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Luxury villa at El Molinos, Villablanca, Cost de la Luz – near the Portugese border on Spain’s eastern Algarve. The local area offers fantastic golf courses and beaches. The local culture is traditional Spanish everyday life of a wonderfull, culturally rich rural community.
The modern architect designed villa completed in 2004, offers the following accommodation: 4 double bedrooms, 1 with double bed and luxury bathroom, 3 with twin beds and additional bathroom. Large garden with private swimming pool. The swimming pool is low maintenance low cost salt water swimming pool.
Price: 289,000 euros. All reasonable offers considered.
You can view the villa at: http://www.spanishvillaholidays.info
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I own a villa just around the corner from you and hopefully have found a buyer. Please read my posting concerning declared value of property because I have just found out my villa was under-declared, 113,000 euros instead of 180,000 so now I will have a huge capital gains bill to pay, (check with our supposedly superior agents in Bristol) i will actually be selling for less than I paid for the place.
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I have seen certain agents around here selling places on with other agents for 50K less. One agent advertising a place for 180K and another advertisng it for 230K is quite common.
I guess you may have been hit by this AND under declaration.
Bad Luck!
Best
Loco
@Phantom Phixer wrote:
I own a villa just around the corner from you and hopefully have found a buyer. Please read my posting concerning declared value of property because I have just found out my villa was under-declared, 113,000 euros instead of 180,000 so now I will have a huge capital gains bill to pay, (check with our supposedly superior agents in Bristol) i will actually be selling for less than I paid for the place.
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Hi Tim, I will be in Spain as soon as I get word from the estate agents and have to go over to sign documents etc at the notary. I am still left wondering what happened to the missing money because I know for a fact I paid our superior agents in Bristol 7% of 180,000 euros in tax but only 113,000 was declared???Hope we can meet up for a beer or three and warn other people what a bunch of sharks we dealt with.
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Hi Katy,
When I referred to cash, I am simply quoting the Sunday Times. I wouldn’t suggest anyone goes around with a suitcase full of cash 😯
The way we paid the difference is with a bankers draft from our UK bank account, but a cheque may well suffice – you’ll should ask whether a cheque is acceptable before the transaction. During the transaction you should have legal representation to best advise you.
All the Sunday Times is saying is that this is normal practice and that the law looks the other way. There are governmental moves afoot to change this practice, but there will not be any changes for the foreseeable future anyway…
hope that helps?
cheers
Tim -
Yes Tim, it seems that under declaring is common practice in Spain but in our case the buyers of our propery will definitely not pay any cash and want the declared value on the escritura to be what they actually pay for it. This is so they do not get caught in the undeclaring trap when they come to sell in the future. So if we want the sale to go ahead we have to accept their terms or lose the sale and we take an enormous hit on the capital gains tax. I still would like to know what happened to the 7% iva I paid on the full price.
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Hi Phantom,
It is for you to decide whether or not to accept the conditions of a sale. Personally I would have said no to the sale because you are losing money. The buyers have to accept that 100% of properties in Spain are under declared. The system isn’t corrupt, it is simply the way things are done 100% of the time. The government want to change the practice, but realise it would be political suicide. In my opinion, the only way for the government to change the system now is to legally accept what has gone before and compensate the tax system accordingly.
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No, 100% properties are not underdeclared. I bought and sold a few times before I became resident and always insisted the full price. If the value is much lower the you are faced with a huge capital gains bill. A decent lawyer would advise a non-resident to have the full purchase price on the escritura.
Its different if you are resident as its very rare to pay CG tax. The tax authority are clamping down on this practice and I know people who have been fined for doing this. Its harder to do if the property has been built during the last ten years as they now have a chart of values.
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Well, obviously not 100% then. I would still argue that it is the norm for Spanish citizens, although it would appear some of us Brits have a problem with the way the Spanish do business. Nothing unusual there then… 😀 I always say, when in Wales do as the Welsh do and when in Spain do as the Spanish do… There is no “trap” as long as we understand the system, we enter it voluntarily, do we not?
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Well, if you are not resident and have under declared you haven’t gained anything, only the seller. You have saved on the 7% tax but will pay more if you sell on 35% capital gains tax. Unless of course you sell to a resident, most unlikely in the present climate. Have you not read up on any of this?
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Hi Tim,
I have looked at your property on the website and am interested in discussing the villa privately. I have sent an email from your website, but have not received a reply. Could you contact me at: hebronfarm@btinternet.com or call my number: 07976 475037
Thank you, Ann
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On this question about CGT. I was told that next year the Spanish will amend the rates of tax to bring this into line for both Residents and NON Residents. Apparently the EEC has said it is not acceptable for European residents to be treated unfairly in this respect. So I had heard that in place of 35% it will fall to 18%. At present the CGT paid by a Spaniard for selling a 2nd home is 15%. Of course if the home is your main residence then different rules apply. As a NON Resident you are obliged to complete an annual tax return in respect of your Spanish property (Modelo 214 it is called) and pay some annual tax. On selling your Spanish property, it is important to make sure you have these 214 taxes up to date as they will ask for them !
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The cost of the house is reduced on the paperwork . However the buyer pays (in black money) the difference to full asking price. The notory will excuse himself whist cash changes hands !!
Massive tax saving to Spanish vendor.
Initially tax and rateable saving to buyer
However this practise is illegal and when a Brit resident or non resident sells to they will be clobbered by CGT , Because it will be assumed more profit.
Unfortunately most Spanish want to deal this way and a sale may be lost if not complied with. Personally we took our chance and decided against and paid full IVA. -
The cost of the house is reduced on the paperwork . However the buyer pays (in black money) the difference to full asking price. The notory will excuse himself whist cash changes hands !!
Massive tax saving to Spanish vendor.
Initially tax and rateable saving to buyer
However this practise is illegal and when a Brit resident or non resident sells to they will be clobbered by CGT , Because it will be assumed more profit.
Unfortunately most Spanish want to deal this way and a sale may be lost if not complied with. Personally we took our chance and decided against and paid full IVA.
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