BLACK MONEY PROBLEMS

Lovely Jubbly

 

 

Johnone

Hey that looks like my luggage when I go on holiday!!! ;+)))

I saw our builder & I took a snap of him counting his black money  (or maybe it's a buyer throwing his money away,  your choice  ..

Yes, I know it's dollars, they had no euros.

This message was last edited by morerosado on 8/28/2007.

Hello! Yeah, this "black money" stuff is really weird! I mean, it´s a commonly accepted practice which is illegal, and this only can be done if you agree to it.

So if you wish you can demand the real price of the property to be reflected in the Escritura. In this cases, it´s up to you and how informed you are.

 

Surley as a firm of lawyers and with the current Spanish and EU anti terror/money laundering regulations you would advise your clients ' quite simply not to do it'

I am just 'Inglés' and a Chartered Surveyor but my advice to people I deal with is 'dont do it'....Spain changed after 'Madrid' and the old practice is history and fading away||

With the slow market in 2008 very few builders and sellers will  walk away from a sale if you refuse

I speak also as a buyer

Everyone comments on how the black money benefits the builder.

Surely the buyer gains too? The purchase tax is reduced dramatically for them if part of the price is paid that way. ?

Just thinking out loud....

 

Laury

The buyer only gains until they wat to sell. If the new buyer won't pay black money, that 30,000€ you paid in black money becomes an extra 30,000€ profit that is liable to capital gains tax. I think I would rather pay the righttax in the beginning than be clobbered for someone else's gain later on down the road!! (That is my understanding of it anyway, I am new to this game so could have read it all wrong ).

Mark

Yes but the capital gains tax depends on how old you are and how long you've lived there.

You may not lose out.

In general Marksfish you are correct. Most people wont be of the age and time where they can get their profit free. Also if you are a resident and plough the profit back into another proeprty within the same tax year, you do not pay capital gains.

Better in general to pay 7% purchase tax than 18% of the profit - although with the market the way it is, not many are paying capital gains!!

You would be amazed at the number of buyers of new build properties that want to pay quite large amounts in cash and try buying land from a Spanish family if you are not prepared to follow the time honoured tradition of paying a percentage in cash!

No Im not amazed at all - the Spanish reckon its a divine right and it dates back many years to underdeclare and have black money. Hence many Spanish selling now - or their heirs as the older Spaniards buy property and hang onto it forever - insist on cash regardless.

We do not advocate it and will have nothing to do with it - anymore!! Notaries and Lawyers are too hot on it now anyway.

Post ' Madrid' it is history

The rules have changed

Anyone ' normal' from EU paying 'black money' is just asking for trouble!

But it is still true to say that if you do it right and you have ' UK notes' you can still use it to buy in Spain using the BM route!!

Our sale failed last June simply because the seller wanted to underdeclare... Our lawyer said "no", not only is it illegal but you could be in trouble with tax authorities for fraud!! 

When we refused to underdeclare, the seller walked away - by that time we had spent quite a few thousand euros!!!!

From our understanding, the authorities are now clamping down hard when they discover BM so not a good idea in my humble opinion.

Cath

Are you still looking?

2008 may just be a good time to buy!

Whilst prices of the good well located off plan developments are firm there are some good re sales about at sensible prices!

Brian  

Just a thought, if you declare the full amount and you bought via an agent, what about their fees.  Shouldn't they be deducted from the sale price and the amount declared is the amount the builder or vendor receives.

Otherwise this amount of money will be double taxed, the agents IVA and your 7%..

LauryC/Rixxy - Can you elabourate more on the CGT and age, I've read that if you're over 65, resident and owned house for 3 or more years then you could take the money back to UK free of tax.  Is this what you're talking about or is it something else.

LauryC/Rixxy - Can you elabourate more on the CGT and age, I've read that if you're over 65, resident and owned house for 3 or more years then you could take the money back to UK free of tax.  Is this what you're talking about or is it something else.

Semi, I think you'll find it was discussed in >>>  If you sell a Spanish property and buy another is there relief on capital gains tax? Maria de Castro advised.

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Edited ... hmm, that was for those reinvesting in Spain, wasn't it ?

This message was last edited by morerosado on 2/11/2008.

If you bought via an agent then their fee is invoiced and even written into the title deeds of the proeprty - that happened to me this morning. So its all legal and the iva is deducted. When you sell your property, your agents fees in full are deducted from any CGT due as is your lawyers fees, andything you did or bought for th property that you are leaving and so never throw receipts away.

I believe that after a certain age your cgt is 0 and you can do what you like.

As an owner/resident your liability reduces with time - Maria would know better than I and if you buy another property where all the profit goes into the new purchase within the same tax year, then your liability is 0

Hope that helps

Think you have 2 years to invest into the new property in Spain - then again i am no brief!! I think that if you are non resident and you are repatriating the money to the UK (I think, I think, I think) you are still subject to CGT as it is not your principal residence