Tax - Page 2

Paolo51 wrote on Sat Dec 31, 2022 7:21am:

I can only speak about my experience of buying in Spain and my reply was based on the tax I paid which was 10% of the actual price that I bought the house for plus solicitor and notary fees. I would have saved a lot of money if I had only paid tax on the original Escritura value as stated in the ...

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...other post.

Hugh103 wrote on Fri Dec 30, 2022 7:57pm:

Hi

The tax paid on house purchase is, as some of the other replies stated, 8% or 10% depending on which area the house is located.

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However, the tax is not based on the sale price; it is based on the assessed value of the property as stated in the original Escritura.

The Escritura is Spanish for Title Deeds and is a very important document in the Spanish property conveyancing process. It is a legal document that contains the following: 

Former owners personal details Buyers personal details The legal representatives who are involved details Land registry details Translators details Property’s address Property description, which is usually obtained in the form of nota simpleThe property price Cadastral price Property taxes Mortgage details A breakdown of how the price is being paid Miscellanea, including; 

Certificate of the Community of Owners. This states that the property is debt free and up to date with all its communal payments. 

Utility bills 

Cheques 

Council tax bills 

Copy of the license of first occupation 

Once the title deed is signed it is submitted to the land registry so the ownership details can be changed. In Spain, Title Deeds are signed by the Notary and the buyer / seller (or Power of Attorney if applicable). The Notary then keeps the document on file. 

If you are a non-resident vendor of a Spanish property, you must pay the local tax authority 3% of the property price when you are selling. The purpose of retaining this amount is to pay for any outstanding taxes or other fees which the vendor might be liable to pay. 

The Notary is responsible for ensuring that the purchase price of the property is split so the 3% retention fee goes to the applicable tax authority. 

If the vendor can prove that all of his taxes are paid up to date, then they will be returned the 3%. If the final amount to be paid is lower than the 3% that has been retained, the remainder will be returned to the vendor. 

I'm sorry this message is a bit long-winded, but I hope it clarifies your potential position

Regards

Hugh Williams - Villamartin

Paolo51 wrote on Sat Dec 31, 2022 7:21am:

I can only speak about my experience of buying in Spain and my reply was based on the tax I paid which was 10% of the actual price that I bought the house for plus solicitor and notary fees. I would have saved a lot of money if I had only paid tax on the original Escritura value as stated in the ...

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...other post.

Hugh103 wrote on Fri Dec 30, 2022 9:37pm:

Tony Smith; it would be better for you to add in something helpful rather than sniping from the wings!

Geo57 wrote on Sat Dec 31, 2022 7:15pm:

Thank you for your response. 

All the best for 2023

Geo57 wrote on Thu Dec 29, 2022 8:23pm:

Can anyone please help. 

When buying a property  in spain .

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The Tax Over and above the cost of the house. Does the government assess it on the price you pay or the price the government outline its worth. 

Thank in advance. 

marcliff wrote on Thu Jan 5, 2023 9:12pm:

Tax when buying a property in the Valencia Region is 10% of the price you paid for the property. This is the price which will go on the new escritura you receive.

Now, the Spanish government also has a thing called the complementary tax. Lots of buyers/sellers would pay a certain amount in cash and then declare a lower price on the escritura which meant less tax for both buyer and seller....

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The government got wise to this so they can now levy what is called a reference value on the property. They get this by comparing all the returns from the notaries in the area to find the true cost of the property. If you are applying for a mortgage, this reference value is what the banks will require to grant the mortgage.The reference value can be found online from hacienda and your solicitor will be able to access it.

Let's take an area with half a dozen houses. 5 for sale at €200,000 and one which the owner wants as a quick sale for €150,000. You buy the house and pay €15,000 either transfer tax if it's a resale or IVA if it's a new one. 

The hacienda will receive the reference value from the notaries who have gone through other sales and come up with an average price of 200,000.

This is where the complementary tax comes into play. If the hacienda thinks you have underpaid, they can then levy the complementary tax on the difference between what you paid and what the reference value is and can ask for a further €5,000 tax on top and that has happened to quite a few people. 

You can look at it in two ways. One, you've now only saved €45,000 instead of €50,000 and bite the bullet. You can appeal it and it could take years to get it through the courts through the solicitors who will, of course, charge you for the pleasure and the hacienda will charge interest if the verdict goes their way.

So, in summary, the initial tax is 10% of what you paid for it, not a previous value, which will be entered on your new escritura.

They can get you for more tax and, as far as I'm aware, there's no time limit on them claiming it like there is for unpaid income tax which is 4 years.