My Cortijo, Under-valued on purchase!

[Goatherd]

Hi!

Has anyone else been sent a huge demand because their property was undervalued according to the Hacienda?

Well, 3/4 weeks ago I received a demand from the tax man through my solicitor requesting, sorry, demanding, immediate payment of 550 Euros because my property was undervalued that I completed my purchase on last Sept.!!!!
This was including interest to date ...... well with disgust I paid this.....
THEN, 10 days later I received a further notice that my property was undervalued and they were this time demanding 4,350.00 Euros !!!!!!!!!!!!!!!!!!!!!!!
This shook me...........I can't afford to pay this sort of amount........ who on earth has that sort of money kicking around waiting to give to the tax man?

They say my property was undervalued by 57,000 Euros...... and this was working out the value on the floor area. Well that's all very well, but although I have permission for about 240 square metres, only 30 metres is habitable, the rest most certainly isn't!
I am reforming this cortijo myself as I cannot afford to pay anyone so it will take probably 2 years for me.
So wondering if any other poor souls have been hit in the same way and had any luck appealing against such iniquitous demands.
Any advice on how to fight this would be appreciated.

Graham

[El Cid]

The first thing you should do is get a valuation from a recognized valuer. Ask your bank who they use for mortgage valuations.

If it comes out on your side then take it to Hacienda and ague the toss with them or better still get a good gestor to do it for you.

Sid

[Goatherd]

Hi Sid

Thanks for that. Have you any idea of the cost of such a valuation?

I was hoping that David Searle may have been able to give me some sound advice.

Like very many I am on a pitiful UK pension.......
I just cannot see how they can value ALL properties on a blanket per square metre rate.
It just doesn't make any sense. So according to them whether it is a ruin or a palace it is the same!

Cheers
Graham

[patchdog]

[quote="Goatherd"]Hi Sid

Like very many I am on a pitiful UK pension.......


According to another thread,the budget, there is no such thing as a pitiful UK pension.
On another matter,I had to pay a good deal of black money to buy my house and if I want to get the same sort of money back when I sell my house, I will have to do the same sort of deal,overwise the authorities will want to know why there is such a discrepency in the two monies.

[El Cid]

Thanks for that. Have you any idea of the cost of such a valuation?

Not exactly as I guess it would depend on a number of factors, but I would guess at somewhere between €200 and €300 as a typical charge for professional work of this type.

Sid

[DavidSearl]

FROM DAVID SEARL

FOR GOATHERD

I am pasting in here a section from the 2010 Update of You and the Law in Spain, which will give you an idea of how to go about protesting the valuation. The new edition will be on sale shortly. I would advise you to use a Spanish lawyer for this.

Good luck with it, David Searl




You can protest Tax Agency
Re-valuation of property sale

In today’s depressed property market we see more frequently that the Spanish Tax Agency refuses to accept the declared value of a property sale, even when this is the real price paid. Months after the transaction is completed, the buyer receives a notification that the Tax Agency has placed its own, higher, value on the sale and so the buyer owes more ITP, the property transfer tax.

Perhaps the real price paid was €200,000 but the Tax Agency estimates that the property is worth €300,000, so they claim another €7,000 in transfer tax at 7 per cent on the €100,000 of undervaluation, as they figure it.

The agency has its own well-established methods of valuation, but these may have fallen behind the times, leading to the clearly unfair claim for extra tax. The agency takes into account the quality of construction, the location, the age of the property and other factors.

You, the buyer, have means to protest this decision. First, you can make an administrative claim, called a Recurso de Reposición, if you feel that the Tax Agency has not met all the requirements for making its claim. When the agency notifies you, they must include a listing of all the factors they considered in the valuation as well as the name of the official evaluator and his professional titles.

This appeal on technical grounds is only the first step, however. If you choose not to appeal in this way, or if your appeal is denied, you may then impugn the valuation itself, applying for a Tasación Pericial Contradictoria, an expert and contradictory evaluation. The Tax Agency carries this out.

If you still are not in agreement, there are further steps, by which you can name your own Perito, or expert evaluator and if the Tax Agency does not agree, an independent evaluator is chosen by lot among the registered Peritos, or experts. There are risks involved as well. If the difference in value finally is more than 20 per cent of your declared value, you must pay the costs as well as the extra tax. If it is less, the Tax Agency pays.

[Goatherd]

Thanks David for the advice.

For the record my purchase did not include any black money, I would not have been interested.

I like to sleep at nights...............UNTIL this demand of course...........

[wendyakemp]

I also completed last year and received a bill for well over 3k this spring.
I sent in an appeal via a Spanish lawyer but it was rejected.
He rang them and they agreed a new appeal but it can take up to a year to be decided, all the time interest is accruing.......I also declared the real price as I didn't want to get involved in Black Money.
I was told that they are sending thousands of these out every week to try to get more revenue in.

[Beachcomber]

With a straight forward purchase a good guideline is to apply the municipal multiplier to the valor catastral. If you do not declare below this value you have a good case for appealing any supplementary taxes.

[Bongtrees]

I had to pay a good deal of black money to buy my house and if I want to get the same sort of money back when I sell my house, I will have to do the same sort of deal,overwise the authorities will want to know why there is such a discrepency in the two monies.

Hacienda have always chased under declarations, it´s nothing new. Therefore if you have not been chased for more taxes you might consider that you were either lucky or that your property was grossly overpriced. I have seen this many times with Brits who have purchased rustic or village properties.

One day you might want/need to sell so would be a good idea to know what the current value is. Hopefully you have the agents invoice including IVA to set against any profit and any legitimate allowable improvements again supported by IVA (VAT) invoices and any thing else anyone can think of.

You could follow Beachys advice re a valuation as a starting point.

Just a thought

[DavidSearl]

FROM DAVID SEARL

FOR BONGTREES, BEACHCOMBER ET AL

HOW TO KNOW WHAT THE TAX AGENCY WILL ACCEPT

Quite right, Beachcomber. "Apply the municipal multiplier". Each municipality has a multiplying factor which is applied to the "Valor Catastral" that appears on your annual IBI receipt. Where I live, in Mijas, this factor at this time is 2.5. You take the valor catastral and multiply it by 2.5. This is the minimum amount you can declare your sale for tax. If you declare less, the Tax Agency will make a "complementario" declaration and charge you more tax.

These multipliers vary from municipality to municipality. Generally they are in the range of 2 to 2.5. Find your own by asking.

Each office of the Tax Agency (Hacienda) has an "Oficina Liquidadora" in charge of setting tax values. If you must have official proof, in Andalusia, you must go to the central "Oficina Coordinadora" of the Junta in Malaga city and request in writing a Certificado de Liquidacion which will state the lowest acceptable value. In today's depressed property market, this value may well be higher than the actual sales price.

GOOD LUCK WITH IT, DAVID SEARL

[El Cid]

These multipliers vary from municipality to municipality. Generally they are in the range of 2 to 2.5. Find your own by asking.

You can check out the value online

http://www.juntadeandalucia.es/economia ... Urbana.jsp

If you want a list of the coefficients you can find it here

http://www.juntadeandalucia.es/economia ... -12-07.pdf

Sid

[Goatherd]

AN UPDATE...........

Hi All...... Hoping this may help someone.....

Having tried all avenues against this iniquitous tax....... I have discovered this.......

My solicitor/abogado De Cotta McKenna in Nerja, SHOULD have informed me that there was a PLUSVALI tax to pay of 4,800 Euros BEFORE exchange of contracts AND that this is normally paid by the VENDOR!
Only paid by the purchaser on agreement in the contract.
The abaogado can, and should get this information before exchange of contracts, it is available to them.
Strange why Mr DS didn't mention this point..........

My contract states that all taxes will be paid by the vendor!

Therefore these abogados were NOT using due diligence and I am making a claim against them plus reporting them to the bar association here as recommended by Giles Paxman HM Ambassador!

I could not understand why other abogados at first showed interested in helping then just disappeared...... Now I know why......
They are probably as guilty as De Cotta McKenna and did not want to open a can of worms for themselves....

To get this information has taken a considerable time and I have had help eventually from MEP Sir Graham Watson and who in turn enlisted the help of HM Ambassador Giles Paxman.
I am very thankful to them for their assistance.

Hope this information helps someone.

[El Cid]

My solicitor/abogado De Cotta McKenna in Nerja, SHOULD have informed me that there was a PLUSVALI tax to pay of 4,800 Euros BEFORE exchange of contracts AND that this is normally paid by the VENDOR!
Only paid by the purchaser on agreement in the contract.

Your demand is not for plus valia tax - it is something entirely different. It is the normal transfer tax payable on a property sale and it is always paid by the buyer. Because they say that the property was worth more than you declared then they want the transfer tax on the balance.

Your lawyers would not have known about this before the sale.

Sid

[Beachcomber]

Plus-valía is certainly payable by the seller unless agreed otherwise. However, if the the seller is a foreigner who sells up and leaves Spain taking all of his assets with him, failing to pay the plus-valía, the debt reverts to the property and has to be settled by the purchaser. In order to avoid this situation with a foreign seller it is normal to obtain an estimate of the amount of plus-valía and withhold it from the seller. This tax is paid subsequent to the transaction not prior to it with a bill being sent by the town hall or the patronato.

As far as transfer tax is concerned, the online version of the form 600 generates a dire warning when it detects that the amount being declared is less that the result of applying the municipal multiplier to the valor catastral. I don't think this facility was available at the time of the OP's transaction but it would certainly have been possible to work out the calculation manually.

[peteroldracer]

I am reforming this cortijo myself as I cannot afford to pay anyone so it will take probably 2 years for me.

Not wishing to add to your problems, but have you carefully read your Licencia de Obras - the permit to reform the house - for the date you must have finished everything?
Our licence was valid for 3 years, but I understand this can vary.