Purchase tax 8% or is it actually more ?

Information and questions about the Law in Spain and Andalucia.
User avatar
flan_taster
Resident
Posts: 721
Joined: Fri Jun 02, 2006 3:47 pm
Location: Cadiz

Purchase tax 8% or is it actually more ?

Postby flan_taster » Sun Apr 26, 2015 10:31 am

I hope this has not been covered before. There is an 8% tax paid on purchase of a property. Then later on you get a further tax demand because the property you bought from the Bank who had to repossess it sold it at less than some notional value calculated by the local authorities. So now instead of being an 8% tax it is more like 12.5%.

My question is this. According to my Gestor he reckons that this additional tax is unjustified. And he will take the matter up with whoever preumably the Tax office. If he is successful in reducing the amount payable he wants to share the saving which am comfortable with.

I am wondering if in fact anybody has successfully challenged this additional Tax and won ? If the Bank had it on its books unsold for 2 years how is it that some Tax authority says it is worth much more ?

User avatar
flan_taster
Resident
Posts: 721
Joined: Fri Jun 02, 2006 3:47 pm
Location: Cadiz

Re: Purchase tax 8% or is it actually more ?

Postby flan_taster » Sun Apr 26, 2015 10:36 am

As a follow up, I notice that on the UK in Spain How to Buy a property etc one para on Purchaser's checklist states this:
QUOTE
You know the cadastral value of the property and how much purchase tax will be due. Be aware that tax is charged on the council’s valuation of the property as opposed to the amount of the sale. You can check this at the regional government’s online tax agency site using the cadastal reference number
UNQUOTE
It seems my Gestor does not agree with paying Tax if it is unwarranted !

Beachcomber
Andalucia Guru
Posts: 11081
Joined: Tue Jun 15, 2004 11:11 pm
Location: Guadalhorce Valley

Re: Purchase tax 8% or is it actually more ?

Postby Beachcomber » Sun Apr 26, 2015 11:00 am

The tax is 8% up to €400.000, 9% for the next €300.000 and 10% thereafter.

The tax is calculated on the valor catastral multiplied by the municipal coefficient and, as you say, you will be charged a supplementary tax on the amount undeclared.

You can challenge this but it will, in the first instance, be routinely rejected by AEAT. You then have to contract a property assessor to provide a valuation of the property and proceed from there through the courts with a claim for a reduction in the taxable value and a refund of some of the tax paid.

This will be a lengthy and expensive procedure and you have to decide whether, in the long run, it is worth it.

The gestor says he will carry out the procedure for a share in the saving but does this mean that the expenses involved will be deducted prior to calculating his share or will you be expected to pay them out of your own pocket?
Let's go Brandon!

User avatar
flan_taster
Resident
Posts: 721
Joined: Fri Jun 02, 2006 3:47 pm
Location: Cadiz

Re: Purchase tax 8% or is it actually more ?

Postby flan_taster » Sun Apr 26, 2015 11:56 am

Thanks for that.
I am going to check with the Gestor what are the total fees to be expected and what to expect if he is unsuccessful. Am certainly not prepared to pay more than the actual Tax due ! But if he is willing to process the challenge and thinks he can win then perhaps he knows something.
Am still wondering if there have been any successful challenges. By implication you seem to suggest that there can be providing you are patient.

katy
Andalucia Guru
Posts: 13752
Joined: Thu Jun 24, 2004 3:45 pm

Re: Purchase tax 8% or is it actually more ?

Postby katy » Sun Apr 26, 2015 12:36 pm

So is it on a no win no fee basis?

Our lawyer said it is rare for anyone to win even though he would have earned a hefty fee. Unless things have changed you still have to pay the money owed upfront before the appeal is considered. Property assessers aren't cheap and he will probably be on the side of the authorities.

Beachcomber
Andalucia Guru
Posts: 11081
Joined: Tue Jun 15, 2004 11:11 pm
Location: Guadalhorce Valley

Re: Purchase tax 8% or is it actually more ?

Postby Beachcomber » Sun Apr 26, 2015 12:44 pm

Apparently there have been successful appeals but then AEAT has come along and recalculated the taxes subsequently then you have to appeal all over again.

I am reluctant to give links to third party sites especially those of Spanish lawyers but just have a read through this as a guide:

http://www.abacotaxes.com/articles/gene ... x-in-spain

Bear in mind the caveat that they are Spanish lawyers (with all its implications) and they are obviously touting for business.
Let's go Brandon!

User avatar
flan_taster
Resident
Posts: 721
Joined: Fri Jun 02, 2006 3:47 pm
Location: Cadiz

Re: Purchase tax 8% or is it actually more ?

Postby flan_taster » Sun Apr 26, 2015 1:54 pm

Katy: Yes I had understood it to be No Win No Fee. The Gestor seems happy on this basis.But am checking again.
Beach: Oh dear. So you can win a lower Tax amount and think it's all over then some time later it is rescinded. How pathetic. Thanks for the link and will find more to think about.

Miro
Andalucia Guru
Posts: 3584
Joined: Tue Feb 27, 2007 8:20 pm
Location: Merseyside, formally Torremolinos

Re: Purchase tax 8% or is it actually more ?

Postby Miro » Mon Apr 27, 2015 3:04 pm

Beachcomber wrote: The tax is calculated on the valor catastral multiplied by the municipal coefficient and, as you say, you will be charged a supplementary tax on the amount undeclared.
Surely the tax has always been payable on the actual sale price - unless the declared price is less than the calculation you mention?
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.

Beachcomber
Andalucia Guru
Posts: 11081
Joined: Tue Jun 15, 2004 11:11 pm
Location: Guadalhorce Valley

Re: Purchase tax 8% or is it actually more ?

Postby Beachcomber » Mon Apr 27, 2015 4:01 pm

Yes, I suppose I should have said the minimum amount of tax payable but the discussion was about the situation where the value of the property is claimed to have been underdeclared.
Let's go Brandon!

Miro
Andalucia Guru
Posts: 3584
Joined: Tue Feb 27, 2007 8:20 pm
Location: Merseyside, formally Torremolinos

Re: Purchase tax 8% or is it actually more ?

Postby Miro » Mon Apr 27, 2015 4:11 pm

Understood. Didn't mean to be pedantic, I just wondered if perhaps something had changed.
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.

User avatar
flan_taster
Resident
Posts: 721
Joined: Fri Jun 02, 2006 3:47 pm
Location: Cadiz

Re: Purchase tax 8% or is it actually more ?

Postby flan_taster » Mon Apr 27, 2015 5:14 pm

I have heard tales of locals underdeclaring when selling if the other party is happy which apperently is or was common in Andalucia. But when a bank sells its own repossessed property then surely the Tax man is going to think that the sale price is exactly what the bank agreed and got.
No funny business.
Or am I missing a point?

Miro
Andalucia Guru
Posts: 3584
Joined: Tue Feb 27, 2007 8:20 pm
Location: Merseyside, formally Torremolinos

Re: Purchase tax 8% or is it actually more ?

Postby Miro » Mon Apr 27, 2015 5:22 pm

Don't think you're missing the point, it's just that even if a bank sells a property for less than Hacienda's calculation, they will charge tax to the buyer based on the higher figure. I was just checking that it doesn't work the other way round, i.e. if the sale price is higher than Hacienda's valuation, which even in today's market is still highly likely, they will still charge tax on the declared sale price.
Personally, I think they should have always used the catastral value for tax purposes, as they do with plus valia, because whether or not the valuation makes any sense, at least it's documented and transparent, and using this figure would have eliminated any point in under-declaring and avoided the whole black economy mess.
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.

catriona1
Newbie
Posts: 3
Joined: Sat Jul 21, 2012 1:28 pm

Re: Purchase tax 8% or is it actually more ?

Postby catriona1 » Thu Aug 20, 2015 11:20 am

Hi
I am interested in a property in the region of Murcia, I have the valor catastral could anyone give me a link to a site to find the municipal coefficient for the region in order to work out the actual purchase tax payable. Thank you

KarenD
Andalucia.com Amigo
Posts: 126
Joined: Fri Jan 23, 2009 2:00 pm

Re: Purchase tax 8% or is it actually more ?

Postby KarenD » Thu Aug 20, 2015 1:07 pm

We've just bought an apartment in Jimena de la Frontera. It's on the top floor of a house which was demolished and rebuilt in 2001. Our lawyer told us the purchase tax was 8% and we transferred the money to him together with notary fees etc a few days before completion. On the morning we were due to sign at the notary's office the lawyer rang us to say he had just found out that as the owner of the property (a company) was the developer and we were the first purchaser (the apartments had been rented out) then we would have to pay 12% tax instead of the usual 8%! When we got to the notary's office the lawyer went in to discuss it with the notary and he confirmed that was the case. We still went ahead and completed the purchase but it was a nasty surprise!!


Who is online

Users browsing this forum: No registered users and 20 guests