Wonderful Alcaidesa

We put down a deposit on an apartment  on phase 2 in April.

Say for example the purchase price of the apartment was 205,000 Euros so with all the added costs and taxes the total was @ 230,000 Euros.

The developers have changed as we all know.

The property is finished and we were supposed to complete in may but now this looks more like the end of June or Early July due to the change of developers.

Our Spanish solicitor contacted us recently stating that there are now more taxes to pay due to the developers underdeclaring or something.

An extra 15,000 Euros in taxes needs to be found and would we be able to pay  this amount or share a percentage of this amount with the developers in order to complete.

We are virtually at our financial limit and have not even bought a furniture pack.

Has anyone else been asked to find extra money for taxes at the final stages of completion?

Thank You

Helen and Kev.

we were talking to our solicitor last thursday he did not mention this  and on tuesday he sent us e-mail about contract signing and again no mention of more tax 

Hi Kevellan, there is total confusion among lawyers and agents concerning this new Purchase Tax of 7%.  It is additional to the 7% IVA.  I am selling an apt and the buyer doesn't want to pay this tax, as apparently it had not been implemented until recently.  Most lawyers seem to think it should only be paid on the 30% deposit portion of the cost price, plus the profit if any, for properties that are being sold before completion.  The Junta Andalucia say it's payable on the full original purchase price.  It is bringing contract resales to a near standstill as it is adding 7% to the cost.  Other lawyers won't give you an opinion on it.  One agent has written to the Junta Andalucia for a written ruling.  Everybody agrees it is unfair, as it's a new cost that people were unaware of when they signed their contract.  The new owners of Arenal seem to be insisting on payment of the tax on the full purchase price before they agree to the assignment of the contract and hand over of the property.  In a down market, it is adding further large cost and making a bad situation much worse.  Seems to me if Arenal/Cajasur are insisting on it, they should be the ones to pay it.  Nobody knew about it when they bought originally, so to implement it retrospectively is unjust.

Patrick

Hello

Thanks to everyone who has responded to our post.

We have asked our solicitor in Spain to try to get the developer to pay this extra tax and we are awaiting her response.

We feel that it is unfair that we should pay extra.

We were told the purchase price of the apartment and also the costs and taxes involved before we decided to pay our deposit.

No one mentioned this extra tax because apparently it has only appeared recently.

Thanks Again

Helen and Kevin.

is the new tax for all apartments or only for resale before compleation  and when did it come into force

we purchased ours three years ago and hope to sign contract in the next few weeks and our solicitor has not mentioned a thing about it

Hi I have just had an e-mail from my solicitor and she has explained the tax as follows:

If you buy directly from the developer an off-plan property the law considers that is the first transmission of the property and you have to pay VAT (7%).

If you buy from a particular in a normal resale you have to pay the ITP tax (7%), a resale tax.

So the taxation is different if we are talking about the first transmission of the property or the second one.

First transmission: VAT

The second, the third, ... transmission: Resale tax, ITP (Impuesto de transmisiones patrimoniales)

Sometimes, we have the following case: A purchaser buys directly from the developer (first transmission) an off plan property paying a 30% deposit of the total price plus the VAT, and he has to pay on completion the 70% of the price plus the VAT of this pending amount.

This first buyer sales the property before completion to a second buyer, as the first buyer only has paid a deposit to the developer and there is pending the completion amount with the corresponded VAT, the second buyer has to pay the VAT of the first buyer, and the resale tax because there is a second transmission between the first buyer and the second one.

Please, see below the example:

Mr. A buys a property from a developer for a price of 185,914.90 €, and plus VAT, the total price is an amount of 198,928.94.

He paid at the moment of sign the private purchase contract an amount of 59,678.682€ including VAT and he has to pay an amount of 139,250.26€ on completion including VAT.

Before completion he decides to resale the property to Mr. B, for a total price of 188,000.00€, because he is going to make some profit, but Mr. B has to pay the VAT of the first buyer, Mr. A, and also the resale tax because is a second transmission.

188,000.00€ - 185,914.90 = 2, 0851.10€ is the profit that Mr. A is going to obtain, but Mr. B has to pay the following figures:

1º An amount of 59,678.682€ plus the profit (2, 085.10€) = 61,763.782 , has to be paid directly to Mr. A, so he is paying him the deposit that Mr. A has already paid to the developer including VAT and the profit that Mr. A is obtaining.

2º An amount of 139,250.26€ including VAT directly to the developer, because is the completion amount.

If we sum the three payments, we have a total of 201,023.04€, that is the result of the original payment that should be done for the first buyer but as he is reselling the second buyer, Mr. B, has to pay also the profit.

198,928.94 (developer’s price including VAT) plus Mr. A profit 2,085.10 = 201,014.04

The second buyer Mr. B, as he is buying directly to Mr. A, and is a resale (is a second transmission) he has to pay the 7% resale tax, of the total amount that he is paying

201,014.04 x 7% (resale tax) = 215,085.02€

So finally he has to pay 215,085.02€.

This is not something new, this is something that the law says for long time ago but the people sometimes don't know what they are buying and the tax implications.

Hi Sef

Just been looking at your reply from your lawyer seems a bit long winded.I am no expert but your first email said would you mind sharing this extra tax.Why would someone ask did you mind sharing the burden if it was yours.

Your second posting says you are paying the first buyers vat. plus more tax .because it is a second sale..If you are buying of the first purchaser of the apartment surely he must have paid in full before it becomes a second purchase .Otherwise it would seem like you are just taking over an unsold apartment of someone who has put down a deposit and not gone through with the sale.It would seem like you are the first buyer completing on the purchase.

Seems strange idea to be in a second sale situation if the apartment has not been completed on the first time.Under these terms it would looke like people pulling out of a purchase on phase 4 would need to check the true costs before they think of buying a resale on another phase.Something I had in mind myself.

Hi sef

Sorry my last post probably seems strange to you.I thought I was answering a problam possed by Kevellen .I did not see why he was being asked for more tax.I misunderstood your post .I thought it was another by Kevellen