No Gain in Spain?

by Readers Question

7:12 AM, 24th December 2018
About 2 years ago

No Gain in Spain?

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No Gain in Spain?

My wife and I bought an off-plan property in Spain’s Costa Blanca in 2003. We used that for holidays ourselves, and rented it out as a holiday let. We sold that last year, at a small loss, having already bought another one in Costa del Sol.

We then sold a rental property in UK this year, at a profit. Can we carry forward the loss in Spain from last tax year to offset against the gain made this year in UK, as we always have to declare our income and or profit made in Spain when submitting our UK Tax Return?

Many thanks

Malcolm


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Neil Patterson

7:20 AM, 24th December 2018
About 2 years ago

From HMRC >> https://www.gov.uk/tax-sell-property/selling-overseas-property

Selling overseas property

You pay Capital Gains Tax when you ‘dispose of’ overseas property if you’re resident in the UK.

There are special rules if you’re resident in the UK but your permanent home (‘domicile’) is abroad.

You may also have to pay tax in the country you made the gain. If you’re taxed twice, you may be able to claim relief.
If you’re non-resident

Non-residents may have to pay UK tax on overseas property if they return to the UK within 5 years of leaving.

Therefore if you would have paid CGT on a gain I am guessing you can offset the loss.

Max

8:42 AM, 24th December 2018
About 2 years ago

Not a direct answer, but another consideration you may or may not know which can change the calculation - You need to calculate all cost and profit at the exchange rate on the day the cost/ profit was accrued.

So for example
Purchase in local currency at 300,000 / x-rate on day 1.30 / £ cost on day £230,679
Sell in local at 280,000 / x-rate on day 1.20 / £ income on day £233,333

In this scenario, although you have sold for a local currency loss of 20,000, as far as the Inland revenue are concerned, you have made a profit of £2,564.

You can find historical exchange rate tables at oanada.com

Mark Alexander

20:59 PM, 24th December 2018
About 2 years ago

This is a very complex area of taxation. When I was in a similar position I took advice from Pacific Limited Chartered Accountants in Norwich.

Currency I had exchanged from savings was exempt from gains on exchange rates, but that was over 10 years ago. My own scenario was a property in Florida, USA

I am not an expert on this aspect of taxation

Cathie Hawkins

9:38 AM, 29th December 2018
About 2 years ago

When we made losses in Spain they had to go in the Foreign Property pages of our tax return. These losses could be carried forward but not offset against UK profits. Would it be the same for Capital losses - only able to be offset against foreign Capital profits?


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