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How can we protect ourselves if the seller of the property we want to buy says we have to declare less?

Property Law

Antonio Flores Vila

5th of August 2000

Q. My question relates to the question asked in Week 28-11-1999 Tax Law which was answered by Antonio Flores Vila. We are looking to buy a Rustic property in the Province of Granada, directly from a Spanish Family who have always owned it. It is near enough to the coast for the vendors to want top price but they only want to declare half of this money.

Their solicitor has said that this will be no problem for us. Is it possible that the different Provinces have different Tax Laws? Would it be possible to insert a clause into a sale contract saying that if we were asked for more money from the hacienda then the family must pay their share, i.e. anything above the transfer tax. that we would have paid on the full amount? We have given Power of Attourney to a friend to act for us. We would much appreciate your answers as we are quite unable to get to your office and do not see where to look for advice.

Anonymous
Granada

    A. Under declaring the price of properties on a purchase-sale contract is customary in this country. This, however, does not mean it is legal. In fact, it is quite the contrary. Laws in Granada are exactly the same as in La Coruņa or Tenerife. It is understandable that the lawyer of the other party says there will be no problem. He is representing the interests of the seller.

    The agreement you suggest is useful for the purpose of covering yourself against the risk of the taxman raising a supplementary demand for tax. However, I do also recommend you have a separate agreement stating what the real price is in case something goes wrong.

    I strongly recommend you hire a lawyer to ensure a smooth transfer of title. Regards



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