Cap­i­tal Gains tax

Costa Blanca News (South Edition) - - Residents' Advice Desk -

Fis­cal and le­gal ad­vice from Web­ster As­esores Dear Sir, We bought our house here just over a year ago, and although we love liv­ing here, we have to sell and move back to Blighty.

For­tu­nately, and prob­a­bly be­cause of our re­duced ask­ing price, we have found a buyer and their so­lic­i­tor is sug­gest­ing with­hold­ing quite a sub­stan­tial amount, which we find sur­pris­ing.

We have ques­tioned this, and he said that 3% is kept back in case there are any debts. 'In case'? there are no debts. If there were, there are not - these would turn up dur­ing the searches.

He also wants to with­hold a cer­tain amount for “Plus­valía tax”, which is the re­spon­si­bil­ity of the ven­dor.

I un­der­stand that he wants to hold back an amount to cover our share of the util­i­ties.

Fi­nally, and in this re­spect, he says he is be­ing nice, he wants us to pay for our share of the IBI tax for this year. He says that we should pay for the whole year even though we are not go­ing to be the own­ers for the re­main­ing pe­riod of this year. An­swer The 3% that is be­ing re­tained is be­cause when a non-res­i­dent sells, the buyer is obliged by law to re­tain 3% of the sale price and to de­posit this amount with the tax of­fice. It is not 'in case' there are any debts, but is con­sid­ered to be a pay­ment on ac­count of any Cap­i­tal Gains Tax.

Once the sale deeds has been com­pleted, your tax ad­vi­sor will cal­cu­late the CGT for you. If this tax is lower than the 3% that has been re­tained your tax ad­vi­sor will sub­mit a re­fund ap­pli­ca­tion and you will re­ceive the re­fund in about one year from the date of ap­pli­ca­tion. In the event that the CGT is higher than the 3% that has been re­tained, you are obliged to pay the dif­fer­ence.

The law states that when a non-res­i­dent sells their prop­erty, if the plus­valía tax is not paid, the prop­erty (i.e. the new owner) is re­spon­si­ble for the pay­ment of this tax.

This is why the buy­ers’ lawyer wants to re­tain this amount to pay this tax on your be­half. He is just do­ing his job cor­rectly.

Re­gard­ing the IBI, the law states that who­ever owns the prop­erty on the 1st of Jan­uary is re­spon­si­ble to the pay­ment of this tax for the whole year.

So, in fair­ness, the buy­ers’ lawyer is be­ing nice when he sug­gests an ap­por­tion­ment of this tax, for each party to pay in ac­cor­dance with their re­spec­tive pe­riod of own­er­ship.

This law does seem un­fair, but it works both ways. When some­one pur­chases a prop­erty, if this law is ap­plied, they buyer does not pay this tax for the first year of own­er­ship.

It is cus­tom­ary for the buy­ers’ so­lic­i­tor to hold back a cer­tain amount of money to pay for things that are the re­spon­si­bil­ity of the ven­dor.

Usu­ally the ven­dor leaves the coun­try mak­ing the re­cov­ery of rel­a­tively small debts not cost ef­fec­tive, and there­fore a re­ten­tion is made.

Once all the pay­ment has been made, you should re­quest a state­ment of ac­counts and any balance should be re­funded to you.

Fi­nally, it is im­por­tant to in­clude all these re­ten­tions in the sale deeds that you will be sign­ing in the pres­ence of the No­tary, as then you will have a clear record of what is go­ing where and who is re­tain­ing it. Please send us your queries ei­ther by email, or let­ter in­di­cat­ing that you wish your let­ter and re­ply to be pub­lished in the Costa Blanca News. You may ei­ther send these di­rectly to our of­fices or to the Costa Blanca News.

This col­umn is in­tended for in­for­ma­tive pur­poses only and we strongly ad­vise any read­ers to seek pro­fes­sional ad­vice prior to tak­ing any ac­tion.

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