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What tips for buying property in Oliva old town

Posted: Sat Mar 5, 2022 10:49pm
7 replies228 views4 members subscribed
lynnb1988

Posts: 13

5 helpful points

Location: Oliva

Joined: 5 Mar 2022

Hi. Me and my hubby are about to offer on a property and was wondering if there is anything specifically we need to be aware of? We will appoint a lawyer and arrange a survey, but any other pointers will be much appreciated. Thanks.

Kimmy11

Posted: Sun Mar 6, 2022 1:11am

Kimmy11

Legendary helpful member

Posts: 6869

12554 helpful points

Joined: 8 Aug 2017

Posted: Sun Mar 6, 2022 1:11am

Hi Lynn and welcome to the forum,

Probably the best advice that any of us will give you is to ensure you appoint an independent lawyer, not one that is tied to the selling agent.  Also, "reservation" deposits are still common in Spain, even though they have no basis in law.  When you make an offer via an agent, they may well ask for a deposit of around €3,000.  Ignore suggestions that this is "normal", but if you are put under pressure by the agent, tell them you will pay it to your lawyer as an act of good faith.  Once your lawyer has done all the searches, including confirmation that there are no outstanding debts on the property which, as the buyer, you would inherit, you will be required to pay a legally binding deposit in the amount of 10% of the agreed purchase price.

Another practice to resist is any suggestion by the agent or vendor that you declare a lower purchase price at completion, with the balance being discreetly paid "under the table".  This practice used to be rife in Spain before the 2008 financial crash and it's never completely gone away.  While it will save both you and the vendor some money, it's tax fraud and punishable in law.  Also, to try and tackle this practice, the Spanish authorities introduced what is known as "Complementary Tax" - this is where the tax authorities decide that a buyer has paid less for a property than it's market value and so they apply Complementary Tax to make up the shortfall.  To add insult to injury, this has to be paid by the buyer, not the seller.

Kind regards,

Kim

Robin Parkes

Posted: Sun Mar 6, 2022 10:05am

Posts: 25

14 helpful points

Location: Oliva

Joined: 27 Jul 2020

Posted: Sun Mar 6, 2022 10:05am

The post above has covered most subjects but one point that always gets forgotten about is the amount of ' purchase tax ' you pay, which in this area is 10 % Eg Offer a price of 100,000 and that in real terms is 110,000 that extra 10 % goes to the tax man not the vendor It can make a big hole in some peoples budget and its not always pointed out by some agents 

Kimmy11

Posted: Sun Mar 6, 2022 1:57pm

Kimmy11

Legendary helpful member

Posts: 6869

12554 helpful points

Joined: 8 Aug 2017

Posted: Sun Mar 6, 2022 1:57pm

Robin Parkes wrote on Sun Mar 6, 2022 10:05am:

The post above has covered most subjects but one point that always gets forgotten about is the amount of ' purchase tax ' you pay, which in this area is 10 % Eg Offer a price of 100,000 and that in real terms is 110,000 that extra 10 % goes to the tax man not the vendor It can make a big hole in ...

...some peoples budget and its not always pointed out by some agents 

That's a good point, Robin, property transfer tax (ITP) never gets a mention on "A Place in the Sun"!  

It also reminded me that there was a change in the law in January this year regarding the "reference value" used for calculating the ITP.  All reference values, which are based on the cadastral (land registry) value of a property, have been reviewed.  This is another way of overcoming vendors and buyers who under-declare the sale value at the Notary and top-up with 'under the table' payments.  From January, it's the reference value that will be used to calculate the transfer tax.  

For example, in the Comunidad Valenciana region, ITP is set at 10% of the selling price, so if you were to buy a property at €150,000, you would expect to pay ITP of €15,000.  However, if the new reference value has been set at €175,000, the ITP will be €17,500, even though you've only paid €150,000 for the property.  Conversely, if the reference value of a property is €150,000, but you agree a higher purchase price of, say, €165,000, the transfer tax will be based on the actual selling price, even though it's higher than the reference value.  So I think it's worth buyers checking with the relevant Town Hall what the revised reference value is, prior to making an offer.

Kind regards,

Kim

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lynnb1988

Posted: Sun Mar 6, 2022 3:02pm

lynnb1988

Original Poster

Posts: 13

5 helpful points

Location: Oliva

Joined: 5 Mar 2022

Posted: Sun Mar 6, 2022 3:02pm

Kimmy11 wrote on Sun Mar 6, 2022 1:11am:

Hi Lynn and welcome to the forum,

Probably the best advice that any of us will give you is to ensure you appoint an independent lawyer, not one that is tied to the selling agent.  Also, "reservation" deposits are still common in Spain, even though they have no basis in law.  When you make an offer via an agent, they may...

... well ask for a deposit of around €3,000.  Ignore suggestions that this is "normal", but if you are put under pressure by the agent, tell them you will pay it to your lawyer as an act of good faith.  Once your lawyer has done all the searches, including confirmation that there are no outstanding debts on the property which, as the buyer, you would inherit, you will be required to pay a legally binding deposit in the amount of 10% of the agreed purchase price.

Another practice to resist is any suggestion by the agent or vendor that you declare a lower purchase price at completion, with the balance being discreetly paid "under the table".  This practice used to be rife in Spain before the 2008 financial crash and it's never completely gone away.  While it will save both you and the vendor some money, it's tax fraud and punishable in law.  Also, to try and tackle this practice, the Spanish authorities introduced what is known as "Complementary Tax" - this is where the tax authorities decide that a buyer has paid less for a property than it's market value and so they apply Complementary Tax to make up the shortfall.  To add insult to injury, this has to be paid by the buyer, not the seller.

Kind regards,

Kim

That’s great advice thank you so much. If you know of any good lawyers, could you let me know.

Kimmy11

Posted: Sun Mar 6, 2022 3:17pm

Kimmy11

Legendary helpful member

Posts: 6869

12554 helpful points

Joined: 8 Aug 2017

Posted: Sun Mar 6, 2022 3:17pm

lynnb1988 wrote on Sun Mar 6, 2022 3:02pm:

That’s great advice thank you so much. If you know of any good lawyers, could you let me know.

Hi Lynn,

I live in Costa Blanca South, so I can´t recommend lawyers in your area, but I´m sure members in and around Oliva will be able to do so.

Kind regards,

Kim

M55

Posted: Mon Mar 7, 2022 12:02pm

M55

Posts: 64

36 helpful points

Location: Denia

Joined: 8 Apr 2021

Posted: Mon Mar 7, 2022 12:02pm

lynnb1988 wrote on Sat Mar 5, 2022 10:49pm:

Hi. Me and my hubby are about to offer on a property and was wondering if there is anything specifically we need to be aware of? We will appoint a lawyer and arrange a survey, but any other pointers will be much appreciated. Thanks.

In addition to the advice you have already received, it’s worth knowing what the local annual tax on the property will be, and if it is in a development, what the annual management fee is. We found estate agents were not always up front about these

Robin Parkes

Posted: Mon Mar 7, 2022 2:12pm

Posts: 25

14 helpful points

Location: Oliva

Joined: 27 Jul 2020

Posted: Mon Mar 7, 2022 2:12pm

M55 wrote on Mon Mar 7, 2022 12:02pm:

In addition to the advice you have already received, it’s worth knowing what the local annual tax on the property will be, and if it is in a development, what the annual management fee is. We found estate agents were not always up front about these

If this is in Oliva ' old town '  as suggested in the OP the annual cost is approx 145 e per year plus 70 e for recycling split into 2 seperate bills payable May and August 

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