Selling property as a distressed asset
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4. Selling the property as a distressed asset. If you have already run through the numbers and you are convinced that you will no longer be able to service your mortgage, rather than defaulting and being repossessed, you should very seriously consider selling the property as a distressed asset. The catch again is that the property should not be in negative equity. The more it is the least likelihood there will be anyone interested in it as they in turn are regarding the purchase as an investment and the numbers need to stack up to make it worthwhile for them.
How does this work in terms of capital gains tax and plus valia tax? I've been offered a price for my property which will cover the mortgage but I've been told that I need to pay CGT on the Catastral Value which is nearly 400,000 higher than the price I can achieve for the property.
I have my property on the market at 500,000 (the mortgage is 275,000), but from what I can see, I will have to pay around 35,000 plus valia and 170,000 capital gains tax, so by the time I pay that plus the estate agent, notary, lawyer and the fee for paying off the mortgage, I could be left with a bill.
I've been offered 450,000 but I can't cover the costs with that. So I don't understand how I could sell it as a distressed asset.
There is 225,000 equity in the property but this is all going to be wiped out with the cost of selling!!!
If I arrange a Dacion en pago, what happens about the taxes?