Cherrypop

Can someone clarify IMT rates? I've just completed on the sale of my property. Prior to signing of the deeds I asked the solicitor for the breakdown of costs in order to transfer the funds which I duly did.

On arrival in Portugal last week, he asked me to go to his office. He told me that he had miscalculated the tax (twice) and that I owed him another 1200 euros. I'm now back in the UK and he has emailed me with the final figure. The figures he has given me bear little relation to the tax scales I've found online and I've calculated that I've already paid more IMT than I should.

To complicate matters, I was told by the notary at the signing that my property price was lower than I had paid. I've heard of this happening to others so queried it but I was told the 10% deposit I'd paid for the promissory was for 'furnture' and the balance was the value recorded on the deeds. I wasn't a bit happy about this as it was the first I'd heard of it but I really had no option but to sign as I was moving in that day. The notary explained that this was normal practice and means I pay less taxes.

So, if the deeds say I paid 'x amount' for my property, I'm assuming IMT is calculated on that price, not on the total price I paid, given the way it was explained to me?

I really feel very unhappy about sending extra money to my solicitor as I can't trust him now (he had POA to sign the promissory and hadn't explained to me that the deeds price would be lower than what I paid). I just feel he's trying to fleece me.

mfesharne

In short, you've been tucked up & your lawyer was involved.......... where did you find the lawyer?

I wouldn't be in the least surprised to hear you used a lawyer recommended by the seller or agent...... which is always a VERY big mistake!

Your problems may get worse if you sell within the next 5(?) years because it'll look like you made more of a profit & may get hit with additional capital gains tax. (depending on exact circumstance.

It sounds to me as though the notary was possibly trying to warn you of what was going on.........

Cherrypop

Actually, it was the notary who insisted this is the way things are done. I've checked out the lawyer with a friend who has lived there for 20 years. She insists he's very honest indeed.

mfesharne

He obviously wasn't in this case because it's his job to protect your interests & he failed to do that when he allowed the deal to be done in that way without telling you first (at least) to say nothing of the fact he 'miscalculated' the tax at least twice & arguably, three times.

Was he by any chance recommended to you by the seller or the estate agent?

And the notary was either lying or plain wrong because although not uncommon for the seller to ask for such a deal it's not a good idea for the buyer to agree to it.

EMR

Reducing the tax bill by allocating an amountb to furniture etc etc is quite a common practice.
This is not unusual.
The tax on the property purchase should be quite easy to establish.

Cherrypop

Even more confused. The lawyer has sent me a copy of the tax bill. It is exactly as I'd calculated it and I sent him the funds to cover this in with the other payments due (remaining cost of the property, notary fees etc.). He still tells me I owe him 1200 euros

Awaiting his explanation!

EMR

Is that his fee ?

mfesharne

I can only repeat my statement that you've been tucked up & before he changes his tune & says the difference is his fees....... They should be nowhere near that much.

You have my sympathy.

Cherrypop

The difference isn't his fees. They were 1% and I've already accounted for those.

mfesharne

Why not ask him to justify the additional costs & show you the links & full calculations & receipts to prove it?

You really do have my sympathy but this is a very good example of why it's so vitally important to use a good, honest lawyer who has no links whatsoever to seller or agent etc.

And if it's any consolation, you're not the first to encounter this........ I've heard of 3 others this year who have been conned in more or less similar fashion.

Pilou

Better wait until you see the break-down of all the costs.
Was the IMT calculated on buying the house as your main residence (it then 924 EUR lower)?
10% for furniture could be acceptable, but the seller/ real estate agent should explain this before selling. The seller is happy but your potential tax burden will be 10% higher.
Did you take over furniture?

Of course don't send extra money to your lawyer, unless he has a very good reason to ask you this!

EMR

The tax burden is not higher because the price for the property is less that for the furniture.
E.g. if the price agreed 200k less 10k for furniture then the tax is based on 190k.

Red Eric

You mention IMT but not the other tax, stamp duty (IS - imposto de selo), which is calculated at 0.8% of the purchase price (or the VPT, whichever is the higher - but it would usually be the former).

Could that account for the difference?

liveaboard

I think you have 2 paths; either pay, and hope that this is the last of it, and that the property sale has no further hidden issues; or take all your paperwork and correspondence to an outside expert and ask for an opinion.
One thing I wouldn't trust is your personal feeling for the people involved. This is really counter intuitive, but the best con artists and ripoff people make you feel all warm and fuzzy, it's what they do for a living.
On the other hand, genuine honest people often don't manage to inspire trust from the outset.

Your story sounds really fishy to me, especially your deposit money; how can the first 10% be for the furniture? You've bought a house full of old stuff but paid nothing towards the house itself?
When you pay your 10% deposit, it's 10% of the property price and locks in the sale contract for both parties. If you've only paid for the furniture, something is VERY WRONG.

Quietly find a decent lawyer, who doesn't have any connection with the sellers, agent, or current lawyer, and ask him/her to check EVERYTHING about this sale before you pay any more money.

Your friend might sincerely believe that the lawyer is an honest person; your friend could be wrong.

Or maybe it's all just fine and there's been a little error hare and miscommunication there, and you're nervous because everyone is at these times.
I hope this is the case.
Check twice, because once that money is paid you'll never see it again.

The answer is in the papers, not the vibes.

Pilou

What I mean is when she sells in the future, she is taxed roughly on the difference between the price she is selling for minus the purchase price. When she paid now EUR 200,000 the price in the deeds is only EUR 180,000 (10% furniture). This difference of 20,000 could be taxed when she sells. With a tax of 28% (I don't know if that is the rate!) she will pay EUR 5,600 extra tax.

But if she really took over nice furniture of a certain value it is logic that the price for the house and furniture will be split.

We just bought a house and in the contract we put down that we buy the house without furniture. Then the price we paid is 100% for the property.

When people take over all of a small part of the furniture, talk about the price for the furniture and put it in the promissory contract!