Tax Paradox

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    • #53930

      Spain has been hit hard by the credit crunch, which struck just as its housing boom was ending. This issue is also affecting to our tax rules whose provisions are really outdated.
      Going to the point, one is buying a house for 100k € and the seller bought this property 18 month ago for 125k€. Now it is possible this situation.
      Regional Tax bodies are in charge of Transfer Tax ITP, which is a percentage (6%-7%) of the declared value in the deed but they publish a minimum value of the properties, if one declared less value than the minimum established I can incur in heavy financial penalties. These minimums are updated always rising so when one asks for the minimum value one realizes that is higher than the value declared 18 month ago.
      Why one has to pay more tax than the seller if the real price is actually minor ?
      We have some cases like this and the answers of the Spanish Revenue is that it must be distinguish between:
      a) Real price. You agree a price with the seller
      b) Value. They said that they calculate the value according to a very objective criteria.

      We think the most objective criteria is the real market prices

      At least we can use a resource offered by Spanish law to relatively avoid the unfair consequences of these outdated rules. It is known as tasación pericial contradictoria (expert appraisal) and it provides that one is entitled to hire an adjuster and confront his valuation in order to reduce the official declared value.

    • #82315

      This actually happened to us in 1995 when we bought a bank foreclosure. About two months later we had another bill of about 2500 euros even though we had declared the full price.

      We decided to pay it as the fees for our Lawyer to contest this plus we were advised the appeal is often refused. Very unfair, although we wrote it off as we did get a bargain.

    • #82323

      These kind of situation would not arise if the system worked, not open to abuse and citizens have confidence in the system.

      The tax payer cannot even use the official house price index or figures from the land registry as we all know that they are showing property being increased in regions of Spain. The land registry information will be out of date, inaccurate and undeclared any way besides inaccurate basis of data capture with the “pasa nada” attitude.

      I suggest you obtain three valuations & if the hacienda has an approved panel of agents use them to justify. Obtain all bank movement to the clients account six months before & after to show that nothing has been paid into the account after the notary deed.

      I am not for letting them get away with it, even if I have to spend the extra money for professional services.

    • #82369

      The way we are getting around this and it is legal, is for the lawyer to declare the true price to hacienda just prior to completion.

      They issue a certificate and as long as they have notification and everything is then photocopied and is above board, then it is ok

      We havent had any problems as yet! And many of our sales are in this scenario!!

    • #82375

      Yes Inez I knew about this way but the problem is for people who do not have that certificate and after paying the tax arise the problem of disconformities in the value between tax officers and the declared value in the tax form. As you know there are minimum values and they don’t care about real value if it is lower than these minimums. When they issue this certificate they check that it is according to the minimums

    • #82381

      Thats true – people need to know this has to be declaresd BEFORE going to notary and NOT after!

      Pretty obvious really though!

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