House Sale

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Lyric
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House Sale

Postby Lyric » Sat Mar 06, 2021 12:32 am

Hypothetically if a friend was selling his primary (only) dwelling and had received an offer strangely phrased would it be legal ?
The offer is a sum low but not enough to arouse suspicion let's say 70,000 below asking and a further cash payment of 50,000 direct between vendor and purchaser bank to bank not involving the agent or the lawyers.
I don't know, to me, in effect it's black and would be frowned on if discovered.

What does the team think ?

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Re: House Sale

Postby Beachcomber » Sat Mar 06, 2021 7:06 am

This was common practice in the past but it is now strictly controlled. Payment into the bank would have to be justified with relevant paperwork of which there would be none.

Even in the past transactions of this kind could only be made in cash and if he were paid in cash it would have to be kept under the bed. It could not be paid into the bank or taken out of the country.

This should not be contemplated under any circumstances. It wouldn't be just frowned upon. It could result in a prison sentence and forfeiture of the funds.

In fact, do not even discuss it especially by email, telephone or social media.

Lyric
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Re: House Sale

Postby Lyric » Sat Mar 06, 2021 9:21 am

That is as I thought, as I understand it the payment would be between Norway and the UK with no Spanish involvement does that make a difference ? only if caught I suppose.

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costakid
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Re: House Sale

Postby costakid » Sat Mar 06, 2021 9:58 am

If he banks it in any country it will raise eyebrows. Kept in cash and spent on living etc he would probably get away with it.

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Re: House Sale

Postby Beachcomber » Sat Mar 06, 2021 10:01 am

I am sure that the provenance of the funds would have to be justified to the receiving bank. Gone are the days when you could just deposit a large amount of money with no explanation.

elusive
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Re: House Sale

Postby elusive » Sat Mar 06, 2021 10:03 am

Sounds like how my wages were paid. Not quite the same amount though!! Half in the bank half cash in hand by businesses and their dodgy contracts. Agree with the aboves. Any large amount of cash going into a bank is prob gonna have questions asked
Last edited by elusive on Sat Mar 06, 2021 10:06 am, edited 1 time in total.

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fincalospinos
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Re: House Sale

Postby fincalospinos » Sat Mar 06, 2021 10:04 am

Another thing to consider is that if the Hacienda consider the sale price of the property to be undervalued, the new owner may be subject to extra taxes in the future.
Hardworking resident !!

Lyric
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Re: House Sale

Postby Lyric » Sat Mar 06, 2021 10:09 am

Just been chatting with the vendor and it seems the offer is not enough anyway, won't happen.

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Re: House Sale

Postby Paddy Pumpkin » Sat Mar 06, 2021 10:33 am

Even if they up the offer, don't do it.

As others have said the bank can freeze the account and ask for documents. You can supply documents that can show that the money is legitimate and then they unfreeze the account.

It is not for a UK bank to know or decide upon Spanish tax matters they will just make sure that the money is legitimate. This type of payment happens a lot in Greece to legally avoid capital controls on house sales.

So far so good but the bank may, unbeknown to the receiver, make a 'suspicious activity report' (SAR) to the authorities. The payment can go through and everyone forgets about it

Life can can go on as normal until there is a knock on the door one day and they have to explain where the money came from. Basically an SAR opens the matter up to the possibility of an investigation by anyone who might be interested and is not limited to one country. Basic example...UK bank files SAR. UK authorities look and see account owner is Spanish resident then send the information to Spanish tax man.

The only way to not be subject to an SAR is a cash payment. However this can still be illegal but just harder to trace.

katy
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Re: House Sale

Postby katy » Sat Mar 06, 2021 2:07 pm

If you pay more than around five or 6 thousand into a Spanish bank you will have to fill in a form for the Bank of Spain detailing the origin. I think I posted on here the problem when I sold my car for cash. Even 2 banks in Gibraltar declined it and my Spanish bank where we had 2 accounts.

There is another thought, could it be a scam? A friend advertised their Spanish house on a property portal and they had a few attempted scams and one was very similar. Take care.

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Re: House Sale

Postby katy » Sat Mar 06, 2021 2:09 pm

Just remembered re. bypassing the agent. A friend did that, a few months later the Agent sued for loss of commission and won, he had to pay thousands plus court costs.

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Re: House Sale

Postby Paddy Pumpkin » Sat Mar 06, 2021 4:47 pm

Paddy Pumpkin wrote: Sat Mar 06, 2021 10:33 am Even if they up the offer, don't do it.

As others have said the bank can freeze the account and ask for documents. You can supply documents that can show that the money is legitimate and then they unfreeze the account.

It is not for a UK bank to know or decide upon Spanish tax matters they will just make sure that the money is legitimate. This type of payment happens a lot in Greece to legally avoid capital controls on house sales.

So far so good but the bank may, unbeknown to the receiver, make a 'suspicious activity report' (SAR) to the authorities. The payment can go through and everyone forgets about it

Life can can go on as normal until there is a knock on the door one day and they have to explain where the money came from. Basically an SAR opens the matter up to the possibility of an investigation by anyone who might be interested and is not limited to one country. Basic example...UK bank files SAR. UK authorities look and see account owner is Spanish resident then send the information to Spanish tax man.

The only way to not be subject to an SAR is a cash payment. However this can still be illegal but just harder to trace.
Actually I just thought about this properly....the actual cash payment is completely legal. As this is a transaction between two private individuals there is no limit on the size of a cash payment in Spain.

The other question of taxes is a totally separate issue as to what taxes are applicable on the underlying transaction but the actual act of receiving or paying the cash is not illegal.

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Re: House Sale

Postby katy » Sat Mar 06, 2021 11:45 pm

There is an article from Spanish Property insight. Beware buyers who flash the cash.

Lyric
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Re: House Sale

Postby Lyric » Sun Mar 07, 2021 12:01 am

We had a chat over a virtual beer earlier and the buyer's offer is being flatly refused.

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costakid
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Re: House Sale

Postby costakid » Sun Mar 07, 2021 8:27 am

I got stopped at Luton airport a few years ago with £5000 in cash on me. It caused a bit of a stir until i proved via bank app and paperwork where i was going and what I was carrying cash for. No problem sir, carry on with your journey. I then asked border force what amount you can legally carry over a border and the answer was there is no limit, you can take as much as you like but if stopped and you cant prove/explain where it came from we will confiscate it.

In the UK if the police stop you with any amount of cash and they think you are up to no good they can confiscate the cash under money laundering laws. It used to be any amount under a £1000 and you were safe but not anymore.

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Re: House Sale

Postby Pamela1 » Sun Mar 07, 2021 9:47 am

Interesting post costakid, I never realised they could confiscate your cash.We always put cash into our account in Spain and thought as long as it was within the limit it was ok, i never knew you could be stopped and asked to prove where it came from..No problem though that can be easily proved.

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Re: House Sale

Postby Paddy Pumpkin » Sun Mar 07, 2021 10:57 am

There are two sets of laws at play there.

One is leaving the other country. In the UK there are no currency controls going to the EU so you can leave the country with 10 million in cash if you want to. There is no form or declaration that you must fill in. There is no legal obligation to declare it. You are not committing any crime by walking through the airport and not telling anybody you have this money.

However there are proceeds of crime acts that basically say all items of value are presumed to have been acquired illegally unless you can prove that they are not ill-gotten gains. You can be stopped walking down the street or anywhere, it doesn't need to be the border. However the border is an obvious choke point to catch people.

Second part is entering Spain. There is a limit of 10,000 importing to Spain. Actually you can bring more but you have to declare it, nothing more though just declare it. There is also a second part in Spain which is that if you want to walk down the street in Spain with 100k you have to declare it. So if you for whatever reason you want to move more than 100k cash in Spain you have to declare it.

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Re: House Sale

Postby Beachcomber » Sun Mar 07, 2021 11:10 am


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Re: House Sale

Postby Paddy Pumpkin » Sun Mar 07, 2021 11:48 am

You are correct I keep forgetting about Brexit. Since the UK is not part of the EU of course the 10k limit now applies to all countries. However strangely the gov.uk page still states the old rules but then says the page is not valid because if Brexit. You would think that they knew Brexit was coming and had some time to update the page.

So you are limited to 10k coming through the border of the UK no matter where you are going. Thanks Brexit

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Re: House Sale

Postby katy » Sun Mar 07, 2021 11:56 am

Interesting Beachcomber, I didn’t know it included cheques. When we left Spain we had 3 bankers drafts from sale of house. We deposited 2 in our UK bank and 1 in another country. So technically we broke the law.

One time we were at the boarding gate for flight when a handler came through with a sniffer dog. It approached and sniffed everyone. Was talking to the handler and he said the dog had just completed training. Solely trained to sniff out large sums of cash.

On the whole I agree with it though with the large amount moved by drug dealers etc.


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