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Who pays what ?
In deciding who pays what, the buyer and seller are free to contract whatever terms they choose. There is no Spanish law that requires that one of the parties must pay any particular tax.
Traditionally, the seller has paid the notary’s fees and the plus yalta tax, as he is the one making the profit on the increase in the land’s value, while the buyer pays the impuesto de transmistones and the registry fee, as he is the one who is interested in making sure the property is truly registered to his name. Spanish consumer regulations state that this should be the normal division of costs.
It is a frequent practice, however, for the contract to state that the buyer will pay todos los gastos, all the expenses arising. There is nothing illegal about this. Remember that the two parties are free to make any contract they choose.
This practice, which may seem unfair to the buyer, has come about because tax bills, especially the plus yalta, have often gone unpaid, especially by non-resident sellers.
By the time the new purchaser realised this, the seller was gone and the buyer stuck with the taxes anyway as they were billed to the owner of the property if the seller did not pay. Charging the new owner with all the taxes is at least straightforward and avoids complications.
Nevertheless, you can use this point in negotiating your final price. If the contract you are offered states that you as the purchaser must pay all taxes and fees, you could suggest that the seller take something off the price.
How much to declare ?
Formerly it was the practice to declare a ridiculously low amount for the value of the house, in order to minimise the transfer tax, hut now Spanish lawyers advise sellers and buyers to declare.
the approximate market value, normally the real value of the sale. Spanish tax inspectors will make their own assessment if they feel the declaration is too low.
Spain’s Tax Agency maintains its own tables of values on property, and they are empowered to set a higher value on a sale if they judge the declaration to be under market value. More than one property purchaser has been disconcerted to discover that he has to pay extra taxes when he gets a new tax bill six months after the sale.
If they discover that the transfer has been under-declared by more than €12,000 and 20 per cent, they can apply heavy penalties to both the buyer and seller under the terms of Spain’s 1989 Le de Tasas - the law of public fees - which was enacted to prevent precisely this dodge.
When in doubt, you can ask the tax office what value they will accept on any particular property Inquire at the oficina liquidadora, the payment office, at your nearest Tax Agency office, and they will tell you exactly what value they assign to your purchase. They base their valuation on a careful study of various factors, such as location, size, quality, age, and others. Or just do as more and more people are doing today, and declare the actual amount of the sale.
Buyer Beware: When you go to resell your property, you will be charged Spanish capital gains tax on any profit you make. If you are a resident, you pay as part of your income tax with a maximum of 18 per cent. If you are non-resident, you face the 35 per cent capital gains tax on the profits you have made. If you declare a low value now, you will be liable for tax on a much bigger profit when you sell later. It is in your own best interests, as the buyer, to declare the full amount of the sale.
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