11 Oct, 2010 @ 09:00
1 min read

From bargain to burden

By Wendy Williams

A STRING of homebuyers have been unfairly stung after landing property bargains in Spain.

It comes after cash-strapped regional authorities re-evaluated the official tax bands for their areas.

It has led to many homebuyers being sent additional tax bills, sometimes a couple of years after they bought a property.

One villa sold for 600,000 was revalued at one million euros, while an apartment sold for 275,000 euros was marked up at 475,000 euros.

British expats, Neil and Lynda Hunter from Kent, fell victim to this practice last year after they bought a three-bedroom villa for 400,000 euros in Mijas-Costa.

After the deal had gone through, the Malaga authorities declared the villa’s true value to be 465,000 euros and demanded a further 4,800 euros in tax on top of the 30,000 euros they had already paid.

“This was a considerable shock and we are very upset,” says Neil, 63.

“The value of a property is whatever someone is prepared to pay for it, and this is extortion.”

Now their lawyer has advised them that a court appeal would only lead to more costs. Although, as lawyer Adolfo Martos explains it is probably worth it.

“Would-be buyers need to be aware that these stealth taxes can be levied after the sale,” says Neil.

“We were obviously aware that property has fallen considerably in value and were looking for a discount on the price. But we did not get an amazing bargain.”

According to Olena Armitage, of Anastasiya Estates in Fuengirola, who sold the villa, the tax demand can be made up to three years after the sale.

She said: “This is happening ever more frequently as the local authorities do everything they can to raise revenue.

“Mr Hunter’s was made quickly, which means the local authorities are short of cash,” She added: “Buyers should think carefully whether it is better to fight this, or pay up.”

The moves have come after years of homeowners paying a proportion of the purchase price in cash and then under-declaring the true cost of their homes in order to avoid tax.

Jon Clarke (Publisher & Editor)

Jon Clarke is a Londoner who worked at the Daily Mail and Mail on Sunday as an investigative journalist before moving permanently to Spain in 2003 where he helped set up the Olive Press. He is the author of three books; Costa Killer, Dining Secrets of Andalucia and My Search for Madeleine.

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  1. Actually I am glad this is happening. It is horrible to keep seeing deseperate people selling their beautiful homes at bargain prices just to get a sale. I bet the estate agents are keeping quiet about this issue, lol.

    It just goes to show that even now, after all the press coverage Spain has had about its dodgey property market, people are STILL being advised incorrectly on the amount of taxes they have to pay. The lawyers STILL do not know what the buyer has to pay, even now. Amazing.

  2. Factually this NON-appealable tax-authority from the Spanish tax Dept Hacienda is not new, nor related to the sudden drop in actual sale prices. And yes, the RE Agents normally don’t tell the Buyer this suden tax-reappraisal could happen after the purchase – that might kill the sale!

    Before, for many years it was fairly common prctice (but wrong) to Register a LOWER than actual Sale Price to reduce both the Buyer’s Tax and the Seller’s Capital Gains Tax. The balance was paid in cash-black money. Tax Dept HACIENDA had the legal authority to send a DEMAND for the “extra” tax they believed was due based on their assessed Proper Value of the property sale. Their assessment and tax demand were non-appealable. Some folks who bought/sold property paying up to 50% of the Actual price in Dinero Negro + 50% Registered Dinero Blanco were “surprised” to say the least.

    As Gordon Gecko said, “Greed is good”.. until you’re caught!

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