January 9, 2010 at 12:55 pm #55364
I was fortunate to sell my apartment in the Mijas Golf area to a Spanish couple in December 2007.
As expected, the Spanish tax authorities withheld a proportion of the sales proceeds as I am UK resident.
Over 2 years later I am still waiting for a refund even though my lawyer has been active on my behalf in trying to chase the tax authorities on a regular basis.
Finally they have informed us that the refund is imminent but I’m shocked at the calculation they have used to determine my tax liability on the sale.
My property sold for a few thousand euros over the purchase price and I was delighted to even get this amount. However, the tax authorities have used the rateable value to determine my liability which I’m told is quite normal if this is the higher figure.
The rateable value has been determined at a figure double that of the actual sales price two years ago and I’m told by my lawyer that there’s nothing that can be done about the situation. I’m also informed that this is a particular problem in the mijas/fuengirola/manilva areas due to the ridiculously high rateable values attributed by Mijas town hall.
Short of going to court and seeking the advice of my MEP I seem to have no option but to pay an inflated (and in my opinion corrupt) level of tax on the sale of my property.
I’d be grateful for comments from people who have any experience in these matters or who have suffered a similar problem.
January 9, 2010 at 3:43 pm #95839
I am sorry. This is Spain, when will you all learn and not be naive. This is the reason why the Spanish people dont pay attention or worry about taxes, legality, Councils etc.
You can bring this to the attention of your MEP. What can he/she do. They cannot interfere in the workings of an individual Councils and for once and totally against my grain that I agree with them.
January 9, 2010 at 5:12 pm #95840
I am also awaiting my tax refund for a property sold in March 2009. Technically any tax refund must be repaid within 6 months, otherwise the tax office are required to pay interest.
I expect my 3% retention also not to be refunded, however I have made a 70,000 Euro loss since I purchased off plan in 2004. We shall see.
I guess this is one reason why the country is f^^&ed. Nobody pays taxes and if you play by the system you are f^^&ed.
One family member (by marrige) works for Hacienda. He has more days off a year than he works. Has a doctor as a friend who gives him a whole pile of signed sick notes. He just has to add the date on the form for the days he fancies off. All the cafes, bars, even dentists are free when you are with him. He does their tax returns and gets a back hander for grossly allowing them to under declare. He is rather an expection than the rule though I imagine for Haciendia employees.
Other family member owns restaurant. He declares only a third of what he pays his staff, the rest is given in cash. They are happpy to sign off to this fact, probably don’t realise how it affects their social security payments.
Lots of other family members rent out holiday accomodation and pay no tax whatsoever on the income they receive.
And here I am in the UK paying Spanish income tax on income I do not receive for my holiday home simply because I am non-resident.
I imagine that from buying two Spanish properties (and selling one) I have paid more tax in Spain that most working (non-home owning) Spanairds. I get about 6 weeks of Sunshine a year for my tax payments.
Yes the country is truely f^^&ed.
January 9, 2010 at 8:43 pm #95841
JP1, you summed it up. In Spain two wrong makes a right. Remember “Spain is different”.
January 10, 2010 at 12:11 am #95842
I don’t think it’s ‘naive’ of me to ask for advice in a spanish property forum just in case someone has some information that might help to guide me!
If i was naive at all then it was in purchasing property in Spain in the first place. Believe me I realise only too well that Spain is ‘different’ and it should be obvious from my posting (even to you) that I’ve made my decision and would now just like to close this miserable chapter once and for all.
If you have nothing helpful to add then can I please suggest that you expend your energies somewhere else?
January 10, 2010 at 10:43 am #95844
Whilst I fully understand and empathise with your feelings about Spain, Shakeel is entitled to post his/her views too. I fully support Shakeels post as he/she has been around long enough on this forum, as have I too, to see the huge scale of corruption in Spain and knows that the MEPS etc, whilst sympathetic to “the cause” are in reality unable to do anything effective that sees a positive solution/outcome, to the corruption that thousands have been victims of. As the saying goes.They “talk the talk “but when it comes to doing the walk they fail miserably. At least I’ve seen no evidence of success.
If anyone can help you that visits this forum, I’m sure they would advise you. Good luck in getting back your money.
January 10, 2010 at 11:47 am #95845
Jonners: I fully understand your response. The fact is what can be done about it. The basis of calculations and the catastral values are there as set by the Hacienda/region and have not been designed with you alone in mind.
For, reasons above neither I or other forum users can assist you. In a normal Country I would have sugguested that you used a tax expert. A decsion that you have to take. In my opinion you would be throwing good money after bad and further feeding the system.
My, posting was with a view that other forum users are made aware and not to be naive about the working of Spain.
I feel forearmed is forewarned and this is the position I have been taking for some years now on the forum.
January 10, 2010 at 3:52 pm #95846
Well at least now I know that when my lawyer says ‘the situation is hopeless’, then she’s absolutely right!!
I’d still be interested to hear from anyone who has first hand experience of the Spanish tax system and the refund of property taxes in particular.
January 10, 2010 at 5:06 pm #95847
You don’t give figures, but assuming you sold a property for 200k ( I assume it was not a 3 million Euro Villa in Marbella) then around 6k was withheld. You say it sold for a few thousand over your selling price. So in effect you are walking away almost even (ok you may have to take the buying costs on the chin)
As you are now probably aware, trying to argue a reduction in CGT is going to be a pointless exercise.
In your situation I would consider myself very lucky as you have only had your fingers verly slightly warmed!
January 10, 2010 at 5:30 pm #95848
Your guesstimate on the figures is almost spot on and I do consider myself very lucky to have left the Spanish property market just over 2 years ago.
When I read some of the horror stories I know that it is more by luck than judgement that I didn’t get my fingers badly burned too.
All the same, I’d rather give away my 6000 euros to charity than have it effectively stolen by a corrupt Spanish local authority. Of course I still don’t know for sure how much, if anything, I will get back so we will see.
January 10, 2010 at 5:50 pm #95849
Well I have written my 4k off.
I am still pushing it and having a Spanish wife I hope will help, as we have already been to the Hacienda office twice to push it along.
I sold very cheaply, hence my loss, to simply sell the property, About 60k below the average of similar apartments. So I expect Hacienda to query the sale figues. But whichever way you look at it there is no way any profit could have been made as I effectively bought at the peak and sold nearly 2 years into the crash. I still expect some arguement to be made by Hacienda about false figures and hence a reason to withhold a refund.
Some apartments in the complex are now being advertised a few k above my sale price, so I made the right decision. 2011 I expect capitulation and the average prices will be 100k.
With the current economic climate and Spain going the way of Greece, every way possible to raise funds will be exploited. Foreigner buyers/sellers are going to be rich pickings.
January 10, 2010 at 7:22 pm #95850
So…between you Jonners ,and jp1 you’ve written off €10k. Multiply that ?? hundreds/thousands of times!!!! 😈
PS. I’ve just heard Marbella described as “The epicenter of criminality in Europe” Spot on!
Watch Piers Morgan, Tuesday 12th Jan @ 9pm ITV1. Hitmen, shooting & robberies!!!
January 10, 2010 at 9:22 pm #95851
Jonners: It does not matter. However you forgot that you are also entitled to indexation allowance on your property for the number of years that it was held by you. I think perhaps not for the first three years .
If you lawyer says that it is a hopeless case. Than you are lucky, she could have been on the gravy train at your expense.
January 11, 2010 at 12:26 pm #95857
I bought my apartment in Elveria in 03 for 221k. Sold it in 06 for 280k. MRI commission was 29k. Now trying to claim back 5% rentention of 14k.
Lawyer calculated I can only claim back 12k but first have to pay 1.775 euro wealth/income tax. During the 3 years the property was mainly empty. Managed to sue the developer of Las Vistas and after 5 years got my deposit back. I am glad I am out of the spanish market.
January 11, 2010 at 1:49 pm #95860
Now, perhaps you all know why Spaniards under declare and take cash when sales are made. In Rome do what the Romans …………
January 11, 2010 at 3:46 pm #95861
Of course for every advocate of the system of underdeclaring and cash payments there is another who will point out the risks involved in doing this.
Personally I was happier to risk 6000 euros with the tax authorities than to risk 10s of thousands in cash payments ‘under the table’. Using this method there is the possibility of losing a lot of money on your property if the cash payment is not made (after all you’ve just signed away your property in front of a notary at a vastly lower value than it’s true worth), the possiblity of being given forged cash and the possibility of being investigated by the tax authorities at a later date for fraud. This is particularly relevant where the proceeds are to be repatriated to the UK as in my case.
I’d also have to wonder about my lawyer if they were happy to sanction such a move. When you live outside of Spain and have given your lawyer power of attorney over your affairs, you want to be as certain as you can be that they’re absolutely straight and honest. No wonder so many people come unstuck with corrupt lawyers. The cash system just promotes the criminal fraternity in my opinion.
I appreciate that lots of cash transactions do go through without problem but I think it’s very slowly becoming a thing of the past.
I can’t resist reminding shakeel what happened to the Roman empire in the end. 😆
January 11, 2010 at 6:00 pm #95862
Jonners: The Lawyers are part of the system. Yes, I am aware of what happened to the roman Empire. Perhaps we could also look at what happened to the British Empire !!!!!!!!!!!
January 11, 2010 at 7:19 pm #95863
Ahh, but not my Lawyer at least.
We could look at what happened to the British Empire too but I don’t think anyone would be interested on a Spanish property forum website.
January 11, 2010 at 8:00 pm #95864
It’s quiet… we could discuss anything!! 😆
January 12, 2010 at 12:51 pm #95881
And do – even when its NOT quiet!!!
January 12, 2010 at 5:53 pm #95885
Sooo right Inez! 😆 Happy New Year to you!
January 13, 2010 at 1:04 pm #95895
And a very Happy New Year to you and everyone else!! 😀
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