siteservices

hi there the solicitor we used to purchase our apartment - advertised price 115,000 - purchase price 100,000 has been in touch to say she has received a notification saying we have to pay the Andalucian ayuntamente an extra tax payment of the 1,800 euros. We can appeal within 14 days by letter including an independent valuation of the apartment. If we do not appeal or if the appeal is unsuccessful we will have to pay up. presumably they think we did some cash under the table deal but we offered and they accepted 100,000 euros and all was completed in the notary's office. we have asked our solicitor to forward the letter - she is using delaying tactics. Why would they not have sent a copy to us rather than the solicitor? there is an apartment similar to ours for sale now at 115,000. We have asked our solicitor to tell how much it would cost for her to act on our behalf (which we thought she was angling for) but still no response. we have contacted another estate agent who showed us other properties in Torremolinos (but not the one we bought) and she has given us a contact number of someone who will be able to help - no reply by either phone or email. is there an easy way we can sort this out without incurring expense and, more importantly, not leaving it too late so we miss the 14 day deadline which in my opinion is much too little time. is this normal practice for such a small purchase price? thanks for any advice. By the way we speak very little Spanish and don't think google translate is up to the task of a letter of this importance.

snikpoh

Perhaps the problem is that they think the property is too cheap?

What is the cadastral value (IBI)? If this is higher (including the multiplier) than the actual sale price, then they may think you have paid the additional money in black.

This is very difficult to disprove.


Did you pay the transfer tax of 10% (I think it's now 10 )?

Lynn R

I have heard of this happening in other cases during recent years, but in respect of additional transfer tax which is demanded by Hacienda (the Spanish tax office) rather than the Ayuntamiento (the local Council). This is because Hacienda bases the decision on how much transfer tax is due on the "official" catastral value of the property and whatever local multiplier applies, rather than the "actual" purchase price. You can, as the letter sent via your abogado advises, appeal but you would need to obtain the alternative valuation first (which obviously involves a cost) and there is no guarantee of success.

siteservices

I will have a look and see what the value is on the IBI paperwork. all I know for certain is that we did not pass over any cash - everything was above board. At the time we bought there was another on the market 2 floors below for 90,000 and another was for sale until recently at 89,000 so 100,000 is not out of the way. This is the email we received from the solicitor:-

"We have received yesterday a notification from the oficina liqudadora in which their allegations are that the property you bought has a higher value that the one you declared on the title deed and therefore you should pay the difference on transfer tax.

They do request 1.893,15 euros

We have 15 days to appeal it and contest it or proceed with the payment
In order to appeal you will need to do a writing address to junta de Andalucia –oficina liquidadora- providing a official valuation from a independent valuer which confirms that the market value is the one you paid for the apartment and requesting them to declare this request null."

I only copied this because I wondered if the names of the different authorities would make any difference. is this sort of thing common? Could our solicitor be trying it on? Don't mean to sound suspicious but she did try to overcharge us for the Notary fees and various other things so our antennae are always up!

Fred James

As Lynn says, the tax office has a calculation of property values based on the catastral value. This has not changed significantly for some years.

They use these values for tax purposes such as IHT etc. The problem is that the actual property values have dropped so far that in some areas they are now below the "official" value and as a result the tax office is comparing the two figures and issuing demands for any extra tax that the calculation throws up.

It´s not exactly scientific but it is causing grief for some.

Lynn R

I know that this problem has also affected sellers of property, not just buyers, as they have been hit with bills for capital gains tax based on the official value of the property sold, no matter what they actually received for it.

When I bought my house in 2003, the catastral value was only about one third of what I paid for the house. The catastral values in my area were revised in 2007 (just about at the top of the market) and of course prices have dropped considerably since then. If I wanted to sell now, we would be lucky to get the catastral value for it, and I have heard of instances where the catastral value exceeds the current market value of the property by a huge amount.

If I were considering buying now, I would check the catastral value of the property and if it was considerably more than the agreed sale price I would ask the vendors to get an independent valuation done and submit it to Hacienda (I would offer to pay half the cost of the valuation as it would benefit both parties) so that neither party would be hit with an additional bill of this kind after the event. Sorry this is no help to the OP!

If you suspect the lawyer may be "trying it on", why not ask them to scan and email you a copy of the actual letter they have received? You could then at least check the amount being demanded.

siteservices

thanks - yes we have asked for a copy. She said it was sent to us on Monday but it wasn't. In answer to someone's previous point, I think we paid 8% tax (not completely sure as my OH did all the transactions) or whatever was the appropriate amount at the time. I would also have thought that they would have sent us a copy rather than through the solicitor although it could well be awaiting us on our next trip over as we aee still resident in UK. I appreciate what you're saying about Catastral valuations - there will be winners and losers. I jut can't accept that we should have to pay this money as the fall in property prices is beyond anyone's control (well us plebs anyway!)

Lynn R

If you get the independent valuation and appeal successfully, you could end up not having to pay it - but nobody can guarantee that so it has to be your call, as it will cost you money to do it, unfortunately.

guirijohn

If an independent valuer arrives at a different market value than the price actually paid between two unconnected parties he is clearly wrong. I imagine that when a bank is the seller the hacienda accepts the price reported without question.

Lynn R

I may be wrong, and I am sure she will correct me if I am, but I'm sure I remember another forum member, Jackytoo, saying in a previous thread on this subject that she had once had to pay such an additional transfer tax bill after having purchased bank repossession property in Spain. If that was so, then Hacienda certainly didn't accept that bank's reported price without question.

guirijohn

Quite right, this has been discussed before...

http://britishexpats.com/forum/showthread.php?t=789097

Sausages

Is the property subject to any kind of mortgage? If so, the bank with whom it's with would have done a valuation and you will have paid a fee for this, so that valuation is what you will have paid tax on. If it's not a new property then you will have paid 4% property tax I'd have thought. It recently changed to 10% for new properties.

If the solicitor is using delaying tactics this sounds extremely fishy. Are you in a position to go to their office and have it out with them? Do you have all the paperwork for your property? Is it in Spanish and English?

frigilianafreddy

Yes you will have paid 8% tax on a second hand property.

Yes the hacienda is using catastral value X multiplier to assess worth.

Yes you can appeal and get a valuation.

BUT.

This will work out as more expensive than paying up, if the bill is €1,800!

When your solicitor scans you the letter, pay up, grin and bear it and realise that this is Spain. Reality has nothing to do with bureaucracy.

amideislas

In tax matters, "Guilty until proven innocent" is seems to be the prevailing wisdom - even in Spain.

In Germany, if you are autonomo (or "selbständig") and collect any part of your income in cash, you are automatically assessed a 20% penalty because you "probably" are lying.

The Germans affectionately say "with a good lawyer you can get away with murder, but if you don't pay your taxes, you're going to jail".

jackytoo

It was our Lawyer who was contacted by Hacienda, although he did pass on the letter. We paid and shrugged it off, it does seem unfair Got our reveng when we sold one and didn't declare for CGT