How do you calculate capital gains tax on new build sale.
How do you calculate capital gains tax on new build sale.
We bought the land and built our house completed back in 2006, but for capital gains tax purposes how do we calculate the first part if we sell, do we just add the cost of the land to the cost it took us to build Including all costs and taxes or is the build calculated on a valuation of the property on the Escritura deeds and land deeds, totally confused.
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- Andalucia Guru
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- Joined: Tue Jun 15, 2004 11:11 pm
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Re: How do you calculate capital gains tax on new build sale.
An obra nueva or an inheritance is regarded as a 'Mejora o 2ª adquisición' on the form 210. (I am assuming you are a non resident) It is not simply a case of adding the original purchase price to the price of the obra nueva although the end result would be the same. The figures are calculated by taking each as a proportion of the other and applying them to the current sale price. For example:
Original purchase price (after adding expenses) €91.000,00. Value of obra nueva (after adding expenses) €128.000,00. Total €219.000,00
91.000 ÷ 219.000 as a percentage = 41.55251% and 128.000 ÷ 219.000 as a percentage = 58,44749%
Current sale price (after deducting expenses) €320.000,00. 41.55251% of 320.000 = 132.968,04 therefore the percentage equating to the sale price = €132.968,04 in relation to the original acquisition
and
58,44749% of 320.000 = 187.031,96 therefore the percentage equating to the sale price = €132.968,04 in relation to the obra nueva.
Therefore €132.968,04 - €91.000,00 = €41.968,04 (gain on purchase)
€187.031,96 - €128.000,00 = €59.031,96 (gain on obra nueva)
Total gain €101.000,00
19% tax = €19.190,00
Retention = €10.500,00
Balance to pay = €8.690,00
Original purchase price (after adding expenses) €91.000,00. Value of obra nueva (after adding expenses) €128.000,00. Total €219.000,00
91.000 ÷ 219.000 as a percentage = 41.55251% and 128.000 ÷ 219.000 as a percentage = 58,44749%
Current sale price (after deducting expenses) €320.000,00. 41.55251% of 320.000 = 132.968,04 therefore the percentage equating to the sale price = €132.968,04 in relation to the original acquisition
and
58,44749% of 320.000 = 187.031,96 therefore the percentage equating to the sale price = €132.968,04 in relation to the obra nueva.
Therefore €132.968,04 - €91.000,00 = €41.968,04 (gain on purchase)
€187.031,96 - €128.000,00 = €59.031,96 (gain on obra nueva)
Total gain €101.000,00
19% tax = €19.190,00
Retention = €10.500,00
Balance to pay = €8.690,00
Re: How do you calculate capital gains tax on new build sale.
No we are resident and tax resident.
Re: How do you calculate capital gains tax on new build sale.
Yes but how do we work out original purchase price that's the thing, if we bought the land and built the property what figures do we use?.
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- Andalucia Guru
- Posts: 11081
- Joined: Tue Jun 15, 2004 11:11 pm
- Location: Guadalhorce Valley
Re: How do you calculate capital gains tax on new build sale.
You use the land purchase escritura value plus the fees and expenses and the obra nueva escritura value plus fees and expenses.
Re: How do you calculate capital gains tax on new build sale.
Ah thanks you so much Beach, I'm over 65 so I think its only my wife part as its jointly owned, I did see somewhere about having to live in it for 3 yrs but can't find it now.
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- Andalucia Guru
- Posts: 11081
- Joined: Tue Jun 15, 2004 11:11 pm
- Location: Guadalhorce Valley
Re: How do you calculate capital gains tax on new build sale.
It has to have been your primary residence for at least three years.
https://www.agenciatributaria.es/AEAT.i ... itual.html
https://www.agenciatributaria.es/AEAT.i ... itual.html
Re: How do you calculate capital gains tax on new build sale.
So when selling here our home(main residence) and reinvesting in UK main home how do you work out if any what capital gains if your property your buying in UK is less than the selling amount in Spain, I'm talking about the main home exemption now.
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