Tax - Page 3

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.