Buyers Guide

Page 4

Tax inspectors now make their own assessment based on market values. There are penalties for both the seller and especially the buyer that will be swiftly applied if it is considered the declared price is not the market value. Your abogado will advise you on what you should declare and if it is in your interest.
Under declaring a sale price will usually benefit the seller more than the purchaser, saving the seller up to 35% tax capital gains or corporation tax on the undeclared amount, where as the purchaser may save 7% now [or possibly 16% on newly divided land] , BUT, may end up paying 35% tax on the amount later! so bear this in mind when agreeing the value to be declared.
It is you, the buyer who will when you sell will have to pay Capital gains tax on he difference between the declared value when you purchased, and the declared value when you sell, of up to 35% if you are non resident or up to 20% if you are resident.
The amount of capital gains tax payable on the sale of a properties purchased now, and since 1995 reduces annually inline with inflation.
Good news if you are a resident and sell a property which is your principal residence in Spain, as long as you have owned it for at least 3 years, and all the capital is reinvested into a more expensive property, and the new property is also your principle residence in Spain, then any capital gained from the sale will not be taxed. [this is effectively a tax on property speculation]
Good news for resident pensioners is that from 2000 resident persons over 65 years old, who have owned a property for at least 3 years, which is their principle residence in Spain, will not have to pay any tax on the capital they gain from the sale of the property.
To make sure a non resident pays this tax when selling a property the tax man Hacienda requires the buyer to pay 5% of the purchase price to them, the seller can later claim back this money minus any taxes due. Both parties can agree with the Notario to waive this payment, If you agree to such a waiver, you as the new owner will be responsible for any taxes due, if these taxes are not paid, Hacienda will place an Embargo on your new property, the taxes due can also exceed 5%.
Furniture, carpets etc. can of course be sold separately reducing the value on the Escritura.

Declared value when purchasing a property under construction from an investor. [not directly from the developer]
Investors who purchase early on in the history of a development, [often before construction starts] are rewarded by very good prices, as their 30% or 40% payment [depending on the terms negotiated] allows the developer to keep borrowing to a minimum.
The purchase price is written into the sales purchase contract and that is the price that will be declared on completion, when the balance of the money is paid and the escritura is drawn up into the name of the owner.
Over the construction period [2-3 years] a property will increase considerably and an investor may decide to sell the property for a profit [this is usually just before or just after completion] .
In such cases it is not the property that is sold, but the contact allowing the person named to buy at the price stated from the developer or owner stated.
The contract can only be transferred with the cooperation of both parties, which is why it is necessary to have a clause written into the contract allowing the transfer, otherwise the purchaser is at the mercy of the seller who may not want to cooperate.

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