Tax on resale property

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This topic contains 20 replies, has 11 voices, and was last updated by Profile photo of Fuengi (Andrew) Fuengi (Andrew) 3 years, 4 months ago.

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  • #57024
    Profile photo of Anonymous
    Anonymous
    Participant

    I’d be grateful if anyone can supply any information on the following development.

    My wife and I bought a resale apartment in Almeria Province in March of this year. We paid the 8% property tax in full on the full purchase price of the property at the time of completion. Last week we had an e-mail from the solicitor we employed for the purchase saying that they had been contacted by the tax department of the Junta de Andalucia who told them they had been checking the purchase and sale prices of all properties. The message indicated that the valuation put on our purchase by the tax department was over 35% more than we actually paid and therefore we owed a further 3 1/2 thousand euros in tax. The price we paid was the current market value – in fact we could have bought an apartment in the block for less but we were happy to pay a premium because of the apartments position, condition and contents etc. It is true the price now is significantly less than the asking price when the apartments were new 6 to 7 years ago but that is the state of the market.

    We checked with the agent we used during the purchase and they had not come accross this situation before.

    I had understood that the 8% tax was due on the purchase price therefore the questions I am confused about are:-

    1) Has the wording of the relevant tax law changed from “purchase price” to “Junta’s valuation”?

    2) If so why is it not widely known?

    3) Is there an appeals procedure?

    4) How is the tax office valuation calculated?

    Any advice, information or comments would be welcome.

  • #111783
    Profile photo of katy
    katy
    Spectator

    There has been a few threads on this before. It has always happened, it did to us. You can appeal but it costs and can be like throwing good money after bad. We just looked at it that we had got an absolute bargain and paid up although we thought it very unfair…Spanish law has no logic, especially when the tax office is involved 👿

  • #111785
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks for that – I wouldn’t actually say we’d got an “absolute bargain” as we paid the current market value and obeyed the law as it is understood. However we’re going out again in a few weeks to try to sort it out and your comments are very helpful.

    Thanks again for taking the trouble to reply.

  • #111787
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @Grahame wrote:

    The message indicated that the valuation put on our purchase by the tax department was over 35% more than we actually paid and therefore we owed a further 3 1/2 thousand euros in tax. The price we paid was the current market value.

    so they are saying the property is worth about 40,000€ more? I assume the 3,500€ includes a penalty for late payment?

    @Grahame wrote:

    We checked with the agent we used during the purchase and they had not come accross this situation before.

    Really? suprising, but then it is easier to claim ignorance.

    @Grahame wrote:

    I had understood that the 8% tax was due on the purchase price therefore the questions I am confused about are:-

    1) Has the wording of the relevant tax law changed from “purchase price” to “Junta’s valuation”?

    No, but for tax purposes you property has a value (valor catastral) used to calculate taxes (IBI, Basura). but the tax office has a minimal value for the property.

    @Grahame wrote:

    2) If so why is it not widely known?

    It is. It is the ‘valor fiscal’. With a copy of the IBI of the property, your lawyer (or the agent) should have been able to find out this figure within 20 minutes or so.

    @Grahame wrote:

    3) Is there an appeals procedure?

    there is, but only within about 10% of the tax office valuation. You can argue more if the property was in particularly bad state.

    @Grahame wrote:

    Any advice, information or comments would be welcome.

    Your lawyer should have done this as a basic search for you on the property. I would be asking them why the hell did they not inform you. Had you been informed and paid on time, you would have not received a fine. You may have even been able to avoid it (unlikely) or at least mitigated it.

  • #111788
    Profile photo of Anonymous
    Anonymous
    Participant

    1) Has the wording of the relevant tax law changed from “purchase price” to “Junta’s valuation”?

    The law hasn’t changed, the tax authorities are claiming that you under-declared the sale price and hence are applying a tax figure that they deem suitable. Of course under-declaration was (and probably still is) widespread amongst Spanish sellers/buyers.

    The fact that we are in a world depression and the housing market is screwed makes no difference to the Hacienda.

    2) If so why is it not widely known?

    It is on these forums and I am surprised at any estate agent that claims ignorance, as to sell a property in this market you have to effectively give it away hence attracting Hacienda scrutiny.

  • #111790
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks Andrew I’m really grateful for your help. Since I read your post I’ve been researching the terms you have used which are new to me. Can I just clarify a few points with you. First the the e-mail I received from the solicitor is not clear to me so I’ve copied and pasted what she said:-

    I have recieved a phone call from the tax department of the Junta of Andalucia. The Junta of Andalucía is checking the purchases and sales prices of all the properties. According to the tax deparment the total tax valuation of your property including the store-room is 158.436,67 euros so you have to pay the difference. You paid taxes for the total purchase price and the Junta is now reclaiming to you 3.349,80 euros. The Junta has been trying to contact you sending the letter to your address in Spain but as you are not living here you have not been notified

    We paid 117.000 euros for the property
    We paid 9360.00 euros tax (ie 8% of purchase peice) at the notary office on completion

    1) Are you saying the solicitor should have known and asked us to pay the 9360 + 3349.80 euros when we were in the notary’s office?

    2) Many sites seem to suggest the Valor Catastral us usually lower than the market value – is this not so?

    3) Is the tax 8% of the VC or 8% of the Valor Fiscal

    4) Would you say we,ve not been well advised by the solicitor?

    Many thanks.

  • #111791
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @Grahame wrote:

    Thanks Andrew I’m really grateful for your help. Since I read your post I’ve been researching the terms you have used which are new to me. Can I just clarify a few points with you. First the the e-mail I received from the solicitor is not clear to me so I’ve copied and pasted what she said:-

    I have recieved a phone call from the tax department of the Junta of Andalucia. The Junta of Andalucía is checking the purchases and sales prices of all the properties. According to the tax deparment the total tax valuation of your property including the store-room is 158.436,67 euros so you have to pay the difference. You paid taxes for the total purchase price and the Junta is now reclaiming to you 3.349,80 euros. The Junta has been trying to contact you sending the letter to your address in Spain but as you are not living here you have not been notified

    We paid 117.000 euros for the property
    We paid 9360.00 euros tax (ie 8% of purchase peice) at the notary office on completion

    1) Are you saying the solicitor should have known and asked us to pay the 9360 + 3349.80 euros when we were in the notary’s office?

    Yes. correction, they should have known the figure before notary.

    @Grahame wrote:

    2) Many sites seem to suggest the Valor Catastral us usually lower than the market value – is this not so?

    yes, normally quite lower. but this figure is used to calculate the fiscal value.

    @Grahame wrote:

    3) Is the tax 8% of the VC or 8% of the Valor Fiscal

    of sales prices, unless the sales prices i lower than the valor fiscal.

    @Grahame wrote:

    4) Would you say we,ve not been well advised by the solicitor?

    definitely. This person was meant to be representing you and should have confirmed the full cost of your purchase. Obviously they have not.

  • #111792
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    and just to prove a point.
    Just took a IBI (council tax) receipt from my a co-worker for one of our listings.
    Valor catastral is 499173,53
    pretending we have a completion on the 5 of septembre for this particular property
    valor fiscal= 948.429,82

    That took me 3 minutes to do.

    all i need was 3 things
    when going to completion
    the valor castral
    location of property (province and town)

  • #111793
    Profile photo of Anonymous
    Anonymous
    Participant

    Thank you – That was extremely helpful.

    Looks like I’ll have to save up and pay my dues.

    I feel rather naive and a bit foolish. I thought I’d been reasonably prudent and paid good money for professional advice which in the end turns out to be lacking in substance.

    Thanks

  • #111797
    Profile photo of Anonymous
    Anonymous
    Participant

    A good warning for anyone buying to check and double check their solicitor. ALL (capitals to highlight this!!) the Brits I know in Spain who used a solicitor had to traipse around for months/years to sort out the little things the solicitor SHOULD have done but didn’t. They paid good money (often a lot of money) to have the paperwork sorted out.

    Scary but true. Solicitors in Spain don’t do the same job as you would expect in the UK. It seems that they basically write up the deeds (copying the sellers version and changing a name and date) and then going to the notary to have a bit of a chin wag and then cash in. They don’t seem to check that your house actually exists, whether cousin bloggings could return from Barcelona to claim your spare bedroom as his own, that half the garden is actually the neighbours. Boundaries…ha ha, they wouldn’t have a clue. Topographers? They’ll draw up a plan depending on who is paying them.

    What can be done? Maybe the British Consulate should investigate decent and hard working english speaking solicitors who they can recommend?

    Or isn’t there some sort of insurance for house buying in Spain by Caser? Maybe it’s worth taking that out incase of having to sue the solicitor?

    Buyer beware again….

  • #111799
    Profile photo of Anonymous
    Anonymous
    Participant

    just goes to show agents and solicitors still have not learned and are lying and not giving the full information required incase it means you pull out

  • #111817
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @Grahame wrote:

    Thank you – That was extremely helpful.

    Looks like I’ll have to save up and pay my dues.

    I feel rather naive and a bit foolish. I thought I’d been reasonably prudent and paid good money for professional advice which in the end turns out to be lacking in substance.

    Thanks

    please don’t. you obviously did what you felt was right. Yes you will have to pay the oustanding amount. But I would suggest seeking legal advice to see if you can make a claim against your lawyer.
    I assume you have in writing from the lawyers your costs of purchase, etc… as you have transfered the fund from abroad?

  • #111882
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry, Grahame. I dont want to be unkind. ” you feel rather neive & foolish ” your words & not mine. No wonder with this kind of approach from the Brits all & sundry will keep on milking us.

    They will keep us treating like idiots wheter its the Agents, Lawyers, Hacienda, furniture stores, Councils etc, etc if you lay it for them on a plate & walk with a shirt saying take me for a ride I am all yours .

    This forum & others forums are full of caution, advise, do & donts. You have come to the forum after the event and expect to find solutions.

    @ dartboy, why should they learn, when people like Grahame keep on coming for more. I fully agree with “its me”. They i.e. the lawyers do not do anything and expect to be paid 1% as legal fee. Further in most cases they are obsticle and an expensive one.

    I have bought & sold in Spain on a number of occassions & have never used a lawyer & never will. Any property which has doubtful history I just walk away and if this is what people should do.

    Decsions made from heart & not from head always cost in one form or another.

  • #111949
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    Anonymous
    Participant

    Thank you Shakeel – for your word of wisdom.

    What a pity we’re not all as clever as you. You’ve “bought and sold in Spain on a number of occasions and never used a lawyer” – well isn’t that prudent advice for the rest of us to follow.

    You’ve also obviously not bothered to read the thread properly (or possibly you just understand the Spanish legal and tax systems better than the written word in English). I did not come to the forum “after the event expecting to find SOLUTIONS” – what I did do was ask for advice. That is something people who are not as brilliant as you do from time to time.

    I also fail to understand where you obtain evidence of your claim that our decision to buy a property in Spain was a decision made from the heart rather than from the head. You couldn’t be further from the truth. What I did do was gain references for all the professional people I used – they all checked out. Research the market. Take advice and listen – but at the end of the day the advice I received was not as good as it should have been. But do you know – I think I would still rather listen to them than listen to you.

  • #111959
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    Anonymous
    Participant

    Hi Grahame,

    You may find this thread sheds a little more light for you -> http://www.andalucia.com/forums/viewtopic.php?f=41&t=23978&p=261551

    Hows your Spanish … description of process and appeal also here -> http://jordimarrot.blogspot.co.uk/2012/07/la-valoracion-de-los-bienes-inmuebles.html

    Regards,

    Mike

  • #111969
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks you for that Mike – some very useful information in that thread which I’d not found during my internet searches.

    Unfortuanately my Spanish is only good enough to order a couple of beers at the moment but I’ll copy and paste the info and take it with me on my next trip when I try to get this sorted out.

    Grahame

  • #82659
    Profile photo of Anonymous
    Anonymous
    Participant

    The Spanish press reports that professional real estate organisations like the Asociación de Profesionales Expertos Inmobiliarios (APEI) are complaining that inflated taxes are being charged on resale transactions because the “minimum price” set by most local tax offices are much higher than current market values.

    So if you buy a bargain from a bank as Grahame did, the tax office will not accept the sales price, and apply their own minimum price for tax purposes, which the APEI say is now 20pc to 30pc above market prices in most regions.

    The only regions where the minimum prices for tax purposes are inline with market prices are the Balearics and the Valencian Community.

    The APEI are urging buyers to appeal against this “complimentary charge”, but do warn that it can be a long and expensive process with no guarantees of winning.

  • #82651
    Profile photo of Anonymous
    Anonymous
    Participant

    @Grahame wrote:

    Thank you Shakeel – for your word of wisdom.

    What a pity we’re not all as clever as you. You’ve “bought and sold in Spain on a number of occasions and never used a lawyer” – well isn’t that prudent advice for the rest of us to follow.

    You’ve also obviously not bothered to read the thread properly (or possibly you just understand the Spanish legal and tax systems better than the written word in English). I did not come to the forum “after the event expecting to find SOLUTIONS” – what I did do was ask for advice. That is something people who are not as brilliant as you do from time to time.

    I also fail to understand where you obtain evidence of your claim that our decision to buy a property in Spain was a decision made from the heart rather than from the head. You couldn’t be further from the truth. What I did do was gain references for all the professional people I used – they all checked out. Research the market. Take advice and listen – but at the end of the day the advice I received was not as good as it should have been. But do you know – I think I would still rather listen to them than listen to you.

    I think he meant that a solicitor will most of the time just give you a false sense of security. Any property that ain’t clear cut in terms of paper work means trouble down the line and not worth the hassle. There are so many properties out there that you can easily find one in almost the same location with less “problems”.

  • #81792
    Profile photo of Anonymous
    Anonymous
    Participant

    @Ardun, You are spot on as to why I would not use a lawyer. Not only they give a false sense of security they entrap you & milk you all the way an example of this is that his lawyer should have checked out the value and established this before going to the Notary. It seems that he did not & now will he will charge extra for taking the case against the Hacienda.

    I have not taken his posting personally as I know what I am talking about. He came up with remarks as to not being clever etc …….. is a pointless statement to make. We all have our strengths & weaknesses.

    Of course he is free to listen to who ever he likes and does not have to listen to me. It seems that he did listen to his learned lawyer etc and paid for this….

    Did he not find out in his research as to why Spaniards do not use lawyers when buying a property.????

  • #116227
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    Anonymous
    Participant

    We have just found the same thing with our property purchase in Mallorca. We bought a small very run down property two years ago, paid 100,000 with a bank mortgage. We have now been told that the value was 162,500 and we have another 4500 tax to pay. These properties are not selling for this price even in pristine condition and we thought we had researched everything before we took this huge decision of buying.

    Our solicitor has told us to submit evidence of the property being run down and all the work we have had to carry out to make it habitable, but I don’t hold out a lot of hope, and don’t know where we will find this money. I can understand why this system exists because of all the under the table payments, but it does not seem accurate in any way with the value of the properties bought and sold.

  • #117566
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @Lizzie2995 wrote:

    We have just found the same thing with our property purchase in Mallorca. We bought a small very run down property two years ago, paid 100,000 with a bank mortgage. We have now been told that the value was 162,500 and we have another 4500 tax to pay. These properties are not selling for this price even in pristine condition and we thought we had researched everything before we took this huge decision of buying.

    Our solicitor has told us to submit evidence of the property being run down and all the work we have had to carry out to make it habitable, but I don’t hold out a lot of hope, and don’t know where we will find this money. I can understand why this system exists because of all the under the table payments, but it does not seem accurate in any way with the value of the properties bought and sold.

    Actually you may be lucky. From what I understand this is one of the few areas where they are sensible. Although they do not take into account market forces, they do take into account the state of the property.

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