Taxes when Selling Spanish Property

[meg]

Hi we bought an apartment in Marbella 5 years ago and sold it in June 2010 for a huge loss due to the economic climate in Spain. At the point of sale our Lawyer said we would have to pay 3% CGT but not to worry as we would be reimbursed with the full amount within 2-3 months. After the sale he changed this period of waiting for reimbursment to up to one year. Here we are 18 months later still waiting! It really sticks in the throat that we had to pay this 3% as it was stressful enough having to sell because of health reasons for a 100,000 euros loss on what we paid for the property. We were also shocked at all the extra taxes etc that were deducted but had not been made aware of. We have not seen receipts for anything that has been paid from our funds that the Lawyer was holding despite requesting them and the Plusvalia tax actually doubled from the initial figure to over 2000 euros. We were told this is because we had to also pay this tax for when we purchased our property. This tax was never mentioned to us before now but from research on the internet we now know that it is the Vendor who pays this so why are we being hit with both! Our Lawyer fobs us off when we query anything and to be honest we have lost all trust in him. We really feel something is not quite right with him. Is there anyone we can complain to such as an Ombudsman like we have in the UK?
Thank you and regards Meg

[aflores]

Hello meg

Sorry for the late reply. I hope that you have received the refund by now, as 18 months is indeed a long time. If you have lost faith in your current lawyers, perhaps you should personally request from the Tax Office a report on your legal situation (what forms have been submitted and whether the refund has already been issued or not). If you are unsure how to go about this, a Fiscal Advisor should be able to carry out this work for you for a small fee.

Regarding the PlusvalÃ*a Tax, I'm sorry you have been hit twice. Spanish law indeed mentions it's the vendor who pays it, but can be agreed between the parties for the buyer to take care of it. This should have been mentioned by your lawyer when you purchased the property (it's normally a clause in the private purchase contract). If this was not the case, and you feel misrepressented, you can always try to submit a formal complaint to the local Law Association.

Let me know if you need further help.

Regards

[GCKB]

My husband and I are divorcing and I want to transfer ownership of our Spanish property to him. How do I go about this?

[tom clarke]

I sold a flat in 2005 and paid no tax on the sale. I was considered a resident and intended to roll over to a new property. I then left Spain. I guess this makes me a classical tax absconder. I now wish to return and buy another property. Am I still liable for the GST 7 years later?

[aflores]

Hello Tom

I’m afraid I cannot give you a straight answer to your enquiry, as I would need further information before I can determine what your legal situation is. If you are indebted with the Spanish Taxman or not, depends on whether you were formally requested in writing by the Tax Office to submit and pay your Capital Gains Tax forms within the 4 years and 3 months set by the statute of limitations. If this didn’t happen, your debt has expired and the Taxman will not be able request from you this amount.

I recommend that you instruct your solicitor to request from the Tax Office a report on your current tax situation. Should you require help with this, please let me know.

Regards

[debra coates]

we are just selling an apt that we have owned since 1988, i understand that we will get a discount on cgt will that discount be deducted when we are at the notary, im worried ill have to pay the full 18% and then have to wait to get my dicount amount back at a later date??

[aflores]

Dear Debra

Capital Gains Tax is paid on any profit made on the sale of your property, and is currently fixed at 19% on the profit made. In the current economic climate, not many sellers are making any profit, and therefore the sale will attract no Capital Gains Tax. However, if you are a non-resident, you will have a 3% of the purchase price automatically withheld by the buyer at the Notary. You are eligible for a full refund of this 3% if you are up to date with your taxes at the Tax Office (namely Non-Residents Imputed Income Tax). The refund takes around 6 months to be issued. Your lawyer should be able to take care of all the paperwork to request this full refund. Also, watch out for the PlusvalÃ*a Tax (IIVTNU), which can amount to a substantial figure if the property was bought in 1988.

Regards

[aflores]

Hello GCKB

I’m sorry that your marriage didn't work and that you are divorcing (I hope it’s amicable). Regarding your question, the most tax efficient way of transferring your share of the property on to your husband is that you conduct a Dissolution of joint property Ownership, which attracts 1% of the property value as opposed to 7-10% Transfer Tax (depending on the value of the property) you would have to pay if you sold your share. I recommend that you contact your solicitor for further information on how to proceed.

Regards

[Rene Koppen]

Hi, we bought a house from BBVA 2 weeks ago. The entire deal was done according correctly but because of others reasons we are no longer able to live in the house. BBVA has agreed to swop the house with another BBVA owned house to an equal price. We already paid the 7% transfer fee and my question is whatever the Transfer Fee can be swoped or do we again have to pay another 7% Transfer Fee?

[Patricia]

Mr. Koppen,

You should not be required to pay transfer tax for a property you did not buy in the end, that is, you cannot be taxed twice.

However, the limited information you provide prevents us for giving a more detailed advice. We are unsure if you mean you signed the purchase deeds or only the reservation contract. If you signed the deeds, the swap can only be possible if there is an additional swap deeds, that will certainly entail taxes that, initially, BBVA will have to assume. As it is swap operation, two transfer taxes are to be applied.

Regards