Splatt

It's been a long time since i've posted so please don't hold that against me!

A couple of days age we received some letters from the Generalitat dictating that our house is worth some €221,000 more than we paid for it in 2008.
So they are billing us for the difference which amounts to some €15,500 (7%).

While this is particularly galling to say the least, given this economic climate, I thought I had found a way to turn this to my advantage. However up until now after visiting a gestor, lawyer and tax specialist I seem to only be able to get vague, 'probably', or 'it depends' kinds of answers.

What I would like to know is upon the sale of a property, what value is used for the capital gains tax (18%)? Surely if my property has been revalued and the tax paid (or owing in my case) then that must be the value used to determine the purchase price?

I realise that if you reinvest the proceeds of your home into another property then the tax is waived, but I am thinking of downsizing which would surely trigger a CGT liability.

If anyone has any experience of this I would be eternally grateful for any wisdom!

Of the professionals I have spoken to, they seem to think that it is highly likely I would win an expensive appeal. But no-one seems to want to give me a straight answer regarding my question.

Thanks in advance,
Steve.

snikpoh

Unfortunately, this is happening ALL over Spain and not just in Valencia.

There have been a couple of articles about this in the press recently.

They seem to be a law unto themselves! Surely, the value of a property is what someone is willing to pay for it? How can the tax authorities come along later and say that it was worth a lot more? - but that's what they're doing.


I suspect that no-one has any recourse. I'm also not sure how one can avoid this happening. I suspect that despite others saying otherwise, now is NOT the time to buy!

Dxf

Hi

Perhaps they remember the "Black" money and are now trying to get something back to establish an even keel for the future.

If you win a loophole case, then they will simply change the law for the next person

Davexf

poolboy

hi, sorry to hear about this & I should think most readers dread opening their buzons now.

You may be interested to know that if you decide to accept the fine then you may be able to pay in instalments at say 100e pcm, no further fines or penalties are imposed so you are at least chipping away at the debt each month.

Worst thing is do nothing as fines & interest accrue at punitive rates, fines on fines sadly.

I don't know the name of the payment plan but just ask at the tax office, they need your money.

johnnyone

Isn't this the same as the junta de andalucia thread on the Ayamonte forum?
Seems not to be just Valencia.

jackytoo

I was advised by my lawyer not to appeal as they rarely are successful. As he was going to charge a bit to do it I took his advice as valid. They have their figures and they stick to them.Also if you do appeal the money owed needs to be deposited with the authorities first. Not to mention paying the valuers. I suppose many dubious Lawyers will advise appealing to get the fee!

Dick Dasterdly

Surely they are basing their estimate on what they consider your house was worth in 2008 rather than the value shown on the esritura, or the value of the property at present.
This is nothing new and has been happening as long as I can remember throughout Spain, wherever they have checked up on the declared escritura purchase price and considered it to be not realistic.
It is a way of getting back some of the tax on undeclared black money and may well not reflect either present day value or future value.
In most instances ppl. tend just to pay up rather than argue the case.
By the way, not knowing your particular circumstances I have no idea whether or not you did declare fair or true purchase price on the escritura back in 2008.

snikpoh

Yes but I think you are missing the essential point which is that we are in a crisis with prices tumbling from the cadastral value or (original) escritura value.

When banks auction off properties, shouldn't this be the (new) realistic value??

Dick Dasterdly

Possibly, but the tax due in this case is rightly based on the estimated true value at time of purchase in 2008, not present or future values.
It is not uncommon for the authorities to take a couple of years or so to catch up with the paperwork and make their claim.
I got a similar bill about two years after buying my first property many years ago. Fortunately it was not for a similar amount and was too insignificant to be worth disputing.

Splatt

Thanks for your replies so far, just to clarify, I do believe I got a bargain from a distressed seller. I'd rather not discuss the ugly subject of 'black' money emoluments or any other kind of illegal activity on a public forum.

I don't see how they can realistically tax on negotiation!

Anyway my question was (is), if I concede to the new valuation and pay the tax is this the value that will be effective on resale? For example; if I sell the house for let's say €600,000 and the new, revised, tax paid value was €575,000 would I then be liable for 18% tax on the €25,000 profit or on the 'old' value which would be 18% of €246,000 profit. I'm sure you can see where I'm coming from.

Cheers,
Ste.

jackytoo

It will be the new value but make sure you have all the paperwork.

Dick Dasterdly

I'm not so sure on that jacky.
On paper they may still have a case to charge tax on what appears to be the full amount of profit, but I really don't know for sure.
Maybe Fred can advise, otherwise you may need a legal beagle to put you right.

ononno

Looks a bit like our 'Equitalia' system here in Italy. If they say 'pay' you pay; or else get stung for exorbitant interest, admin, and other sundry charges.
Very interesting also on BBC website this morning; that Spain's housing authorities saying no better time to buy in Spain, and as safe as houses (pardon) with a property road show in UK right now.

'lluego,
'o nonno

Fred James

When you sell, the CGT calculation will be what you actually paid for the house, not what they think you should have paid.

The original cost will be the price you paid plus any taxes and legal fees and obviously that will include the extra transfer tax.

The selling price will be what you sell it for less any taxes, fees and commissions at that time.

Apart from you being able to "claim back" the extra tax from the purchase value, the tax issue is irrelevant in the future CGT issue.

Dick Dasterdly

Meaning I presume that CGT is calculated on the price shown in the escritura on purchase as against the price shown in the escritura on sale.

Thats the problem with these things, they can still come back and bite you unless you move it on to a very co-operative buyer, though as I said I'm not presuming this to be the case regarding the OP.