CGT on selling your UK home after moving to Spain

You sell your UK home in the year after you move to Spain. You assume UK Principal Private Residence Relief shelters the gain. You report it to HMRC and pay zero UK CGT. You then file your Spanish tax return for that year and discover that Spain, under the UK-Spain double tax treaty, has primary taxing rights on the gain. Spain does not recognise UK PPR. You owe Spain CGT on a gain you thought was tax-free.

On a typical British move with £400k of unrealised gain on the UK home accumulated over 15 years, this mistake costs €80,000-€110,000 in Spanish CGT. It is the single most expensive year-one error in our case histories.

Under Article 13 of the UK-Spain DTT, gains on immovable property are taxable in the country where the property is situated. UK property gains are therefore UK-taxable regardless of where the owner lives.

But the treaty allows both countries to tax — it's a primary-taxing-right allocation, not an exclusive one. The other country gives credit for foreign tax paid. So for a Spanish resident selling UK property:

• UK taxes the gain (with UK PPR potentially sheltering it)
• Spain also taxes the gain (under Spanish CGT rules)
• Spain gives credit for UK tax actually paid
• If UK tax is zero due to PPR, Spain has nothing to credit and you pay full Spanish CGT

Spanish savings-income tax (which includes CGT) is a progressive ladder:

• 0 - €6,000: 19%
• €6,000 - €50,000: 21%
• €50,000 - €200,000: 23%
• €200,000 - €300,000: 27%
• Above €300,000: 28%

For a £400k gain (~€470k), Spanish CGT works out at approximately €119,000 on the taxable gain. Adjustment for inflation indexation (coefficient de actualización) was abolished in 2015 so the entire nominal gain is taxable.

Spain does have a main-home reinvestment rollover (reinversión en vivienda habitual) that can defer some of this if you buy a Spanish main home with the proceeds, but the rules are tight and don't fit every fact pattern.

Spain's reinversión en vivienda habitual allows you to defer CGT on the sale of your main home if you reinvest the proceeds into a new main home within 2 years. The key constraints:

• Both old and new must qualify as "vivienda habitual" under Spanish rules
• You must have lived in the old home for at least 3 continuous years before sale (or have a justified early exit)
• Reinvestment within 2 years of sale
• The deferral is proportionate to the reinvested amount

A UK home that you sold the year after moving to Spain is unlikely to qualify as your Spanish main home under these rules — you weren't Spanish-resident in the UK property. So this relief usually doesn't save you. The cleaner planning is to sell before the residency crossover.

For a typical British mover:

1. If you can sell BEFORE the move: sell while still UK tax resident, claim UK PPR, full shelter. Spain doesn't see the gain at all.
2. If you can't sell before but can complete in same UK tax year as move: time the move to October/November so you remain UK tax resident for the full UK year of sale, and Spain doesn't become tax resident that calendar year either (under 184 days).
3. If you must sell after Spanish residency triggers: consider Beckham Law if applicable (foreign property gains may be Spain-exempt under Beckham — though this is contested and needs specific advice).
4. If renting out instead of selling: rental income is Spanish-taxable from year 1 of residency. UK income still flows through self- assessment as non-resident landlord. Treaty credit at Spanish tax time.

UK CGT rules allow some rebasing for non-residents on UK residential property at 5 April 2015 (the start of the NRCGT regime). This is a UK-only relief and doesn't extend to Spanish CGT calculation.

For Spanish CGT, the base cost is your original acquisition cost (purchase price plus acquisition costs). The full nominal gain since original purchase is taxable in Spain. The 2015 rebase saves UK CGT but not Spanish CGT.