Tax Problem

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katy
Andalucia Guru
Posts: 13752
Joined: Thu Jun 24, 2004 3:45 pm

Tax Problem

Postby katy » Sun Oct 09, 2005 1:45 pm

My friend isn't on the internet and asked me something that I don't know the answer to...

4 years ago she bought an apartment from her sister. To avoid all the taxes they left the apartment in her sisters name and drew up a private contract. Her sister had never paid any yearly taxes on the 214 and so she didn't pay either as she didn't want to pay the back ones. Now she wants to sell. Taxes haven't been paid for seven years now, will the debt be taken out of her 5% retention? How many years will they go back? the Nota Simple is clear of debts. The apartment is in Cadiz region.

Beachcomber
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Posts: 11081
Joined: Tue Jun 15, 2004 11:11 pm
Location: Guadalhorce Valley

Postby Beachcomber » Sun Oct 09, 2005 11:42 pm

It depends whether someone in AEAT is sufficiently on the ball to check to see if non-resident taxes have been paid. This may or may not be the case. The tax authorities can claim unpaid taxes for four years but, as well as the amount due, fines and surcharges will also be payable.

How long prior to this sale by private contract did your friend's sister own the apartment, ie. the date that it last officially changed hands? Given the steep rise in property prices over the past years I would have thought it fairly unlikely that the retention will even cover the full amount of CGT due leaving aside the possibility of being able to reclaim any of it.

If your friend bought the apartment from her sister without a new title deed being issued in her name it will be the sister who will need to sign at the notary when the apartment is sold.

Acquisition of property in this way is an inadvisable course of action even within the family because if the person in whose name the property is registered should die there is no way it can be sold without going through probate.

katy
Andalucia Guru
Posts: 13752
Joined: Thu Jun 24, 2004 3:45 pm

Postby katy » Mon Oct 10, 2005 11:10 am

Thanks Beachcomber, I think it was one of those things that you think is a good idea at the time and she has got herself in a hole. What I didn't ask is will the tax bill have to be paid before she sells the apartment? Don't think the 5% retention will cover CGT, she is resident unofficially (another good reason why people should apply for residencia when posters on here say you don't need to)

Beachcomber
Andalucia Guru
Posts: 11081
Joined: Tue Jun 15, 2004 11:11 pm
Location: Guadalhorce Valley

Postby Beachcomber » Mon Oct 10, 2005 12:32 pm

Yes Katy, I totally agree but don't forget that in order to avoid imposition of the 5% retention as well as being the holder of a residence permit you also have to produce a certificate of fiscal domicile from AEAT.

Regarding the unpaid non-resident taxes, I have known of instances where a prospective purchaser's lawyer has asked for the receipt for the payment of non-resident taxes to be produced. However, this is a tax on the physical person not on the the property so the new owner will not become responsible for their payment and it should not prejudice the sale.


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