Taxes & Timing Your Move to Spain!

The Importance of Timing Your Move to Spain

Tax Implications When Selling Property in Your Home Country

If you are considering the possibility of moving to Spain and intend to sell a property in your home country, it is essential to consider the timing of your decision. This factor can have a significant impact on the taxation of the sale of your property.

Tax Residency and Its Implications

First and foremost, it is crucial to understand the concept of tax residency. In tax terms, and in general, a person is considered a tax resident in a country when they spend a certain amount of time in that place during a fiscal year, typically 183 days or more (in a calendar year). Once you become a tax resident in Spain, you will be subject to the tax regulations of that country, including those related to the sale of properties, being liable to pay the capital gains tax if there is a gain in the sale.

The tax rate and exemptions may vary based on different factors, such as whether the property is your primary residence and your age. These regulations can change over time and in response to economic conditions, so it is vital to stay informed about the latest tax provisions at the time of your move.

The Key Moment for Selling and Moving

This is where the importance of timing comes into play. If you decide to move to Spain before selling your property in your home country, you may become a tax resident in Spain before the sale if in that natural year you stay more than 183 days in Spain.

On the other hand, if you sell the property before moving and you are not yet a tax resident in Spain, you may be subject to the tax laws of your home country, which could be more favorable in terms of taxes.

So, for instance, if you sell the property in October 2023 and you relocate to Spain in March 2024, you are non-fiscal resident at the time of the selling, so you will be liable to pay taxes in your country of origin.

If, however, you sell the property in January 2024 and you relocate to Spain in March 2024 (and you stay more than 183 days in Spain), you could be liable to pay taxes in Spain for the sale.

In summary, the importance of timing your move to Spain and selling property in your home country lies in the tax implications. Being aware of tax regulations and making informed decisions can help you optimize your finances at a critical point in your life. Make sure to seek professional advice to make sound financial decisions and comply with all tax obligations in both your home country and Spain. We will be, of course, very happy to help you in this situation.