I am reading about black money whilst thinking I will buy resale eventually but have never heard of this? Please help thanks

Don't even go there!! It's rather complicated but from what we have been told the people who benefit are the ones who sell the property to you and pay less tax because they declare less than the true value of the property. The buyer could end up paying more tax as the property will, more than likely, have increased in value and the tax is payable on the profit made since bought. i.e. a larger difference if a lower selling price had been declared but less of a profit if the true price had been declared. You could lose out!

90% or more of Spanish sellers will ask you for black money. Ie, you agree the purchase at 200,000 euros. They say I only want to declare 150,000 euros and you pay me the remaing 50,000 euros in cash. It is a method of tax avoidance. Totally illegal, but rife.

If you buy on one of the costas there is a greater chance that the seller will NOT be Spanish. Foreigners are less likely to ask for black money, thereby you have an increased chance of finding a resale where black is not involved.

Ah so let me get this right..... if I see a house I want for the rest of my life and Black Money is the way to go (cos I wont sell it) then, well it dont matter?

If the property is your prime residence, you dont pay capital gains tax anyway.

Buuuut, the black bit is still illegal and you run the risk of getting caught.

I´m having this problem myself at the moment. Really don´t want to pay black money, but for me at least it is the difference between getting the house I really want, or the best of what´s left.

Seems strange to me lets run a hypothetical case through !!

I or they want to sell a house for £ 200,000 say..

I say give me £ 100,000 in cash and give us a cheque for £ 100,000 for the rest .

Now what do they do with the £ 100,000 in cash ? Stick it in the bank ?
In the UK over £5,000 in cash and all hell breaks loose !! tax men will be on your case , FBI alerted , where did you get this from etc..?

What they going to say ? I just found it , or what ?
If it was taxable they will be for the high jump Big Time . Not only that but then will be back traced to the purchaser asking why you paid cash ? Where did it come from ? The innocent purchaser could most likely then have to prove its all legit !! And if they want they can go back 10 years on your earnings and stuff Mega Hassles .!!..

the other alternative ! Stick it under the mattress ? And pray they dont change the notes to new type !! And if they do roll in the bank and say can you change this £100,000 in £ 50 notes for the new ones ?

A Whole host of Grief if you ask me !

It certainly is a lot of grief. I guess they don´t ask so many questions in Spain about where large sums of cash has come from.

Well just ensure you can easily prove the dosh is from legit funds

Then you will be ok its then his problem ..

Big Pete,
One seller told me I could pay the black money straight into his bank account in Gibraltar...
Spain is known to be the money laundering capital of Europe, so don't underestimate the ingenuity of the Spanish to "wash" black money.
Money from the black economy funds political parties and has established Spanish firms as major buyers on the international stage.
White Whales 1&2 are good examples of this.

Black money is why Spain has over half the 500 euro notes ever printed!!!

If you want a new car or a new kitchen, here you would just pay cash for it. If you write a cheque or transfer bank funds, the banks charge a lot so you never do. The only people I see using debit or credit cards in the shops are foreigners.

I paid some black money when I brought my house, my lawyer told me it was totally acceptable, the bank also agreed with him, including their lawyer, and the whole amount was taken in cash to the Notary and counted out by both my lawyer and the seller's lawyer and then the Notary bloke came in and they gave him the balance. The trouble with it is of course that they won't give you a receipt for that black money and no record of it and if the money is from the UK you have to account for it. The main thing is when you sell the house you put the price to include the black money you paid in the first instance.

I find I pay cash for most things here, you have something to negotiate with, you often then don't pay iva on the service so can be cheaper. If that is how they do things here and is acceptable by the majority, then I go with it.

Hi
I guess none of you guys were around when the peseta became the euro.
Before the exchange came into existence people were dragging their sacks of money from under their beds and buying up property and land all over the place. Here in Andalucia it is not uncommon for working class people to have two houses.

Can anyone answer this?

If you agree to buy a house for 200,000 euros, have 20% in cash as a deposit (40,000 euros) and the remaining 80% is to be mortgaged, does black money affect the amount the bank is willing to lend you?

Eg, You agree on 200,000 but 50,000 of that is black. So the official purchase price is only 150,000. Would the bank only lend me 80% of that 150,000? or would they lend 80% of the 200,000??????

Keith,
Dependent on the bank, they will lend sometimes more than the declared amount, although this is not common practise, most will lend on 100% of the declared price.