Polaris World, La Torre Resort

[Anonymous]

I am currently considering purchasing a 2 bed 2 bath townhouse on this development for completeion end 2006 (when the resort opens fully). I am not looking to sell before completion, but intend to keep the property for rental and some personal use. Any comments on the rental potential of Polaris World.

Also, I have been offered the chance to buy a resale of a similar property prior to completion. I take over the contract price with Polaris and “slip” the seller a nice tasty sweetner. Seems very dodgy to me, if not illegal, but i am assured it is what everybody does. Even if it legal for me to buy this way, I am sure there must ne CGT implications should I decide to sell in the future, as the contract will state the original purchase price as the off plan contact price and not the actual amount I paid including the sweetner. When I questiuoned this, I was told wll just reduce the asking price and ask for your own sweetner when selling. At the moment I am looking for a very big barge pole, or am I being too cautious?

Any comments/advice gratefully appreciated

Regards

Kevin

[Anonymous]

Hi Kevin,

I can’t help you at this stage with information as to the rental potential of La Torre at Polaris. However if they are as good at marketing rentals as they are sales it should be good. I’m going to have to take a closer look at the Polaris developments before I starting making any judgements. It’s an enormous project that’s for sure.

It is true that when you take over the purchase contract from an investor it usually happens the way you mention. You pay the seller in cash and then the balance of the outstanding official payments to the developer. Of course this is illegal as the seller is evading taxes. I would always consult a good lawyer before going down this route.

You are very right to say that it will have CGT implications for you when you come to sell. The problem with taking over purchase contracts and paying the out-going investor in cash (quite apart from the legal implications) is that you take on a deferred-tax liability. If when you come to sell you can’t get the buyer to pay you a similar amount in cash (B-money as it’s called in Spain) they you will end up paying CGT on the tax-free earnings of the investor you bought from. Paying in B is still very common in Spain, but getting less common and the government is getting very serious about stamping it out.

I hope that helps.

Mark

[Anonymous]

Hi Mark

Many thanks for the reply, I really appreciate the information.

I am now getting very frustrated with several agents who are trying to sell off plan resales at Polaris. When I ask the question about CGT liability they get very evasive and say I should discuss this with a Spanish solicitor, who nudge nudge wink wink knows how to sort all this out.

Am I being unreasonable in asking for a contract of sale that states the true sales price that I pay and supercedes the the contract price on the escritura.

Regards

Kevin

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