A BRITISH couple have fought off an ‘extortionate’ property tax that threatens to put potential investors off buying in Spain.
Dave and Philippa Staton fell victim to a surprise 9,500 euro back tax after buying a two-bedroom apartment in Duquesa.
It came after the local town hall wrongly applied a ‘completely unrealistic’ property value on the flat.
The seven per cent property transfer tax – that is catching out numerous property buyers around Spain – is levied not on the actual price paid but on values set by the town hall often many years earlier.
“These are usually well out of date and completely unfair,” explained Phillipa Staton, 44, a software developer from the West Midlands.
Now, on appeal, the couple have had the bill reduced to just 60 euros.
The problem has emerged as the inland revenue (Hacienda) has set minimum sale prices for tax purposes, despite property prices plummeting everywhere.
It means many unsuspecting buyers later receiving an additional bill for the difference PLUS interest for late payment.
“Three months after the sale was completed Hacienda demanded another 9,500 euros, and we went into a panic” explained Staton.
“The valuation was ridiculously high and we were paying the same as someone who has a two bed villa.
“So we paid for an official evaluation and it came back that we should only pay 300 euros more, which was close to what we had actually paid so in the end the bill was just 60 euros.”
According to lawyer Roberto Sanchez from Marbella-based Lawbird it is a growing problem.
“It has become a big issue with the recession, particularly here on the Costa del Sol which has one of the highest values in Spain,” he said.
“The valuations are based on prices from a few years ago and with the current climate it has become ridiculous.
“The valuations should fall to match the fact that prices have changed but it is beneficial to the town halls as they get more money.
“It is absolutely scandalous. Some are charging thousands of euros extra tax and people think that it isn’t worth getting a lawyer to fight it but it can be.”
There should be no ‘surprise’ as the lawyer advising the buyer can look up on the internet the minimum value that the tax should be paid on, which can be higher than the price actually paid. “http://www.juntadeandalucia.es/economiayhacienda/apl/surweb/consultas/bienesUrbanos/valUrbana.jsp”
The authorities have had to fix their own minimums because there was so much under-declaration of sale prices by people trying to avoid tax. Unfortunately, the system takes time to set up and has not been flexible enough to keep up with the fall in values – and as it’s going to bring in more tax if not contested, the authorities aren’t going to move fast!
Oh surprise surprise the Spanish tax authorities can’t keep up with reality, I’m so shocked I think I will have to go and have a lie down.
This must have been a shock to the owners but they managed to get it resolved by a clearly good appeal procedure. However, these taxes have to be set sometime and by nature, they are going to be out of date quite quickly especially with so much under-declaration. Bet not many people appeal about that!!
Very few of Spains property related departments can keep anywhere near, up to date. Their records and procedures are in keeping with the pre-historic building techniques that they refuse to up-date. And they ask; Why can’t we sell properties in Spain!
All the departments make so many mistakes , but unfortunately in Spain its not for them to sort it out its all down to you .
We paid nearly 1000 euros for an IBI bill that had the wrong numbers , obviously not our property but we were told we had to pay it and claim it back later.They had already added a fine for late payment . So we paid it , have put in the claim (2 years ago ) and been told we will get it back ……….when ? Oh and of course we still had to pay IBI on the correct bill .Totally pathetic .
I bought a property in Almeria in October 2010 for 78,000 euros and was told in February 2011 that it was valued at 169,000 for IBI tax purposes! This was despite the fact that the previous owner had only paid 139,000 euros for the property 2 years earlier. I appealed against the decision over 30 months ago and am still awaiting a decision on the amount of additional tax I will have to pay.
Does the length of time I’ve waited mean I may have ‘got away with it’, or can I still expect bad news and a hefty tax bill?
@peter bennett – My lawyer told us that it’s not possible to win an appeal based on the value of a property made by the town hall. Good luck with that.
Pandora, your lawyer was either ignorant or lazy. There is an appeal process and others have been successful. If it’s a marginal difference sometimes its not worth the bother, but if the payment demanded is large its well worth appealing. The timetable can be very tight so make sure that you act immediately the additional tax demand comes to you.
Frankly, i can’t see how it can be correct to demand tax for a gain that hasn’t been made and I hope that somebody is taking a case to Europe as it must be against natural justice and ‘human rights’. Just think if a case was won and all the extra tax had to be repaid! However, just getting own money back and not gaining anything.
“your lawyer was either ignorant or lazy”
Unfortunately, most are both lol.
Cheap answer Fred. There are many, good, conscientious lawyers, of all nationalities, working on the Costas. They are even more annoyed by their failing system than we are as it reflects directly on their integrity. They are working to change things, but it takes a long time to ‘turn a supertanker’! The difficulty is for new arrivals on the coast to know who are the good and bad guys.
Only my personal opinion you appreciate. I found a good German lawyer in Fuengirola and have used him for over a decade.
You still doing those meaningless Spanish surveys Campbell? lol
Fred or whatever your name is, I had hoped that it wasn’t you on this site too. You never have the courage to comment in your own name or respond to queries. You always have negative comments, abusing me and others who give positive advice from their own research and experience. So much so that I will not put entries on other web sites such as Typically Spanish and now this one. Well done Fred and goodbye.
Whoever is moderating this site, you have problems with Fred and his like. He will use aliases both of name and email address, but will eventually reduce your forum to petty mudslinging and negativity.
Not sure what you mean about “on this site” Campbell. A bit of an over-reaction to be honest as I am not stopping you from commenting. Well done on spamming Google with all your links though, most impressive.
Anyone had a Spanish property survey done?
There seems to be many more lazy , ignorant money grabbing lawyers along this coastline than good conscientious ones ( Axarquia ) Amazing how so many of them allowed their clients to by “non urban land ” to build houses on . Made a killing on that , then years later sell their services to try and sort out the unholy mess they have made , usually unsuccessfully .I don´t doubt they´ll come up with yet another way to fleece more money out of unsuspecting trusting people .
Am I cynical ? You bet .