3% retention tax

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Miro
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Re: 3% retention tax

Postby Miro » Tue Aug 22, 2017 4:14 pm

El Cid wrote:The real problem lies with the estate agents and lawyers. The official valuations of property in Spain is well documented...
Clearly any lawyer or estate agent is equally aware of this and should advise their clients that there is a potential liability for an under declaration claim from Hacienda after the sale...

It really should not come as a surprise to anyone, buyer or seller, after the sale. It should have been called out prior to the sale by the lawyer or estate agent.

Sid


I can't say I disagree with this, but you did also say yourself that the problem arises due to "their (the tax office's) archaic valuation" methods. In the case of someone selling, they may not even use a lawyer or estate agent. Even if they do, and even if the lawyer / agent points out the possibility of a subsequent tax claim, if someone genuinely sells at a loss due to market conditions, what else can they do? When you say "it's up to you to provide evidence to the contrary", what evidence other than the escritura (signed in the presence of a public notary) and bank statements etc. can you produce? This info is all readily available already to the tax office anyway. As elusive says, how do you prove a negative?
As Gerry shows with his example, the "official" valuation method can be way off the mark. Surely that's where the real problem lies?

But Gerry, assuming you actually paid more than €8,120, I don't think you need worry; surely the tax office is unlikely to believe you deliberately over declared your purchase price, so any CGT would be based on the difference between your declared sale price of around €120,000 and whatever you declared as your purchase price.

Wicksey wrote:So the CGT rate is almost 39%, based on the alleged gain of 46.000€ (17.900€ as a % of 196.000 - 150.000€)??.. It all seems a bit odd to me!


Yes, I agree, something doesn't seem to quite add up there! Unless Daveylad under-declared when he purchased?
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El Cid
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Re: 3% retention tax

Postby El Cid » Tue Aug 22, 2017 4:38 pm

Mine is valued at 15% of its actual value. Of course, being over 65 I have no CGT liability.

Sid

DAVEYLAD
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Re: 3% retention tax

Postby DAVEYLAD » Tue Aug 22, 2017 5:56 pm

The Catastral value is 128,000 Euro for Malaga.
Two other apartments in the same block sold for the same price.If this is the market price how can anyone say well you should have got 196,000 now pay up.I have no other property in Spain.So would they Persue me in my home country if I Was to let them sing for it.

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gerryh
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Re: 3% retention tax

Postby gerryh » Wed Aug 23, 2017 7:45 am

El Cid wrote:Mine is valued at 15% of its actual value. Of course, being over 65 I have no CGT liability.

Sid

When I told my wife about the possibility of a high tax bill if we sold she become very concerned, worried and stressed.
The house ids owned jointly between us, we are both over 65.
Are you saying that because of this there won't be any CGT to pay on the alleged profit?
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Re: 3% retention tax

Postby El Cid » Wed Aug 23, 2017 7:55 am

If you are over 65 no CGT is payable on the sale of your home and there are no conditions attached (such as having to reinvest the money in another home).

The buyer will not have a problem as the sale price would be higher than the valuation.

Sid

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gerryh
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Re: 3% retention tax

Postby gerryh » Wed Aug 23, 2017 7:59 am

Thanks SId
You have made my wife very happy. :thumbup: :thumbup: :thumbup:
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Gerry
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Re: 3% retention tax

Postby AkoAko » Wed Aug 23, 2017 8:30 am

Think it worth mentioning they the exemption for CGT is for residence only provided its their main home and they have lived there for 3 years or more .

I do recall reading many years ago that it was either the retention which at the time was 2.5% was due to so much being lost by sellers returning to their country of origin without paying the CGT due . The theory was that if they take a small percentage of everyone and made it difficult to recover then it would cover the loses from those that dont pay the full amount due . If it wasn't the retention then it would have been the Non Resident Property Tax to cover unpaid tax on the ones rented out .

Was so long ago it could have been either but i remember thinking at the time what a clever and simple solution it was .

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Re: 3% retention tax

Postby Miro » Wed Aug 23, 2017 8:34 am

Clever & simple - or lazy & immoral (and probably illegal)? Screw the good guys, because we can't be bothered to go after the bad guys.
Don't worry about what people think, they don't do it very often

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Re: 3% retention tax

Postby gerryh » Wed Aug 23, 2017 12:01 pm

El Cid wrote:If you are over 65 no CGT is payable on the sale of your home and there are no conditions attached (such as having to reinvest the money in another home).

Sid

I'm sure you are correct.
Do you have a link to this rule?
I would like to give the link to a friend to give it to their lawyer who doesn't seem to be aware of the rule.
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Gerry
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Re: 3% retention tax

Postby El Cid » Wed Aug 23, 2017 12:08 pm

Try this

http://www.abacoadvisers.com/spain-expl ... x-in-spain

Just Google Spain CGT and you will find loads.

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gerryh
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Re: 3% retention tax

Postby gerryh » Wed Aug 23, 2017 12:56 pm

Thanks Sid.
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Gerry
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Re: 3% retention tax

Postby elusive » Wed Aug 23, 2017 2:48 pm

Does the 65 age rule only come into effect if its your main residence and has been lived in for three years? or does it over rule everything else regardless

El Cid
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Re: 3% retention tax

Postby El Cid » Wed Aug 23, 2017 3:50 pm

I thought the links I posted made that quite clear.

Sid

Miro
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Re: 3% retention tax

Postby Miro » Thu Aug 24, 2017 10:29 am

DAVEYLAD wrote:The Catastral value is 128,000 Euro for Malaga.


Don't know if this is the same link posted earlier (by Sid) http://www.juntadeandalucia.es/economia ... Urbana.jsp
Using this calculator and your figure of €128,000 the minimum declared value should have been €180,480 - so there may be some mileage in pursuing a revaluation. (It's still not right, but what can you do? Banana Republic springs to mind)
But as noted before, the figure of what they've requested doesn't stack up anyway - unless you massively under-declared when you bought. Based on a (declared) purchase price of €150k and a sale valuation of c€180k, your CGT bill should only be around €5,850 in total.
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

El Cid
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Re: 3% retention tax

Postby El Cid » Thu Aug 24, 2017 10:51 am

Yes, it's the same, but for some reason it didn't work for Gerry so I found one that just give the coefficients and posted that.

Sid

Miro
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Re: 3% retention tax

Postby Miro » Thu Aug 24, 2017 11:24 am

Didn't work for me either :wink:
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

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Re: 3% retention tax

Postby DAVEYLAD » Fri Sep 08, 2017 5:59 pm

You think many of these tinpot unqualified lets set up an estate agent in spain and cash in brits/expats even have a clue about such a law.

I fail to see how you are supposed to prove you didnt take black money. They are the ones making the allegation so should have to provide the evidence. You cant prove a negative. . Only a un democratic junta could/would act in such a way. Fail to see how the euro courts would allow them to get away with it.

As above. If you have no other dealings in spain let them sing for it

No other dealings in Spain,so would the spainish tax office persue me in my home country?

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Re: 3% retention tax

Postby El Cid » Fri Sep 08, 2017 7:11 pm

It is perfectly possible for the Spanish tax authorities to chase debts in the UK with the complete cooperation of HMRC under the recent agreements between many countries.

In Spain, it is normal for the “offender” to have to prove that they did not get involved in an illegal transaction. It’s the same with tax residency, if they think you have overstayed the 183 days it’s up to you to prove it. This approach has been upheld in the ECJ and ECHR so it is unlikely that they would have any problem doing so.

Sid

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Re: 3% retention tax

Postby susanspain » Wed Sep 20, 2017 6:45 pm

DAVEYLAD wrote:I bought for 150,000 so sold on at a loss.The procedure now is for me to get a Private valuation done.Then the tax office get an independant valuer to value the apartment.ALL at my expense.Then hopefully the true value will be seen.I am in shock after years of paying what was due and doing everything by the book.



Sadly Daveylad this is all too common of the system here. I believe you totally, that you sold for a loss. We have a very good tax consultant and I am sure she would fight your case for you, but the legal and other fees you mention might make it prohibitive.
And people wonder why some of us want to shut up shop and go!
(I have not come across so much corruption, ignorance of 'morals and common sense' in my life as here!) NB We have always tried to do things the 'right way' but have come a cropper in our time. Makes me sad :x

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Re: 3% retention tax

Postby gus-lopez » Fri Sep 29, 2017 7:08 pm

Wicksey wrote:So the CGT rate is almost 39%, based on the alleged gain of 46.000€ (17.900€ as a % of 196.000 - 150.000€)?? I would be interested to know if the buyer has had an additional purchase tax bill for the difference between the 130k he paid and the alleged selling price of 196k. It all seems a bit odd to me!

it is 35% , same as 'gift tax' rate , giving money to family etc; which comes under same act
Todos somos Lorca.


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