April 7, 2006 at 9:10 pm #51710
I am looking at buying a property in Costa Blanca. The price is 180000 euros and the solicitor wants to put the property through at 148000 euros, I know this is common practice in Spain in order to avoid taxes, but in essence I would really be doing the vendor a favour! If I came to sell the property in say five years time and an offer was made, at which point of the selling process would I know that the new buyer would do the same for me and agree to submit a lower price than they had paid in order to reduce my tax due?
April 7, 2006 at 9:40 pm #61666
Click on the search button above and enter black in the search field. This should return all the posts etc. on black money.
April 8, 2006 at 10:23 am #61668
I wouldn’t get invloved if I was you. Its not worth the risk nowaday as the authorities are very hot on this now. The only loser in any investigation will be you as the current vendor will be long gone. All you will be saving are the taxes on the cash difference from the 148,000 to 180,000. However the vendor is probably saving the 35% Capital Gains tax on this, which is a lot. The problems will arise later when you decide to sell. Lets say the system is even more strict than now and you dont have a person that will buy from you at an underdeclared value, you will pay CGT from the 148,000 euros to your selling price. In other words you will pay your CGT and the CGT of the current owner!!!
The authorites will have 3 years to check on your transaction to decide if it was underdelcared and if they decide it was you will get a demand for the tax and probably a fine. If you appeal you will be paying your own costs unless you win. So you could be sitting on your terrace with your cool glass of Sangria and then the postman knocks on the door!!! Is it really worth it??
I know we all like a bargain and saving a few pounds but for the Spanish authorities it is seen as fraud.
I would suggest to the vendor that you dont want to be responsible for his taxes and put the 180,000 euros in the contract and then sleep peacefully.
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