We bought a holiday home in Spain 20 years ago, which we are now selling. This property is held in my own and my sister’s names, but we secured a mortgage to purchase it against my parents' mortgage-free home. The mortgage for the Spanish property is in my own, my parents’ and my husband’s names, and the four of us plus my sister make the monthly mortgage payments. Both my sister and I also have properties in the UK.
When we sell the Spanish property, we will settle any capital gains and other taxes in Spain. But after we convert the net proceeds, which will be in euros, to sterling and settle the small outstanding mortgage in the UK, will we all be liable to pay UK capital gains tax (CGT) on the remaining money?
JR
Jason Porter, business development director at Blevins Franks
I am assuming that you and your sister are UK-resident and domiciled taxpayers, which means you are both taxable here on a worldwide basis and any gain on sale of the property will be taxable in the UK. In addition, the double tax treaty between the UK and Spain sets out in Article 13 that Spain will also tax the disposal of Spanish real estate by a non-resident.