Taxes for "handing over" property to another

I'm a bit confused about what to do with regards transfer of our property to another person. Like many others, our property has decreased in value substantially since purchase leaving us with a large amount of negative equity. We are unble to sell as we could not afford to pay off the shortfall on the mortgage. We don't want to give the property back to the lender either (which I am sure would be the easier and cheaper option!!).

We have a friend that is willing to take the property off our hands and allow us to walk away. There would be no payment for the property, we will take the loss of the deposit that we paid when purchasing. The friend would also subrogate the mortgage, therefore that keeps the funding side of the transfer complete.

I realise that we would have to pay legal fees for the transfer, but am a bit confused as to how the 3% retention would be worked as we are non residents? I believe the 3% is held back from the funds made from the sale, well, we are not selling but handing over free of charge, so how would that work? I have also read that CGT may also be applicable as the Hacienda do not/ have not re- valued properties.

Thanks for any thoughts.

No thoughts anyone please?

unregistered,

As far as I am aware there is no such thing in Spain as a ' Free Transfer ' - even if you were to GIVE your property to a Family member - The transaction would still be classed as a Sale and Tax would become due on the transaction.

As regards the fallen Value of your property - this also would be discounted in the transaction - The Catastral will have the value of your property listed in their records and on it's sale Tax would have to be paid on that value - not on the amount you received for it.

I have recently sold a property for € 200,000 - the buyers had to pay Tax on € 475,000 - because that was it's value according to the Catastral.