Buying a house: €xx on deeds. €xx in cash to seller??? - Page 2

A few years ago this would have been quite a common practice, but not anymore.  It is important for you that the correct payment is shown on in the records, three main reasons

1. you pay ITP (purchase tax) on the price paid, but the tax is actually due on the value of the property, so you will be paying too little tax.  When the sale price flags up at the land registry as well below expected market value the tax people will want the extra tax, so you will have to pay complimentary tax.  The whole point of this complimentary tax was to stop this type of practice.

2. when you come to sell the property, if not your main residence, you will pay capital gains tax on the 'profit' you have made. The figure used for the purchase price will be the one on the records, so you could be appearing to have made a lot more profit than you actually have, therefore will pay more CGT.

3.  It's dodgy practice!  You are signing an official document knowing it is inaccurate.

So tell your solicitor you are not agreeing to this, and put it in writing.  This isn't a matter for the estate agent to railroad but for the legal people to get correct.  If you are present for the completion at the Notary you can personally check the documentation is correct.

Those days are well and truly gone. Don't touch it, the agent is out of order in advising you to break the law.

Hi Tallpaul

Walk away from this deal !!!! Smells like big trouble if you carry on and complete ???

Bear in mind both the Spanish and British TAX DEPARTMENTS talk to each other a great deal !!!As the old saying is BUYER BEWARE because if things go PEAR SHAPED its YOU that will be made to pay whatever they see is appropriate.Then will hound you on every tax return that you put it whilst living in Spain. Do yourself a FAVOUR and look around for another property as there will be plenty  for sale shortly as most folks wont bother with the HASSLE of SPAIN and look to the rest of Europe .Cheers  BEST OF LUCK WITH WHATEVER YOU DECIDE

Maybe don’t walk away just yet.

But make sure that the payment is 100% transparent, 100% paid “thru the books” and that the full true price is shown in all relevant paperwork that is fully and legally checked, approved, sanctioned and processed by a TRUSTED FULLY LEGAL representative appointed by YOU. Make sure that the property meets all legal requirements regarding planning, land register etc, but that’s part of it anyway.

That way all onus on tax compliance is met by you, you cannot concern yourself with the vendors reasons for not complying.

If they do not want to proceed along these lines then it’s time to reconsider but if your legal team is worth it’s salt it will inform you of these facts anyway.

Reiterate, seek proper advice, both legal & financial. While we can ‘offer’ advice there’s no substitute for a proper trusted professionals in matters such as this.

keep us updated as it helps others in a similar position.

Thank you for all the feedback. We've pulled out of the purchase. There are plenty of other houses to buy without sellers who want us to break the law. Thanks.

Well  done, Saved  yourself  money   and a  lot  of  Stress, I  am  also  looking to  purchase,   but  more  Properties  than  buyers

Keep  the Faith  and  Stay Stay safe 

Good choice and something that was / is still common in Spain.  We personally will not advise it because as you've read by previous comments, it could easily come back and haunt you.

If you'd like any assistance on looking for something else, we offer a free property finding service and would be happy to help. 

Hi Tallpaul

Must say we are glad that you have walked away from the deal and the DOGGIE ESTATATE AGENT having spoke to a relative that is a property owner in Spain also a Legal Eagle back in Blighty he stated it could of cost you the property that you where thinking of buying ????? Because the debt is on the property so that will make it not worth JACK S  T until whatever the TAX PEOPLE think you o FAIR PLAY TO YOU FOR BEING SO BRAVE AND SENSEBLE .CHEERS

Hi

Buying the property and its part owned by his company, sounds dodgy, does he have authority to sell, I wouldn’t touch that with a barge pole you ,  will find another property’s ,there are  lots of property’s and the next will be as good as this good luck  

We bought a place 5 years ago and we agreed on a price, paid 5,000 deposit had surveys and everything done then 5 days before going to sign at the Notary the solisitor told us that the estate agent wanted €7,000 in cash. We got this thinking ok? It wasn't untill we were signing that we found out that the €7,000 had been taken of the price of the property we were signing for. It is an old property so we haven't had a tax bill for it. Just think it was underhand the way they did it but we felt it was too late to back out without losing money.