house selling, tax and readies under the table...

[karandjon]

I know where you´re coming from Retro, but it is still going on daily. I agree as a buyer I would have thought it best not to want to under declare but from past experience and from others, they do!! I can understand the sellers wanting to under declare though!

[lola2]

I have heard of cases where the Hacienda has decided the house was under declared and, guess what, the new buyer cops for it. Be careful they are onto this now. We have never done the black money thing because its when you sell that the it can come back to bite you.

[JAR1972]

I'm with Retro P and lola2 on this one. They are getting wise to this and you'll just end up paying tax on a massive capital gain in the future.

As for "when in Rome" etc, I bought a house in Jerez in August last year. All above board, no black money, no worries.

[j4mes]

whats surprising is that considering everyone knows that a fair number of people leaving the notary's office each day would be carrying tens of thousands of euros, there aren't more people who aren't mugged for thier black money!

[lola2]

Several have been in Sabinillas.

[barryjohn]

Just ask yourself what you are going to do with this cash, you cannot put it into a bank as even in Gibraltar you need a paper trail. You can find yourself in serious trouble unless you plan to keep it under the bed!

This is just my point, I'm personally not moralising about black money (and I totally agree that when in Rome etc...) but practically what on earth can one do with...for example...50,000 euro cash, which is what I was offered?? I suppose it's OK if you remain in Spain if you want to buy another place because you can use it in the negotiation. But you couldn't put it off a UK property, which is one of the reasons I pulled out. Neither could I deposit it in a Spanish or British bank without risk of investigation so, as other posters have suggested, I would have to keep it under the mattress and spend the euros gradually in UK shops, resturants, petrol etc, and make sure I don't keep visiting the same Bureau De Change too much in case they think it's dodgy money...

[barryjohn]

Black money is still very much a way of Life on the Costa de la luz ... kid yourself not ....

My main point is practical Martin - how do you benefit from the black money, i.e. spend it. For example, can one deposit a large amount in a Spanish bank without paying the tax you were trying to avoid? Or does it all have to be stashed under the matress and spent little by little? By the way, I'm not British actually, I'm Irish.

[katy]

Any deposit of over 6000E in a spanish bank and a form has to be filled in to the bank of Spain. I know a couple who stupidly accepted a large sum of money (against the advice of their Lawyer!) and they came unstuck...long story, perhaps for a rainy day

[karandjon]

..but practically what on earth can one do with...for example...50,000 euro cash, which is what I was offered??

...Is it just me, or can other people think of 101 things they could do with €50,000 cash?

[Julie]

In our neck of the woods, were there still are not many Brits, black money is a everyday thing, the spanish would likely pull out of a sale, if the buyer didn't allow at least a portion in black

[petert74]

Does the Black Money scenario only work if CASH is available.

If the property is being financed by a 100% mortgage and the transaction involves the bank managers money, can a black money transaction take place???

[BENIDORM]

I recently purchased a Spanish property, and was 'advised' on the day of signing at the Notary, that the seller required 30,000 euros in cash, and the paper work had been 'drawn up' showing the lesser purchase price...

Well ..I don't 'suffer fools', and very quickly told them where they could stick their house, I then marched out of the office, returning 2 minutes later to collect my rather bemused Wife..

I was hotly pursued by a posse of smarmy solicitors and agents etc, and after they had bought us several quality brandies , we finally agreed to pay them 10,000 in cash , but only after a receipt was issued for the large amount of furnishings originally included in the sale.

I was amazed at the fact that the Notary appeared to be 'in' on this shady deal...
I had refused to pay a deposit to 'hold' the property, so I had remained in the 'driving seat', and I would add , that I have been involved with numerous Spanish property acquisitions, and have never paid a deposit yet.
In my opinion it is better to totally refuse to pay 'lumps of cash', there are , at present , plenty of other properties out there...

So there..

[ICCSL]

It is a matter of personal choice as to whether someone wants to break the law or not. In Spain 47% of the economy is black and the government is trying to reduce this percentage with new laws and rules related to bank transactions, purchase contracts, title deeds etc.

A banker's draft has always been required for a house purchase made out to the amount declared in the title deeds. This is the declared amount and should naturally be the amount that you pay for the house. However, it rarely is. If a deposit has been paid (up to 10,000 euros) this can be deducted from the banker's draft.

The undeclared part of the money is paid in cash just before the title deeds are signed and usually takes place in the notary's office without the notary seeing it. Normally the lawyer has called the notary before the signing to ask what must be the minimum price declared in the title deeds to avoid the tax office stating that the property has been under declared. We sold a house a few months back which was on the market for 60,000 euros, was sold for 52,000 euros after the purchasers made an offer, which was accepted by the owner, the 52,000 euros was all declared and the tax office still want another 1,400 euros in tax because they have said the house is worth more than it was sold for, which came as an incredible surprise to everyone concerned. The bank, within 3 months of the sale valued the house at 130,000 euros for mortgage purposes!!!!

If the purchase price is under declared it does benefit both seller and buyer because the seller pays less tax and the purchaser pays less transfer tax. However, there are now lots of ways to be found out that never existed before. If you draw more than 10,000 (and in some banks it is 4,000) euros out of the bank in cash in one day, the bank has an obligation to inform the tax office. The notary now has to send a copy of every title deed he oversees to the tax office together with the private purchase contract. In this way the private purchase contract obviously has to contain the same amount to be paid that appears in the title deeds. Also it lets the tax man know whether there is an intermediary involved i.e. estate agent. A lot of cowboys will be lost from this business with the new rules which can only be a benefit. What the tax office is trying to do is get in all of the tax that should be paid including tax that should be paid by agents if they receive commission.

Some friends of mine recently had a choice whether to under declare or not and asked my advice. They had found a house that ticked all their boxes but the owner had asked for a percentage in black money. My friends had spent two years searching for their ideal home and having found it didn't want to lose it. Hence because there was no way the owner was going to sell the house without receiving black money and my friends didn't want to break the law, they agreed to pay half the owners tax. This is a compromise that can be reached. We often get both Spaniards and Brits telling us that they want X amount of money net for their houses. We then have to add our commission and the taxes to that figure.

A lot of people do not appreciate that Spaniards often own more than one house - my partner owns seven. If my partner wanted a new tractor or whatever he would put all of the houses up for sale until one sold. He would then take the other six off the market. Hence when people ask questions like "how long has the house been on the market?" or decide that they want to purchase on their own terms it doesn't really have any relevance because if a Spanish owner does not need to sell he can wait around until someone comes along who will buy on his terms. And Spaniards are used to waiting a very long time for almost anything!

Tina