FAO David Searl - Property Transfer Tax - Please Help!

[Beachcomber]

OK, but you think people should pay tax on a private contract of purchase sale? I really would be interested to know if anyone has ever done so.

[julian]

should people underdeclare? no, because it is illegal, but they do.
should they pay ITP on a private contract? yes, because it is illegal not do, but usually they don´t.

it´s not for me to say that people should, or should not, pay ITP on a private contract if the law says they have to.

it surprises me slightly that you, who are often complaining that things are not done correctly in this country and that there is too much corruption and skullduggery here are pushing for the "do not pay tax on private contracts", when that is illegal

whether everyone pays or doesn´t pay the ITP tax on a private contract really doesn´t bother me either way, each to their own.

a few years ago I got a certificated letter from hacienda claiming the ITP on a private purchase that we had made years ago, and never even thought to pay the ITP on..it didn´t even cross our minds, we had to pay, with all the usual fines and interest etc ( god only knows how hacienda knew of the contract..I didn´t like to ask !!!)

[Beachcomber]

Well, as you said before, we shall have to agree to differ.

[katy]

I don´t have clients !!!

Well you could have fooled me You are a book of knowledge on everything concerning property!

[julian]

the knowledge I have is from personal experience and from the need to know and understand what is what so that I can tell whether the lawyers are giving me the correct info....it all sounds a bit back to front, but that´s the way it is here sometimes, as you know !!

nowadays with internet and our friend google all the info is at easyish reach with a bit of patience

as you alraedy know, my "professional" experience in spain has been the bar/restaurant/discoteca world !!

[Beachcomber]

Having looked at this again I think we have been talking at cross-purposes. I was talking about a private contract as a precursor to the granting of the public escritura by the notary whereas you were referring to a situation in the rare circumstance where a property changes hands solely by way of a private contract so unless you are saying that you have to pay tax on both the contract and the escritura in respect of the same purchase/sale I think we can reach agreement.

However, I maintain that such a contract has no validity, cannot be registered and that there is nothing to prevent the 'seller' from selling the property to someone else even if the ITP has been paid on it. This is why the promoter in the case of 'livinginalahurin' (who started all this) insisted on the contract of rescission of the original contract of purchase/sale being granted before the notary.

[julian]

ok, no you certainly don´t have to pay the tax twice on the same sale, as the sale is effectively at the date of the private contract, so the tax should only paid then.

as to the validity of a private contract..if the seller later resold it to someone esle in public escritura who then registered it you can take the seller to court using the private contract as proof, clearly a notorised sale gives much more security, but nevertheless doesn´t mean that a private contract has "no validity"

we got there in the end

[julian]

http://asesorfiscal.wordpress.com/2009/ ... obiliario/

[Beachcomber]

[DavidSearl]

FROM DAVID SEARL

FOR BEACHCOMBER AND JULIAN

OKAY, GUYS, PLAY NICE. YOU ARE OF COURSE BOTH RIGHT, YOU SEE. JUST TO KEEP IN MIND THAT THE WORD "ESCRITURA" REFERS TO A CONTRACT, WHETHER PRIVATE OR PUBLIC BEFORE A NOTARY. AS JULIAN'S REFERENCE TO FORM 600 MAKES CLEAR.

BEST REGARDS, DAVID SEARL

[Beachcomber]

Yes, people think of an 'escritura' as a title deed but it refers to any written document, legal or otherwise, but going back to the original question of the rescission of the contract I finally found what I was looking for which is a copy of a contract signed by a friend who was involved in a similar situation a few years ago but he was the original prospective purchaser of a yet-to-be-built off-plan property having signed a contract of purchase/sale in the normal way.

He was a non-resident and signed a contract with the promoter rescinding his right to the property by way of private contract. He and the promoter were the only two people mentioned in the contract and I don't think a third party had even been involved at the time bearing in mind that it was at a time when foreigners were snapping up every piece of real estate they could find.

Without going into the antecedents etc these were the conditions of the contract:

PRIMERA.- Objeto.- Ambas partes RESCINDEN DE MUTUO ACUERDO EL CONTRATO DE COMPRAVENTA firmado con la PROMOTORA el día --- de --- de dos mil---- referido a las FINCAS descritas en el Expositivo II del presente Contrato.

SEGUNDA.- La PROMOTORA devuelve en este acto la cantidad anticipada de ----- EUROS ( -----euros) IVA incluido.

TERCERA.- El presente contrato tiene plenos efectos desde el momento de la firma del mismo lo que conllevará automáticamente la puesta a disposición de la PROMOTORA de la vivienda vendida, para su comercialización de nuevo.

There was no mention of 7% tax or of going before a notary, in fact, how could 7% ITP be paid on a property that hadn't even been built yet? My friend signed a receipt for the return of his deposit and that was it. This was a private CONTRATO DE RESCISIÓN DE COMPRAVENTA but upon what should tax have been paid and by whom?

This makes a nonsense of the situation in which the original poster, livinginalhaurin, finds himself of having to pay two lots of 7% tax on the same purchase. There must be a scam in there somewhere but I'm damned if I can see it or who benefits from it other that AEAT apart from the fact that the first prospective purchaser has managed to extract himself from the requirement to proceed with the purchase of a property that he decided he didn't really want and avoided paying IVA because he didn't go through with the purchase from the promoter. If he had done so livinginalhaurin would have purchased from him not the promoter and would only have paid the 7% transfer tax on the purchase in the normal way.

[peteroldracer]

I repeat my mantra - never, ever buy a property in Spain.

[Beachcomber]

Peter, a few years ago I would have challenged that 'mantra' but now I entirely agree with you especially if so-called 'specialist property conveyancing lawyers' are involved.

[peteroldracer]

The really sad thing, beachy, is that most readers will just dismiss this advice, as "it will never happen to them" despite the ample evidence of all the many disasters and costly problems that have happened to others.
Has anyone ever, in the UK, bought a house that has subsequently turned out to have massive debts on it, or hidden taxes to pay when it is too late to back out - or been told to knock it down at their cost because it should not even be there?
At worst, an incompetent lawyer might not have discovered that there was a development planned that affected a property, or possibly pocketed some commission for helping to arrange a mortgage, but even these things should result in some compensation for the client, plus the lawyer suffer in some way, and with the very active consumer support and more accountable government, loopholes closed. Here, there seems to be no accountability, no control and no consistancy.

[markwilding]

I repeat my mantra - never, ever buy a property in Spain.

Peter when are you going to realise that Andalucia isn't the only part of Spain?
Your mantra could say "I repeat my mantra - never, ever buy a property in Andalucia"
Your mantra supposes that everybody that buys in Spain has problems when buying a house

[peteroldracer]

As this is a forum about Andalucia, there is nothing about you or anything that you say that has any relevance.

[markwilding]

Peter you just agreed with me
You said Spain
I said it could say Andalucia
You included all of Spain .Read you post
Everytime you post you just show your ignorance You know very little about Spain or the Spanish people You just seem to know what goes on in your little world.
Everytime you post everybody is either incompetent or corrupt or what they have to say hasn't any relevance

[julian]

and not everybody in andalucia has problems when buying a house.

[Beachcomber]

I have a friend in Benalmádena who bought an apartment just under four years ago before I knew him. He was pleased that everything went well with his purchase and was happy with the way it was handled by a local Spanish lawyer until... a few days ago he received one of those dreaded letter to attend the AEAT office in Málaga.

He had declared the full amount, has been paying his non-resident taxes so had no idea what it could be. I went with him to the tax office where he was presented with a bill for nearly €600 in fines and surcharges for late payment of the (then) 5% retention by the lawyer who had acted in the purchase.

The lawyer has not been answering the telephone, is no longer at the address from which he operated and appears to have disappeared (it wasn't José Luis Maseda, from Eurobrokers) so that's a €600 bill that my friend hadn't budgeted for especially nearly four years later.

Small fry in comparison to the situations in which many people find themselves but, nevertheless, a sour experience which will be related to friends, relations and colleagues by someone who thought everything had gone smoothly.

This situation is not peculiar to Andalucía, it could have happened anywhere in Spain and probably does. This story obviously will not reach the press but is another tiny nail in the coffin of the Spanish property market and some more bad-mouthing that it could do without.

I would still appreciated some comments on my most recent post concerning CONTRATO DE RESCISIÓN DE COMPRAVENTA further up this thread.

[katy]

I repeat my mantra - never, ever buy a property in Spain.

I wouldn't advise one way or another but personally I would not buy another property in Spain as things are now.