Contract - Page 3

Hi bhambulls,

George did a better job of explaining that than me (thanks George!).

Some lawyers will advise that, if buying a property at significantly less than market value, you pay the Complementary Tax upfront (some time last year, I did a calculation for someone whose lawyer had recommended paying it upfront and I was able to demonstrate that, in that case, he would still save money - for a sale price of €95k against a €115k selling price).  However, some buyers think it's worth the risk, not pay it and sit out the 4 years in the hope that the tax office don't apply it.  If the tax office does apply it, they may also apply interest and that's where it could become marginal.  Avoiding payment - and I'm not suggesting you would - takes you into a completely different level of risk: penalties applied by the Spanish tax office are punitive, to say the least, and could make any Complementary Tax levied look like small change.

Hopefully, your lawyer is independent and not tied to the selling agent.  If not, you should seek independent advice.

Kind regards,

Kim

In the example above what's the relationship between the asking price (you describe it as the selling price) the agreed sale price and the complimentary tax?

I think it's fairly common for asking prices to be inflated in Spain to allow for negotiation and the delta wouldn't automatically be the figure upon which extra tax would be calculated.

Looking online there appears to be reference to a "fiscal value" the tax office uses to work out any additional tax, god only knows who set's that? It doesn't seem to be linked to the cadastral value or sellers asking price.

I used Abaco, Torrevieja to do the legal stuff on our house and although we agreed a price around 10% less than the sellers asking price we were not alerted to potential complimentary tax. Discreet enquiries revealed we paid 7k more than the owners did 2 years earlier though they had put in a new kitchen with new integrated white goods and generally refurbed the house. That said the house had originally sold for considerably more when new during the boom years.

I've only really posted this because people viewing the thread might be unduly worried.

The fiscal value Lancelot refers to, is the one that counts for the tax office and has nothing to do with the market value. This fiscal value is based on the cadastral value plus a number of coefficents that do vary depending on where the property is located. The tax office is entitled to review any property transaction for 4 years and if they consider that you did buy for less than the fiscal value you will be asked to pay the difference of tax (plus fine and interests) between the price you have payd and the one they consider as the correct one, not paying it can lead to seizure of your bank account or the property.

thanks, to risk asking a silly question, how do you access the fiscal value for a property you either own or plan to buy.

I personally think that there are no silly questions.

You can check out an approximate calculation of the fiscal value (valor fiscal / valor real) here: http://csi.ha.gva.es/kiosko/valor_bien_urbano.principal?el_idioma=CAST

For properties located in other autonomous regions you can surely find similar official pages for calculation or you can ask your solicitor to work it out or check it.

From what I see the prices aren't really dropping. That might just be perception. Certainly in my area they are not dropping. Take advantage of the rising pound and use that as your better deal.

Why should the seller be prepared to renegotiate a price because 'you want a better deal'. Maybe you should pull out and give your deposit for the property that you were happy with the price of before the global pandemic. That way the seller can benefit from the pandemic instead of you. Sellers have a floor level they are willing to accept same as you have a ceiling level.

If you were happy enough to pay the price before the pandemic, the property hasn't changed so why should anything else.

Burn  the  candle  at  both  ends, spring  to mind,

We were in the same situation of yourself .Missing your completion date is down to you and not covid & if you pull out you will be liable for the deposit to the seller, unless the seller agrees & if they do go & buy a lottery ticket

We had to use a POA and completed everything on line but did get a completion date extended as per Spanish Government guidelines for covid of 3 months

If you are wanting to back out to get a negotiated  reduced price make sure you get a good reduction

Hi

We were In similar situation, but gave our solicitor power of attorney. They extended, extended and again extended , but now completed. That ended October 2020, by the time we actually visit we would have forgotten what our villa looks like, although we are being sent ad hoc videos to calm the nerves that all is well.

I guess you need to be careful thou , as if you back out you could forfit your deposit.

Hope it works out for you. 

Best wishes 

Novlette 

I personally wouldnt buy anything in Spain with the way they are treating British