Q&A: The Independent property, your questions answered

Q I acquired a house in Spain four years ago and am considering selling. What Spanish tax would I have to pay and would any Spanish tax be offset against UK tax?

Q I acquired a house in Spain four years ago and am considering selling. What Spanish tax would I have to pay and would any Spanish tax be offset against UK tax?

Laurence Lustgarten, by e-mail

A The Spanish tax laws can be confusing. You must hire an English-speaking lawyer to progress your sale. If you sell the house you will have to pay capital gains tax. A non-resident pays 35 per cent of the net gain, a resident 20 per cent. Your purchaser must withhold 5 per cent of the purchase price and pay it to the Spanish tax authorities as an advance payment of your CGT. You will have to file a tax return on the transaction within three months of the sale before any repayment can be made. You must also pay a local municipal tax called Plusvalia, which is a percentage of the difference in the increased rateable value of the property since it was last sold. You will have to pay lawyers fees of 1 per cent of the purchase price plus VAT at 16 per cent. If the property is your primary home, you are a Spanish resident under 65 and have lived in the house for three years, you may qualify for some tax relief if another house is purchased with the proceeds of the sale. The new property will have to be bought within two years, however, and tax relief is based on the proportion of the total sales proceeds reinvested in the new home. If the new home costs more that the sale price of the old one than all of the tax is deferred until that property is sold. If only half of the sale proceeds are reinvested, then only half of the gain is deferred and the other half is taxable in the year of sale. If you are over 65 years old the gain is tax free and you would not need to buy a new property. You should consult your tax office for advice on the payment of UK taxes as it very much depends on your individual circumstances.

Q Do I have to pay the estate agent's fees if I pull out of the sale?

Melanie Green, by e-mail

A You should look at the contract you signed when instructing the agent to see if it has a "ready, willing and able" clause. This means you will be liable to pay fees to the agent, in addition to any other costs or charges agreed, if the purchaser introduced is prepared and able to exchange unconditional contracts for the purchase of your property and you withdraw, irrespective of your reasons. You should also look for a withdrawal clause that will detail any charges that can be made.

If you would like a query answered on buying or selling a property, e-mail: propertyq&a@independent.co.uk. Only those questions featured will be answered. Any advice given will not be legally binding