Spanish tax authorities demanding extra stamp duty on house sales

[Myrtle Hogan-Lance]

In a not tremendously well written article in the DM (because it jumps around between sterling and the euro, for one reason), the fact that Spanish tax authorities are demanding extra tax from buyers based on their assessment of the correct selling price for a house is discussed.  I know a few people who have bought in the past four years but have not heard of a rush of demands being issued here.  I can't remember if four or five years is the cut-off for them to demand more tax.

[Janet]

I was just reading it and it's the usual mishmash of correct and incorrect info. First, it's not "stamp duty" - there is no such thing in Spain (though there's a registered document tax for new builds). Nor is it "purchase tax", though it is applied to purchases. What it is is what it has always been - transfer of title tax. What is true, though, is that the tax authorities are assessing it as having been underpaid more often these days.

This is from the Q&A on owning property page on my site:

Q: Just within 4 years of buying my property I received a notice from the tax office saying that their valuation was more then stated in the escritura and that I had to pay the purchase tax on the difference between the two prices. I complained about the valuation and the time they had taken to ask for their tax, but they replied that the law allows them up to 4 years to notify and charge you interest on the delay. What else can be done about this?

A: This happens all too frequently when prices are far below what would be expected, and the tax office is correct to say that they have four years to demand a "top-up" sales tax. The problem has arisen, though, because of abuse in the past on the part of those directly involved with property transactions. "Black money" has traditionally been a standard part of such transactions and everyone, even notaries, knew it was happening. The tax authorities' only recourse was to take an independent view of the transaction and "assess to tax" any property for which they did not believe the price noted in the escritura. The problem is becoming quite serious now that prices are falling genuinely here, with people paying sometimes just 50% of a "tax value". What will happen, for example, to all those properties bought as repossessions from the banks? These are sometimes at knockdown prices, abusive in several other senses, of course, but there could well be a serious tax bill waiting up to four years down the line for anyone who buys property far below what the tax office will accept as the tax value. As to what can be done about it – nothing, I'm afraid, as far as I know.

There are two overwhelming factors that should prevent what is happening - the demonstrable collapse of property prices which should stop valuations at extremely out-of-date levels, and money-laundering laws which mean that black money at notary is effectively a thing of the past. But the law allows the Hacienda to do this, and it is rooted in a period, just a decade or so ago, when the property market was booming and black money was the norm.

The Mail's presentation of this as something new, however, and as "stamp duty", reflects its usual standard of journalism ...

[Guanche]

This is what they did to us. We sold the house for slightly less than the market value ( ) They however priced the house and taxed us on the going rate which was more than we sold it for ( ) So we were taxed on the sale of our first house at the price they said was the correct price.




All I will say is 'Black Money'    Never ever be tempted, it will back fire.

[Myrtle Hogan-Lance]

Three weeks to go til we have owned our place four years.