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We are putting our apartment on the market and was advised by the estate agent that we only need to use a Gestoria to do all paperwork when selling as it is cheaper than a conveyancing lawyer who would charge 1% of sale price plus tax.
However with my dealings with Spanish legal system over the last few years with regard to property purchase I am very reluctant not to use a lawyer even though more expensive.Does anybody have any advice regarding this?
Thanks
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Hello, first of all I want to be clear, I am an Spanish Lawyer based in UK, so obviusly my advice is to use a lawyer.
Gestorias are cheaper, this is true (usually) and there are goods and bads like Lawyers, but bear in mind that they are not regulated by any organization and they do not need any qualification to work(although some of them have it).
We deal from Uk with the whole purchasing process, and I am regulated by the Spanish Bar of Abogados from Madrid as Spanish Lawyer, as well as by the Solicitors Regulation Authority given that I work for an English Firm in UK.If you have any question, just let me know
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@JB wrote:
We are putting our apartment on the market and was advised by the estate agent that we only need to use a Gestoria to do all paperwork when selling as it is cheaper than a conveyancing lawyer who would charge 1% of sale price plus tax.
However with my dealings with Spanish legal system over the last few years with regard to property purchase I am very reluctant not to use a lawyer even though more expensive.Does anybody have any advice regarding this?
Thanks
Hi As a general rules a lawyer is going to be the better option.
If you are looking a a straight forward sale = there is a deposit, completion in several weeks. Then are the vendor you need only supply proof of ownership (new ‘nota simple’), community and townhall certificates showing that on completion property has no debts, water and electricity bills. Your legal rep. only needs to make sure that plus valia is paid and that as a non-resident (?) the 3% is paid and that you can claim it back. Oh and do not forget to have your EPC.
Not particularly difficult. In total about 4 hours work. a 1% (+VAT) can seem alot!On the other hand a more complex deal, or one involving a more ‘substantial’ property, you may feel more secure using a solicitor.
@dalorgar wrote:
and I am regulated by the Spanish Bar of Abogados from Madrid as Spanish Lawyer, as well as by the Solicitors Regulation Authority given that I work for an English Firm in UK.
If you have any question, just let me knowIn your opinion how easy/hard is it to have a lawyer dis-bared? If you search on SPI you get the impression that it rarely happens even in cases of gross negligence.
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@Fuengi wrote:
In your opinion how easy/hard is it to have a lawyer dis-bared? If you search on SPI you get the impression that it rarely happens even in cases of gross negligence.
Hi, I can not give you a proper opinion about this matter, I’ve never think about it , perhaps because I never had a complain( I am not special, I only try to do my best for the clients) and I have the luck of have worked and learned with very good and honest lawyers and persons, who love their profession like me, so we always try to do the right thing and take care of our clients. This is a profession based in the relationships and I hope if my currently clients have any problem in the future they will come back to me.
Of course there is bad lawyers and solicitors and they have to be punished, but also there are bad Architects, Politicians, Police, Judges, Businessmen, drivers, plumbers, teachers… and in my opinion Lawyers and specially those ruled by SRA, has more stringent regulation and controls then the rest of them.
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I am thinking that if you want to have the 3% witheld from the sales proceeds and not the CGT sent to Hacienda would it be better to sell with a Gestoria. I am not selling anything at the moment but always eager to learn as much as possible about property transaction prcactice . As Mark says ‘Knowledge is Power-‘ particularly prior knowledge !
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@Ptr wrote:
I am thinking that if you want to have the 3% witheld from the sales proceeds and not the CGT sent to Hacienda would it be better to sell with a Gestoria. I am not selling anything at the moment but always eager to learn as much as possible about property transaction prcactice . As Mark says ‘Knowledge is Power-‘ particularly prior knowledge !
I am sure you already know this, but what you are suggesting is illegal, and at least me and the rest of lawyers that I know don’t do this. This is an example of why I would choose a Lawyer. I fthey do something illegal for you, why not do it for themselves? or for the other part?
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Sorry but I do not know -that is why I asked ! My understanding is that 3% is deducted from the sale proceeds due to the seller. I do not understand why the amount is so small. My opinion is that it cannot cover the amount of tax chargeable in many cases. I have never sold a Spanish property so I do not know the exact way the tax is dealt with. But the very fact that the 3% is deducted suggested to me that some sellers avoid it. Other posters here then told us that it was common for sellers to pay the 3% and clear out of Spain without paying their CGT. in the past. So what I am asking is how is it done -I am grateful for you telling me it is illegal – I am not desiring to break the Spanish Law.and I was not suggesting Lawyers did it -in fact I was asking whether it is more likely to be a Gestoria who did it. Now there may be situations due to a bad purchase experience where a property owner did not get a fair deal that they might be concerned about having to pay more CGT than they should and seek to minimise it and to be able to pay the 3% and leave Spain would give them a sense that it was not unjust to have done it. But I still do not understand how it happens that a seller can in some way not pay the CGT and whether it might be the Gestorias that can do it but the Lawyers usually don’t . I would appreciate clarification of this dalorger and appreciate your interest.
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Sorry, I didn’t realised you were asking, I thought you were suggesting. The amount doesn’t seem so small to me,but anyway it’s about the CGT and based in calculations set by the Tax Office.
Of course there are situations due to a bad purchase experience where a property owner did not get a fair deal that they might be concerned about having to pay more CGT than they should and seek to minimise it and to be able to pay the 3% and leave Spain would give them a sense that it was not unjust to have done it, and I agree a lot of them are unjust, more in the currently economical situation.
And there are ways to avoid the payment, because it is retained from the payment in the completion, but in this moment, there is no “tax agent” present to get it, so if the buyer agree not to retain and the “Gestoria ” or “lawyer”( I’m not saying there are no Lawyers that do it, I only can speak about those I know) does not compels to do it, you can go with the money to UK, cancel your Bank accounts, and it would be very difficult for “Hacienda” to chase you, but bear in mind that you can’t go back to Spain, or inheritate there, because in this moment, they will go for it adding penalties.
So I do not suggest avoid paying Tax, neither in Spain or in UK, the best is try to pay less planning in advance.
you can get more information about spanish law in my blog : http://www.spanishlawintheuk.co.uk -
A very helpful reply on reading this today Dalorgar. My thoughts go back to the reason for the 3% retention which would not be so much on a 60000 sale. Yet if one had to pay the full amount of the CGT 21% and the purchase price had been say 40000 then this would be considerably more and at 100000 very much more !. Seemingly you can pay the 3% retention and not have to worry about having to pay the 21% rate( on the difference between sale and purchase price less indexation the costs of buying and selling- but not the purchase taxes -and the cost of improvements) and you are completely within the Spanish Law.This of course refers to owners who are No Residente (and that means have filed as such and paid the annual small tax) If this is so its a great relief for me and I would appreciate if you would indicate whether this thinking is correct. I note your blog and will look it up later. I note you also practice in UK and its good to read from a decent lawyer.
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Hi Ptr, Thanks for your comments I only try to help. The problem with the 3% retention is in the currently economical situation, not during the property bubble, for example:
– During the property bubble: You buy a house 100,000€ and sell it for 150,000€ so deducted cost of purchase you have a benefit of 40,000€ approximately. In this case the 3%retention would be 1200€ and 21% of CGT (although the calculation is not exactly this way because there are other point to consider like the years between buy and sell) would be 8,400. So no complain about the retention.
– But let’s see what happens now: you buy a house for 100,000€ and sell it (if you are lucky) for 120,000, deducted the cost you would have a benefit of 10,000€ .The 3% retention would be 3,600€ and the 21% CGT would be 2,100€, here starts the problem…
– And what happens if you buy in 100,000€ and sell in 90,000€? (Nothing strange in these days) that they retain the 3% , 3,000€ and you had lost about 20,000€
I hope I clarify it for you, and if I made a mistake, I would be happy if anybody from the forum help us.
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Understood delorger and in current situation see what you mean -that the 3% is an irritation if you sell below purchase price. But my interest is simply -that if you are No Residente it is OK to sell and pay the 3% and to forget about the 21% ? I have been living in the belief that I will have to pay the 21% less deductions because its a second home -but the essence that I have got wrong is that it is not a second home from the Spanish perspective only from the HMRC perspective..I am not planning to sell for some time.but if I wanted to move within Spanish territory it makes it so much easier. It occurs to me how many other people may be thinking wrongly about this and are frightened to sell because of CGT . I am sure I am not the only lemon. In fact from the sales point of view I think if it was clearer to buyers that as non residents they only have to pay 3%. It is my opinion that you could indeed get that back too in time provided you have filed the annual return and paid the small tax and also your IBI and no other debts in your NEI records at Hacienda. Would appreciate any diasagreements with this. May be interesting for Catherine too !!
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@Ptr wrote:
Understood delorger and in current situation see what you mean -that the 3% is an irritation if you sell below purchase price. But my interest is simply -that if you are No Residente it is OK to sell and pay the 3% and to forget about the 21% ?
no.
If you owe capital gains, they (hacienda) will try and get it from you. At this moment they do not chase non-residents that have left the country and have no assets in Spain.But then people forget that many countries (especially within EU) are collaborating more and more over tax, etc…
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Thank-you Fuengi for your reiteration of this previous comment. In fact whilst I am sad -I thought I was right in principle anyway. ‘Thanks’ to Gordon Brown we had the Savings Directive from EU and new Directives have been issued covering other financial income. I am not sure whethere CGT is included in anything yet its not an income its a charge but Cameron rants on about avoidance and encourages this kind of EU legislation ‘so no-one can hide’ -these young upstart politicians with little experience of life annoy me.People like him are the fuel for UKIP However whilst the 3%’ facility’ is still available maybe it should be used. Maybe if you see a bargain that you can sell at a profit and have no desire to stay in Spain then you can clear out with your profit. I suppose Hacienda could not chase you retrospectively in UK if legislation from the EU eventually covers CGT – or hound you at your hotel door if you pay a visit and drag you down to their bank with your plastic I expect my guess would be as good as anyone elses ?
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Even you have to pay more money when you hire a lawyer but you can get the legal solution of your problem easily.Because they have more experience that how to deal with your case and what document you need for that case.
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I have sent money abroad on various occasions, and always the banks are the most expensive. Not only do you have to pay bank charges, the rate of interest that is being offered is usually the worst possible you could ever get. There are various other companies to look at, some even advertising on this site. Check carefully all the small print before trusting the banks to give you a good deal.
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@angie wrote:
Good point salesca, I think the most cost effective way to do this would be to have a UK Bank with branches in Spain or vice versa, eg Santander, I think Barclays has branches in Spain. Then I would expect them to do inter bank transfers either for no charge or just a nominal charge. 8)
Not generally Angie.
@salesca wrote:
What has not come up in the comments is how to repatriate the money back to the UK without incurring exorbitant bank charges.
Easy if you send under 30.000€ (don’t hold me to the amount!) the charges are minimal. If you go above it though the charge tend to be extortionate.
That are take the bankers draft back to UK and put in a euro account, just takes a month or so to clear. -
Agree Fuengi. That’s what we did. We spoke to the UK bank before and also negotiated to get a good rate of exchange. We were given a liaison person on direct line for queries. Did take a long time and was a bit nail-biting as at the time the Spanish banks were in big trouble. I think it took about 6 weeks and at one point contacted the Spanish banks. The hold up was in Getafe, Madrid. The Central clearing bank for foreign transactions…outrageous!
We were forewarned. Some years ago my Daughter sold a Spanish property. She was living in Holland at the time. She transferred the money from Solbank to her Dutch bank. (no internet transactions then!). When she got the statements she was amazed to find Solbank had charged over €20,000 in transaction fees 😯 This was a transaction between two Eurozone countries and supposedly illegal. She did get most of it refunded after a lot of hassle but was still a few thousand out of pocket.
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Actually salesca several international banks with branches in the UK and abroad do permit free international money transfers if you open a Premier Account, they don’t charge a cent or penny. Now to open such an account is not too onerous since the criteria often depends on either/ors, such as your salary over a certain amount, or with some they just require you to have for example 50k in the account to qualify for free banking (not even a monthly charge). Now with many property transactions the 50k is not a problem even on a temporary basis since you may be required to deposit at least that amount to purchase a property, or have it in funds on disposal of property, you could always close the account afterwards or revert to standard account.
We made several free transfers some years back between UK and France with our bank, branches were in both countries.
In Spain we had the dodgy Solbank trying it on and indeed our funds took a while longer in Madrid, most extortionate Solbank charges we challenged each time and they were repaid, problem was then our UK bank had no branches in Spain, but Barclays does, Lloyds are part of Banco Sabadell so should work, open a Pem. account 😉
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” bear in mind that they are not regulated by any organization “
Which organisation are they regulated by ? If you had college of Abagado in mind than they are ineffective & are there because they create some jobs for the connected people.
In my opinion they have been responsible for the low esteem of the legal profession in Spain. They have been non caring or the desire to uphold or investigate issues taken to them. How difficult it is to ensure that lawyers who are not suppose to operate do operate right under their noses.
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