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bigduckontax, Accountant
Category: Tax
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We would like to know we are solely resident in Spain or

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We would like to know we are solely resident in Spain or dual resident in Spain and the UK to apply article 4 of the UK–Spain double tax treaty? 1. We have lived and worked in the UK since 1992. 2 We purchased properties in 2004 and 2006. 3. We lived in
the 2006 property as our main residence. 4. We moved to Spain 6 years ago in 2009 5. In 2012 we briefly returned and lived in the UK for 6 months. 6. Since we left in 2009 we always spend summer holidays in our UK property. Sometimes christmas holidays as
well. 7 We then decided to sell both properties in 2015. 8. We want to know if we are resident in Spain or the UK or both for tax purposes. Summary 2015-2016 (to date) 2014-2015 spent July and August in UK. 2013-2014 spent July and August in UK. 2012-2013
We lived in Uk from November 2011- May 2012. Also spent July and August in UK.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. For the purpose of UK landed property you are liable to UK taxation. However, if this UK house is your sole or main domestic residence, then Private Residence Relief (PRR) applies which relieves any gain at 100%. If you rent in Spain for example than the UK house is likely to be your 'sole etc.' You may need to come back to me with more information on this matter.
Customer: replied 2 years ago.
Thank you. I have another question for you.
The story is that.....
1. We had 2 properties. Purchased in 2004 and 2006. We lived in both of them at some time in the past. 2. We lived in the 2004 property until 2006. Then bought the 2006 property and it became our main residence until November 2015. 3. In 2006 we then changed the 2004 property to a buy-to-let mortgage. Firstly it was let to a family member ( for a small amount below market value. Then from December 2011 it was let to the local council at their rates. 4. We decided to sell both properties this year - 2015 . 5. Our main residence, the 2006 property, was sold in November 2015. 6. The 2004 property was sold in December 2015 QUESTIONS: 1. Are we liable to a. income tax b. capital gains tax? 2. Are we entitled to private residence relief for both properties? I asked because we lived in the 2004 property for 2+ years before we bought the 2006 property? 3. Are we entitled to Annual exemption amount of 11,100 pounds x 2 persons or is it only 11,100 per household? 4. I remember reading somewhere that we are entitled to SDLT rebate. Is that true? 5. When is the deadline to inform and pay any tax due on sale of these properties to the HMRC? I believe I read that we had until October 2016 to file a self assessment form??? Is this correct 6. Which form do I have to use? 7. I did a crude calculation assuming we are entitled to private residence relief and annual exemption amount on 2006 properties and capital gains tax on the 2004 buy-to-let property. Is this how I have to do the calculations? Sale proceeds 285,000 Purchase price 193,000 Diff 92,000 Less Solicitors fees 1,068 Estate Agents 4,979.29 AEA 11,100 AEA 11,100 Letting relief 40,000 Stamp duty rebate 1,930 Total 21,822.71 We are basic rate taxpayers. So I assume it 21,822.71 x 18%= 3,928.0878 IS this correct? Kind regards,
I am of the opinion that, sailing an election within two years of your 2006 property then HMRC will base, on the facts, that it is to that property to which Private Residence Relief (PRR) will apply. You will also get PRR for the 2004 property for 2 years. The gain made on the 2004 property will be subject to Capital Gains Tax (CGT) and must be declared in your 15/16 self assessment tax return. If filed on paper it must reach HMRC by midnight on 31 October 2016, if on line be 31 January 2017. It must be paid by 31 January 2017. The net rental income received on this property is liable to Income Tax. For the last 18 months of ownership you are deemed to be in residence even if this is not the case. Thus for 42 months out of 156 months ownership (27%) PRR will apply. Your gain is 285K - 193K - 6K = 86K (43K each @ 73% a tad over 31K). Deduct Lettings Relief (up to 40K) and Annual Exempt Amount (11.1K) will eliminate this gain and there will be no CGT to pay. A rebate from SDLT appears unlikely. You paid the duty on purchase, but you do not pay duty when you sell. I do hope that I have set your mind at rest on this matter.
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