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

I’m sure the vendor will pay tax on the 40% ????? 😏

This practice is to avoid capital gains/other taxes on the money received by the vendor, and yes……. normal in years gone by… but not something I’d like to do at all.

Take good proper independent legal advice, from your appointed representative and make sure all bases are covered, make sure that no legal/tax implications can come back to haunt you. If you were to sell in the future then your precentage of capital gains will be much higher if ‘you’ declare the full purchase price on your future sales figure.

Tread carefully and get advice.

Depending on when the seller purchased the property this was common practice, 'Official and unofficial price' anywhere between 20 and 40% unofficial, usually paid in cash on the day of transfer.

Avoiding the capital gains tax on the full amount.

At some stage in the properties sale someone has to take the hit, pay full value registered and pay the tax on it.

Especially as now the government/authorities check all property purchases and back date many years. If they think a property has been undervalued and sold, the new law will calculate the amount undervalued and charge the new owner the tax on the undervalued amount. 

I agree with the previous poster in checking with your legal representative, however if you are already asking yourself the question then you may not need the advice, go with your gut !  

Hi 

Don't proceed in this way as if you ever come to sell the property to then you will be stung by capital gains tax as the Spanish government will look at the official price you paid minus the selling price as and this will be taxed accordingly.

Business or no business I would not go ahead or go in to another estate agent and ask for advice.

All the best

Paul

Hi Tallpaul,

The vendor is proposing to under-declare the value of the property, which will result in less Capital Gains Tax for him and lower ITP (property transfer tax) for you.  In other words, tax fraud.  When discovered and, given the amount of under-declaration the vendor is proposing, it will be discovered, you (not the vendor) will get hit with a Complementary Tax bill and a fine.  The estate agent is also a shark for condoning it.

Engage a good, independent abogado (lawyer), who has Colegio de Abogado registration and make them aware that you know what the vendor is suggesting is illegal, and you need their advice on how to proceed.  In the meantime, advise the agent that you have taken preliminary legal advice and have decided you're not prepared to proceed on the basis of under-declaration of the sale price.

You may need to be prepared to walk away from the purchase, but please don't fall for the "it's common practice" - it used to be, but Spain got wise to it and you, as the purchaser, will be the one who will have to foot the additional tax bill when caught.

We used Pilar Penalver - she's based in Pinoso, so you may prefer to get recommendations from other members closer to your area - but she's very good and professionally registered:

https://www.penalverabogados.com/en/ 

Kind regards,

Kim

A friend of mine paid a very low price for a undervalued property, 18 months later got a tax bill as the property was under valued at the time of buying, re a quick sale bargain, they had to pay this unexpected tax demand that was not expected by them.

Not normal at all at the present time. Don't fall for it.

If  in  doubt  Walk  out

Peter

Walk right away from this as you could end up in trouble, don't take a word the estate agent is saying, it's illegal 

On the request of the vendor to lower the selling price for other items such as furniture can be negotiated but like others I personally would steer clear of this practice, especially as they must have expensive furniture at 40% of the house price.

I was asked to do this a few years ago at 10% and told my solicitor I wasn't interested and would just pay the purchase price in full as I agreed for the property.

It should be noted that in the future if you sell then you would be liable for Capital Gains Tax on any profit. The current rate of Capital Gains Tax for Non-Residents I believe is 19%, maybe more as non EU nationals.

If you were to proceed with the private invoice route it would save you 10% on the purchase tax. 

So in the long term you would more that likely pay more tax and as others have advised may get caught out as well.

I hope this makes sense.