Double trouble

By THIS IS MONEY
Updated:

 

I AM trying to sell my apartment in Spain to top-up my pension. I have had the apartment 18 years and have paid all local taxes. Will I have to pay UK tax on the money from the sale? J.O., Bridgenorth.

Robert Langston from tax consultants Grant Thornton UK says: If you are resident in the UK, the gain on the sale of the property will be subject to UK capital gains tax. If you are domiciled in the UK as well, this will be the case whether or not you bring the cash back into the UK.

You are classed as a UK resident in a particular year if you remained in the UK for more than 182 days in that year, or were here on average for 91 days or more each year over the previous four years.

Chances are you are domiciled in the UK whether you live here or in Spain as changing your country of domicile by choice is very difficult - you have to sever all ties with your original country to the extent that you have no assets there and would expect to buried in your new country of domicile.

(This is the case for domicile of choice - there are other classes of domicile but they are less likely to apply to you).

Under the UK-Spain tax treaty, both countries are allowed to tax you on the gain from selling your property. One would probably credit you for the tax you paid in the other, but it is not guaranteed, and you have to go through the whole process of paying twice before you can claim the credit.

What is more if Spanish tax on the gain is less than the UK tax on it, the UK Revenue may ask to pay the difference.

Get a Spanish solicitor to help you with this or to recommend a tax adviser in Spain who can help.

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