Selling a property and tax

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26 Jan 2011 12:00 AM by maryelaineburnett Star rating. 10 posts Send private message

Has anyone tried to sell a property in this down turn.  My son has an apartment which he purchase 3 years ago for 166, thousand euros and he is now selling it at 117.  I am dealing with it as I live in spain.  Has anyone any advise on what fees he will have to pay when he sells it or should I say if.

Any advise would be appreciated.

Thank you.

Mary





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26 Jan 2011 11:08 AM by Angar Star rating. 18 posts Send private message

Dear maryelaineburnett,

You need to make sure all the bills and taxes are paid up to date. This includes non resident taxes and local rates (suma).

Good Luck





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26 Jan 2011 11:15 AM by maryelaineburnett Star rating. 10 posts Send private message

Thank you.

All bills are paid and basura etc.  Not sure about non resident tax can that be deducted off the sale of the property.

Regards, Mary





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26 Jan 2011 1:12 PM by Angar Star rating. 18 posts Send private message

 

Dear maryelaineburnett

Yes I guess you can do that if you know how much to pay! The Notary may ask to see either proof paid or funds set aside to pay and the seller must make sure that it is paid and that there is not debt against his name. There will be also capital gains tax or at least the retention which will need to be paid, within time and then claimed back from Tax Office. Regards Andy R Garcia





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26 Jan 2011 1:33 PM by maryelaineburnett Star rating. 10 posts Send private message

Hi There,

Thank you for you quick reply.

Regards, Mary





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26 Jan 2011 3:38 PM by jek Star rating. 249 posts Send private message

jek´s avatar

Your purchaser will want to see bills/receipts to show that you are up to date with utilities, IBI, basura and community charges for the apartment.  The liability attaches to the property on these items so if he lets you get away with debts, he will become liable.  I am not sure that a purchaser is going to be too worried about non-resident income tax which is personal and stays with your son.  As this tax is paid in arrears, a diligent purchaser may ask for evidence that you are up to date but may also want a retention for the unbilled amount.   The seller is also liable for plusvalia - a town hall tax on value added.  The town hall can tell you what this will be but it's normally not more than a couple of hundred euros.  

The purchaser is responsible for paying the 3% (of the escritura price) capital gains tax retention  into the Hacienda.  The notary will not sign of the escritura until he sees the receipt from the bank saying that it has been paid.  Some estate agents ask the seller to pay it on the day of the notary but personally I don't like that as, if the purchaser drops out at the last minute, you will have the devil of a job getting the money back from the Hacienda.  Given the drop in value, your actual liability is going to be zero so it's up to you to claim it back.  That's when the Hacienda will want to see you up to date with non-resident income tax or they will add interest and fines before repayment. 

If you agree a sale, make sure that it is agreed that the purchaser pays the notary and property registry fees.  That is the standard practice but it can be varied by agreement, so make sure it is clear at the time of agreeing the sale.





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26 Jan 2011 4:48 PM by maryelaineburnett Star rating. 10 posts Send private message

Thank you all that has been really helpful.

Regards, Mary





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