sell off plan before completion

Two years ago we bought an off plan property in Carvahal Costa del Sol, we were never sure if we would keep it or not but it was an investment at that time. Now the completion date is due in a few months and the agents are telling us selling is now not an option due to a change in tax laws. Has anybody else experienced this we would be grateful for any advice.

 

Tony and Sue

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Hi Tony and Sue,

Smiley and Rixxy, on this forum, are the best people to ask about tax laws. You could try sending them a private message.

There is also an 'off plan development' forum you can join and maybe find other purchasers from your development.

For my penny worth I think the agent is spinning you a yarn. 

The property is completed you say, so what's the difference in selling that property and any property that is habitable?

His biggest problem would be actually managing to sell in the present market. 

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Selling is ALWAYS an option, despite current tax laws.  It just depends what you paid for it and how much you could realistically sell if for today.  Some people are selling, others sell at a loss and others are completing and then renting them out, preferably long term

The market is very slow (putting it mildly) so in that respect it will be tough to sell unless you have a prime property in a prime location at a great price.

Best of luck and don't let your agent fob you off so easily.

Justin

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Just back from 12 day holiday and despite things being slow there does not seem to be a downturn in prices, in fact due to the exchange rate my £  will certainly not buy any more than it would a couple of monthe ago and possibly not as much !

I also note that there seems to be very little change in he the number or variety of properties advertised.

Can,t work it out myself, maybe some of the "proffessionals" can explain.

 

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hI acapulco,

Unfortunately the rumour is sometimes a littlle far from the truth.

Good location property is still realising a good price.

An example; I advertised a beach front apartment in Guardamar on a luxury development with concierge,indoor and outdoor pools,clear sea views and 30 seconds to the beach for 265,000€.

It sold in 3 weeks for 252,000€.

I also have non descript property on my books that i have had for 12 months and will probably still be there in 12 months.

There are some good bargains around at the minute will people needing to seell but if you know you have something more desirable you also know people will pay for it.

The unfortunate problem is that there are too may properties on the market in the latter category.

It takes some good old fashioned detective work but you will find what you are looking for in the end.

Like you say if you go by the exchange rate property is 10% more expensive now than this time last year.

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Dear Tony and sue.

I too have the same problem as you. In march 2005 I bought a property off-plan on the Costa through ** EDITED - Against forum rules **. They told me they would market the property after 12 months I would make a profit and move on. They didn't market it and I am now being told I have to complete before I can sell it. I don't think they had any intention of selling it on due to the way commissions are paid. They have cost me my life savings and I would welcome any advice in getting my money back or even taking this company to court. Do not go near this company.

                             Roy

This message was last edited by EOS Team on 3/12/2008.

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The agent is probably referring to the fact that previously, you could "flip" an off-plan property, i.e. sell before completing on it, by effectively cancelling the contract you made with the developer, and your buyer making a new contract with the developer. The difference between the price you bought off-plan, and the price you sell it on at, was profit in your pocket, and the tax man knew nothing about it. However, as always, the tax man caught onto this, and now very few, if any developers will be willing to allow contract flipping in this manner, because they are likely to get into trouble for it. So, if you wish to sell before completion now, it will be dealt with as any other sale, and can potentially (although possibly illegally) end up resulting in transfer tax being charged as well as IVA. This was discussed recently on another thread somewhere. However, the agent is wrong to suggest that it is not an option. But, as Justin said, actually trying to sell it now and even recover what you put in, may be an altogether different matter.

The so-called downturn in prices is an on-going theme of another thread, and makes very interesting reading. Certainly, the £ to € ex-rate is a factor, but purely looking at local prices (i.e. the euro prices), I think it depends very much on the area and type of property you look at. There is no question now that prices are starting to fall in many areas, but others are not as markedly affected - yet. Personally, I think the most notable cases are where prices previously became grossly over-inflated, and a natural correction is now taking place.

5 years ago I was looking to buy in either Torremolinos or Fuengirola. I gave up in Fuengirola, because I couldn't find any value, despite the fact that many local people who have known the areas far longer told me repeatedly that Torremolinos was more expensive than Fuengirola. At the time, they were wrong. I bought in Torremolinos. Today, I see prices in Fuengirola similar to those I found 5 years ago in Torremolinos (i.e. lower than 5 years ago in Fuengirola). Torremolinos prices rose steadily during the last 5 years, and have now stopped rising, and in a few cases, appear to be dropping slightly. But Fuengirola prices seem to have dropped dramatically. Why this should be so, I am not certain, although I think it may be due to a greater number of foreigners buying in the Fuengirola area during the boom, which may have fuelled price hikes there more than in Torremolinos.

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I have great sympathy with all who have problems with " off plan " purchases. I am just relieved to know that when my time to purchase comes later this year we will not need to go down this route. Truth is I am just getting fed up with waiting for things to get sorted this end.

 

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Well Tony effectively Roberto has answered your question before I saw the thread - in theory you can sell but there is likely to be an additional tax liability - while developers used to be quite happy to tear up contracts now they are subject to the scrutiny of the tax office they cannot do it - there are even situations where adding another party (such as a wife or girlfriend) to a contract prior to completion is deemed to be a transfer of title and subject to transfer tax - personally i think that is taking to the opposite extreme as if one can prove the relationship and original intent and one of the original purchasers is still on the deed to complete how can someone be trying to dodge the tax man - problem is that it was always supposed to be the law but developers were flouting the rules and getting away with it encouraged by agents selling the properties on.

That being said I suspect it is the agent making excuses why they cannot find a buyer to flip it to for you for 50% increase in value or whatever other rubbish they have spouted forth.

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