Buying a property in Cabo Roig

Instruct the lawyer "no". 

You are correct, this is a tax dodge. There is every chance that this will be found by the tax office and you would be complicit in it. If it weren't, then when you eventually sell, or pass it on as an inheritance it will be found then. 

This might happen alp over Spain but that doesn't make it right. 

There are plenty of dream homes, many being sold by honest trustworthy people. Walk away from this one as these vendors are neither honest or trustworthy. 

Steer clear!

Normally you are asked to put down 3k to reserve the property  and then within a pre arranged time normally 28 days or a month you have to pay the balance of a 10% deposit.

So on a  100k property you’d pay your 10%  as 3k now plus 7k in a month and the balance of 90k on completion.

The deposit should always always go to your solicitor, held in his clients account.

When you sell a property in Spain, you have to pay tax on the profit, so the seller is pulling a fast one there. They are trying to reduce the property price so they don’t pay tax.

But more importantly  for you if the property is deemed to be under value, you will have additional tax to pay. 

So  at this stage you’ve paid  your seller 110k ,comprised of the deeds showing the property purchased at 100k and this extra 10k, of which you’ll have no legal record.

It can take 12 months for this extra tax bill to hit you and then if in a few years time you sell the property for 120k, you will be taxed on the 20k profit you’ve made , because there’s no proof you actually paid 110k

It can be quite common, for the cost of the included furniture to be deducted from the legal value, that could be paid in cash to the vendor, but usually it’s only a couple of thousand and that is sorted out via solicitors on the day you pick up your keys.

I’d look for another property! 

Lynn

Assuming you are a UK National you should find this link useful:

https://www.gov.uk/guidance/guidance-for-buying-property-abroad 

Please read my post which I posted today before you give anyone your hard earned cash

https://www.costablancaforum.com/latest-posts/area/pilar-de-la-horadada-106/?jump-to-top-of-posts=1

Posted by PatC in Moving to Pilar de la Horadada: tips and advice on Sun Jun 26, 2022 12:48pm

I have posted this previously in response to a question regarding reclaiming retention tax, but felt it need to be highlighted in a stand alone post

Be very very careful when using some so called solicitors, who are no more than glorified conmen. I sold a house10 years ago to an American couple who unfortunately used the same “solicitor” as myself, they also gave him power of attorney and paid 175000  into his account in order to complete the purchase on their behalf, within a month of receiving their 175k he had used the money for his own benefit and never passed the funds onto me, it took 7 years to get him into court and on the day he walked into the court he pleaded guilty told the judge his brother was going to help repay the stolen money and walked out of the court a free man, that was three years ago,a penny has not been repaid, and this conman is walking around free after causing huge mental distress to the poor couple who lost 175k, there is so much more I could write about this bandit, but I would spend days writing of our bad experiences with the legal process in Spain

The company was called SALAR in Torrevieja,  the individuals name is Ignacio Rebas,

As others have said, get a new lawyer. The estate agent also sounds a bit dodgy.

If the amount officially paid for your property is less than the value assessed by the tax man, you will end up paying extra (complementary) tax. 

http://www.abacotaxes.com/complementary-tax#:~:text=Complementary%20tax%20represents%20the%20difference,it%20might%20be%20valued%20at.

Be firm and don’t pay, the ball is in your court as there are thousands of properties on sale. I paid two x 2500€ payments over a short period to reserve the house then nothing more as regards a deposit. The balance was transferred and timed to arrive a couple of days before completion so my lawyers could complete the sale.

It will be very hard to get your money back if anything goes wrong.

Is this a different property to the one where they wanted you to put down a 50k deposit.

Please find yourself a new estate agent and solicitor 

Lynn

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above Trinity Pub are a decent size solicitor firm. We’ve always found them good. But don’t be afraid to ask as many questions as you want. There are conveyance practices in Spain that are 🥴. Lawyers often assume you know about them so won’t bring it up unless you do.