SELLING HOUSE PRIVATELY

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Rossini

SELLING HOUSE PRIVATELY

Postby Rossini » Thu Sep 22, 2005 2:26 pm

Hi

We are thinking of selling our house by private sale. We have the escritura in our names and all other paper/work bills are up to date.

We used agents to buy our previous houses (but we won't go into that) so are not aware of the exect procedures in order to sell.

So any advice would be great.

Rossini

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Postby silver » Thu Sep 22, 2005 2:46 pm

Rossini..selling our house..all you need is a buyer if
the escritura in our names and all other paper/work bills are up to date.
Obviosly to sell you will need to advertise...you can do this here or in England, if you have mortgage deals details ready these could prove helpfull.
once you have found a buyer. To finish the deal all you have to do is sign at the notery office.
No muerdes la mano que te da de comer.

Rossini

House sale

Postby Rossini » Thu Sep 22, 2005 4:13 pm

Hi

We have already got people interested, what do we need to provide for the notary? Or is it all up to the buyer to request?

Rossini

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Postby silver » Thu Sep 22, 2005 4:23 pm

you will have to make an apointment with notery.. deeds... identification.....and dont forget the money..good luck
No muerdes la mano que te da de comer.

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Postby Beachcomber » Thu Sep 22, 2005 5:13 pm

As it is usual for the purchaser to pay the notary's fees it will probably be one of his choice. Unless you are able to demonstrate to the notary a good working knowledge of the Spanish language you will need to employ a translator.

Unless you are residents with certificates of fiscal domicile there will be a 5% retention made by the purchaser which will be deducted from the amount of the banker's draft. He will pay this to the tax authorities on your behalf on form 211. You will then need to submit a capital gains tax return on form 212 and either claim back some or all of the retention or pay the extra tax if it is not covered by the 5% retention.

To do this you will need to arrange with the purchaser or his representative to be given the copy of the form 211 which is the receipt for the payment of the tax

Unless you have agreed otherwise you, as the seller, will be responsible for the payment of the plus valia which is the tax on the increase of the value of the land since your purchase.

Payment for the property should be in the form of a banker's draft or conformed cheque and, even then, if you have any doubt you should check its validity with the issuing bank.

If payment for services etc has been by way of standing order you should cancel these with your bank. However, banks are notorious for paying anything that is presented to them so you will either have to keep an eye on your account for several months to make sure bills are not still being deducted from your account. The safest way is to actually close the account completely.

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Postby jpinks » Thu Sep 22, 2005 5:49 pm

Beachcomber wrote:As it is usual for the purchaser to pay the notary's fees it will probably be one of his choice. Unless you are able to demonstrate to the notary a good working knowledge of the Spanish language you will need to employ a translator.
Some notarios (one in Ronda) split the fee 50:50, and the notarios Estepona will deal with you in English, though the paperwork is still in Spanish, obviously.
Unless you are residents with certificates of fiscal domicile there will be a 5% retention made by the purchaser which will be deducted from the amount of the banker's draft. He will pay this to the tax authorities on your behalf on form 211. You will then need to submit a capital gains tax return on form 212 and either claim back some or all of the retention or pay the extra tax if it is not covered by the 5% retention.
This is not always insisted upon. The notario *might* insist on it, or the purchaser (or his lawyer) might insist on it, but it is by no means certain that you will have the retention made. If they do make the retention, be very careful and do *not* hand over the 5% to the purchaser and expect them to willingly go around to the tax office and lodge it. That would be too trusting. If they want the retention, make sure they have the correct from with them at the notarios and fill it all in then, and then go with them to the tax office and watch the money being handed over to them, and get the receipt yourself - it is *YOUR* money that is being paid to the tax office here.
To do this you will need to arrange with the purchaser or his representative to be given the copy of the form 211 which is the receipt for the payment of the tax.
You will be standing beside him while he pays it to the tax office and not in the local restaurant :wink: - so just take the receipt from the tax office directly.
Unless you have agreed otherwise you, as the seller, will be responsible for the payment of the plus valia which is the tax on the increase of the value of the land since your purchase.
That will not be dealt with in front of the notario.
Payment for the property should be in the form of a banker's draft or conformed cheque and, even then, if you have any doubt you should check its validity with the issuing bank.
And if it is cash - make sure you attend the bank issuing the 500euro notes as there are a lot of good forgeries of these around
If payment for services etc has been by way of standing order you should cancel these with your bank. However, banks are notorious for paying anything that is presented to them so you will either have to keep an eye on your account for several months to make sure bills are not still being deducted from your account. The safest way is to actually close the account completely.
This can be a nightmare.
First things first - cancel your telefonica and any other similar services and get the lines disconnected. If you just cancel the standing order they start legal proceedings against you! The new owner can get it re-connected when they want, but don't fall for the line of leaving it connected and trying to transfer it - it is fraught!
Make sure the new owner signs a document that you can present to the ayuntemiento and the electricity office so that they will transfer the name on the property to the new owner. Make sure you cancel the direct debit for patronado/basura/agua.
Make sure the buyer has the relevant forms from the catastral office to transfer the name on the catastral to his.
Finally - and very important - make sure you keep the escritura which you had when you bought the property, and make sure you have a copy of the escritura which is being written in favour of the new owner.
Unless the new owner is your wife/husband/mother/father/best friend/etc - assume nothing will be done for you after the sale is completed, and that you will have to go around the various offices getting you name removed from these records.
Oh - and don't forget to pass on an gas bottle contract for the price of the deposits on however many gas bottles you have, as that is how the new owner will be able to reclaim the deposits.
Yes - I've just sold a place privately, and I found out the hard way! Not a disaster, but a lot of hassle :(
Slainte,
JohnP.

Rossini

house

Postby Rossini » Thu Sep 22, 2005 6:52 pm

We are residents, so what about the tax issue, if we don't buy another property what will the tax be and if we buy another straight away what will it be?

Thanks for the info so far.

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Postby frank » Thu Sep 22, 2005 7:46 pm

Two very complete answers from Beachcomber and jpinks, if I change my mind and purchase there, I know where to come for info. Well done!
Regards, Frank

No soy residente, simplemente un turista, ¿qué sé yo?

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Postby Lorraine - Mijas » Thu Sep 22, 2005 8:05 pm

You seem to know a hell of a lot on this subject Mr Pinks!!!

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Postby jpinks » Thu Sep 22, 2005 8:09 pm

The voice of experience Larraine - I recently sold 2 properties and am hoping to sell another one soon. All privately done and I did my own paperwork, so - Yes - I do know a lot about it. Not everything though, because the properties were not apartments in urbanisations or anything like that down on the costa, just a simple little village house and a small finca.
Slainte,
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Postby Bongtrees » Thu Sep 22, 2005 8:12 pm

Lorraine - Mijas wrote:You seem to know a hell of a lot on this subject Mr Pinks!!!
snap.....was thinking the same. will be interested to read Pinksys explanation of the tax situation for residents.

Mike

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Postby jpinks » Thu Sep 22, 2005 8:16 pm

I don't have that explanation - but someone did post a lengthy explanation on that topic a while ago. Time for you to do some research into the archives here :)
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Postby Beachcomber » Fri Sep 23, 2005 9:23 am

If the participants conduct the transaction according to law it is quite correct that this says they should each pay half of the notary's fee but this is down to them to decide, not the notary.

The notary's ability to speak English should have no bearing on the on the use or otherwise of a translator. The notary that we use on a regular basis speaks perfect English and reads the documentation in English but he insists on a translator being named in the deed as the person responsible for the accuracy of the translation. He says that this is according to guidelines set down by the college of notaries.

Plus Valia, according to law, should be paid by the seller. If, as is often the case, the responsibility for its payment is transferred to the purchaser this will be specifically stated in the title deed and should be pointed out by the notary. If it is not so mentioned its payment will remain the responsibility of the seller.

Just being the holders of resident's permits is not sufficient. You will need certificates of fiscal domicile in order to avoid the imposition of the 5% retention.

El Cid is the tax expert but he doesn't seem to be around but basically the CGT as a resident is 15%. I thought it was lumped in with the rest of your declared income and the percentage was whatever band you then fell into but I understand from Sid that this is not the case. If you purchase again within two (or possibly three) years there is no CGT payable if the price of the new property is equal to or greater than that which you sold. If you purchase again immediately make sure that the date of sale of the old property precedes the date of purchase of the new one.

If it is decided that the 5% retention is payable the seller has no say in whether, or not, it is retained by the purchaser. This is the law. It will be so stated in the title deed and the notary will insist on it otherwise he will not allow the transaction to proceed.

Although it is the seller's money it is the responsibility of the purchaser to pay the retention to the tax authorities. From a practical point of view transactions before a notary often drag on until well into the afternoon by which time in is too late to pay the tax the same day. Anyway the purchaser has a month in which to make this payment and if he insists on leaving it until the last moment there is little that the seller can do to make him pay it sooner.

This is a real problem, though. Several years ago a friend sold a property and was entitled to reclaim a seizable proportion of the retention. However, the purchaser did not pay the retention to the tax authorities who obviously were not going to refund something they had never received.

The situation was resolved after several months and a great deal of correspondence which eventually resulted in the seller reporting (denouncing, if you must) the purchaser to the tax office. He did get his money back but only after a lot of hassle that he could have done without.

What's the answer? Well, as I have said on this forum time and time again, it's no good relying on some sharp suited, glib tongued lawyer to do this for you because most of them haven't got a clue how to apply for the return of the retention apart from anything else. They will just take their fee and deny all responsibility if anything goes wrong. The best bet is probably to use the services of a Spanish asesor fiscal who will have more clout with the tax office if there is a problem with the payment of the retention.

I specifically avoided mentioning black money but, yes, check every note for authenticity (not just the Bin Ladens). There are several ways to check that a note is genuine and if you are not sure how just pop into your bank and ask them to give you a crash course beforehand.

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Postby jpinks » Fri Sep 23, 2005 9:38 am

If the participants conduct the transaction according to law it is quite correct that this says they should each pay half of the notary's fee but this is down to them to decide, not the notary.
Absolutely - but decide it before you go into the notarios offices:wink:
The notary's ability to speak English should have no bearing on the on the use or otherwise of a translator. The notary that we use on a regular basis speaks perfect English and reads the documentation in English but he insists on a translator being named in the deed as the person responsible for the accuracy of the translation. He says that this is according to guidelines set down by the college of notaries.
Agreed - these guidelines do exist, but they are not legal requirements.
Plus Valia, according to law, should be paid by the seller. If, as is often the case, the responsibility for its payment is transferred to the purchaser this will be specifically stated in the title deed and should be pointed out by the notary. If it is not so mentioned its payment will remain the responsibility of the seller.
Interesting - thanks Beach - I'll remember that trck for the next one and get it written in that the byer will deal with the plus valia.
If it is decided that the 5% retention is payable the seller has no say in whether, or not, it is retained by the purchaser. This is the law. It will be so stated in the title deed and the notary will insist on it otherwise he will not allow the transaction to proceed.
Agreed- but the reality is that the buyer might not pay it (as Beach also found). For my next transaction I am going to have this determined prior to the notario appointment and agree the amount with the buyer, and get a second bankers draft for that amount made out to the tax office. Then I can hand it over happily, knowing that it is of no use to the buyer.
Although it is the seller's money it is the responsibility of the purchaser to pay the retention to the tax authorities. From a practical point of view transactions before a notary often drag on until well into the afternoon by which time in is too late to pay the tax the same day. Anyway the purchaser has a month in which to make this payment and if he insists on leaving it until the last moment there is little that the seller can do to make him pay it sooner.
If there is any black money - retain the same amount form that until the buyer pays the tax.
This is a real problem, though. Several years ago a friend sold a property and was entitled to reclaim a seizable proportion of the retention. However, the purchaser did not pay the retention to the tax authorities who obviously were not going to refund something they had never received.

The situation was resolved after several months and a great deal of correspondence which eventually resulted in the seller reporting (denouncing, if you must) the purchaser to the tax office. He did get his money back but only after a lot of hassle that he could have done without.

What's the answer? Well, as I have said on this forum time and time again, it's no good relying on some sharp suited, glib tongued lawyer to do this for you because most of them haven't got a clue how to apply for the return of the retention apart from anything else. They will just take their fee and deny all responsibility if anything goes wrong. The best bet is probably to use the services of a Spanish asesor fiscal who will have more clout with the tax office if there is a problem with the payment of the retention.
Based in this thread being for DIY selling, I was suggesting methods which involve no professionals, but Beach is right. If you are not sure of your ground and happy to do the horse-trading, get a asesor fiscal - they will be a lot more use than any lawyer. Also a gestor will do the other paperwork for you if you need.
I specifically avoided mentioning black money but, yes, check every note for authenticity (not just the Bin Ladens). There are several ways to check that a note is genuine and if you are not sure how just pop into your bank and ask them to give you a crash course beforehand.
I wrote about how to deal with black money in some other thread a while ago - but basically you need to see the bank issuing the notes and seal the required amount in an envelope ready to be handed over on signing.
Slainte,
JohnP.

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Postby Beachcomber » Fri Sep 23, 2005 1:00 pm

jpinks wrote: For my next transaction I am going to have this determined prior to the notario appointment and agree the amount with the buyer, and get a second bankers draft for that amount made out to the tax office. Then I can hand it over happily, knowing that it is of no use to the buyer.
This is a good idea but make sure you check with the tax office to get the wording exactly right on the draft otherwise they will not accept it and it will be worthless.

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Postby jpinks » Fri Sep 23, 2005 1:58 pm

Yes - I hit the submit button and then thought of that too :) Nothing more useless than a bankers draft made out to the wrong person.
Slainte,
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Postby El Cid » Fri Sep 23, 2005 4:53 pm

Beachcomber wrote:
El Cid is the tax expert but he doesn't seem to be around but basically the CGT as a resident is 15%. I thought it was lumped in with the rest of your declared income and the percentage was whatever band you then fell into but I understand from Sid that this is not the case. If you purchase again within two (or possibly three) years there is no CGT payable if the price of the new property is equal to or greater than that which you sold. If you purchase again immediately make sure that the date of sale of the old property precedes the date of purchase of the new one. .
Thanks for the compliment!

If you make a capital gain within 12 months of aquiring the asset it is not treated as a gain - it is treated as income and taxed at the highest marginal rate.

After 12 months residents pay 15% only.

If it is your primary residence and you have owned it for 3 years at the time of the sale, then you get rollover relief if you reinvest all the proceeds within 2 years in another primary residence. If you only reinvest a percentage then you pay 15% on the balance of the gain.

If you make a gain on a second property then there is no relief - it is just treated as a capital gain and taxed at 15%.

All these rates apply to residents only. Non residents pay 35%. In both cases there are indexation allowances against the gain but since 1994 they have been about the same as inflation - prior to that they were over 10% per annum. That is why you often hear people say (erroneously) that if you have owned the property for ten years there is no capital gain.

Sid

Rossini

Tax

Postby Rossini » Fri Sep 23, 2005 5:55 pm

We have owned the house for 2 1/2 years, so we will still be taxed 15% even if we plough the money straight into another property?

Thanks

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Re: Tax

Postby El Cid » Sat Sep 24, 2005 7:16 am

Rossini wrote:We have owned the house for 2 1/2 years, so we will still be taxed 15% even if we plough the money straight into another property?
Unfortunately, yes.

There are some exceptions to this rule such as moving to a new area for employment, marriage and death. Also if you can find a doctor to say that you have to move for health reasons you might get away with it.

I have a friend in this position as he started suffering from really bad hay fever in his new house. The specialist wrote a letter to the taxman - he is awaiting the outcome at the moment.

Sid

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Postby hillybilly » Sat Sep 24, 2005 1:07 pm

Is there a CGT threshold for residents?


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