Angela

I've been contacted by my agent asking whether I wanted to exchange in pound sterling as the owners are interested in this. Does anyone know whether this is legal. Can the sale of a Spanish property be done in pound sterling? Very interested to find out

The owner is trying to avoid the cost of transferring the money back into sterling ,if you did pay the owners in sterling  it would be difficult for them to pay the tax that will be due at point of sale take my advice use a good lawyer do not hand over any cash so called black money otherwise when it comes round for you to sell on you will have to pay the tax on the black money that the original seller did not pay .

This is a reply from a Spanish solicitor who works in Manchester:

This week a client who lives in the UK asked me if he can pay in sterling the purchase price of a house he is buying in Spain. The truth is that this is not an impediment. On the day of the signature of the purchase deed, the Notary will request evidence that the payment has been made i.e. a copy of the cheque. The purchase deed will also reflect the fact that the price has been paid in sterling and will show its equivalent amount in euros, which at the end of the day will be the one used for tax purposes and for the calculation of the transfer tax.

This is a scenario that is more and more often these days. Many Brits have bought properties in Spain and they are now willing to sell them. At the same time, other Brits who are currently cash privileged are still interested in buying in Spain and very often the transaction involves UK nationals on both sides. In this type of transactions, the parties might be interested in securing the deal in sterling in order to avoid currency fluctuations so this is something that I am seeing with enough frequency.

Food for thought if you are planning to buy in Spain and do not need a mortgage.

When we bought our first property in Spain (when the dinosaurs were still roaming the planet and going under the name of Atlas) we paid the deposit with a UK cheque. In fact, the whole cost was in sterling and we transferred money from a UK bank in sterling when the payments became due.

Providing the amount is shown clearly on the Escritura in euros, then whatever currency used to pay cannot be a problem. 

When I make my 720 return,  I am doing so in the euro equivalent to the sterling amount in my bank and the Philippine Pesos purchase price of my wife’s house in Philippines. The actual sterling or peso amount is not even shown on the form. The result of that means that even if my assets do not increase or decrease, I may still have to make a declaration if the euros exchange change rate moves sufficiently to  make the euros amount increase or decrease by 20,000 €

Maridav:   On the day of the signature of the purchase deed, the Notary will request evidence that the payment has been made i.e. a copy of the cheque.

I do not think the notary needs to see proof that any payment has been made, that is a matter between the buyer and seller.   I cannot remember ever showing the notary any proof (in over 10 transactions I have made) and the days when purchases were often made in cash, even the 100% legal ones, the notary never counted it

Really? On the three properties we have owned here in Spain the notary has always checked photocopies of bank transfers or cheques to ensure payment has been made.

Providing the amount is shown clearly on the Escritura in euros, then whatever currency used to pay cannot be a problem

That's correct as I understand it, If both the buyer and seller are from the UK the money dosen't even need to leave the UK - just a domestic bank transfer.

If it were me I would check that the exchange rate used is approved by the hacienda - using a rate that favored the buyer or seller could result in claims for unpaid tax. 

Marirdav:  Really? On the three properties we have owned here in Spain the notary has always checked photocopies of bank transfers or cheques to ensure payment has been made.

That I write a cheque and produce it,  or a photocopy of it,  does not mean there are funds in the account to meet it,  I / we have not agreed to tear it up afterwards, or that it will not be stopped, or that it is not a fake,  etc.   It is not and can never be,  proof of payment. Just like a photocopty of a passport, D/L etc is never proof of the original.

As for bank transfers.  As the sale does not take place until you sign before the notary,  I do not see how there could be any proof of a transfer.

As the sale does not take place until you sign before the notary

That's correct and we have discused this many times before - so transfers wont work, because if you transfer before the notary the buyer is at risk of the seller not signing and if you agree to transfer after the notary the seller is at risk of the buyer not paying..

You need to have the money with you at the notary to exchange when signing - the only way to do this is with a bankers draft if in GBP