losses from previous property sales against future gains, reducing taxable income.
Note: Non-residents cannot offset capital losses against future gains in Spain
For non-residents, Capital Gains Tax rates in Spain depend on your nationality:
If you reside in an EU country with a tax treaty with Spain, some exemptions may apply.
Ken sells his UK home for €200,000, which he bought for €150,000. He incurs €10,000 in legal and notary fees.
Calculation:
CGT Breakdown:
Angelica sells her US home for €300,000, making a €120,000 profit. She moves to Spain and reinvests the full amount in a new primary residence.
Tax Liability: €0 (There is a full exemption due to reinvestment in a habitual residence in Spain).
David sells his Canadian home for €250,000—the same price he originally paid.
Net Gain: -€15,000 (a loss)
Tax Due: €0 (no tax on losses, but the loss can be carried forward for residents).
At Private Client Consultancy we often present 5 ways for you to minimise your CGT in Spain on UK property sales. These are:
1. Know Your Tax Residency:
If you stay less than 183 days in Spain in the year of the sale, you might not be taxed in Spain that year.
2. Sell Before You Move:
If you sell while still a UK resident, the UK tax system applies, potentially reducing Spanish tax liability.
3. Use the UK-Spain Double Taxation Treaty:
Claim credit for UK tax paid when filing in Spain to avoid double taxation.
4. Reinvest in a Spanish Main Residence
If your UK property was your main home, reinvesting in a Spanish home may exempt you from Spanish CGT.
5. Consult a Wealth Management Expert
International tax and Capital Gains Tax planning can be complex, and a tailored strategy can save you thousands. The right strategy depends on your personal circumstances. Consulting with a wealth management specialist can help optimise your tax position in the long term.
Selling UK property while living in Spain doesn’t have to mean a high tax bill. With proper planning, you can legally reduce your Capital Gains Tax liability and keep more of your wealth.
At Private Client Consultancy, we specialise in expat wealth management and international tax strategies. Our experts can help you navigate the complexities of Spanish and UK tax laws.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
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