selling spanish property

hope someone can help me ? im getting really worried as ive heard so many horror stories? i have a mortgage owing 217000. i purchased my house for 178000/ as i got some cash back to modify it./ how much tax do i have to pay when i sell it? i know the bank asks for one per cent for ending a mortgage early, im trying to work out how much i can sell the house for, to at least clear the mortgage and taxes. by your calculations how much would i have to sell the house for? thanks

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HI Tweety,

Your capital gains liability is 18% of any profit made unless you are buying another property in which case it rolls on.

You need to check your mortgage contract as there is the redemption of usually 1%, you will have legal fees usually 1% plus 16% iva but I know of a company now specializing in selling property for a flat fee - pm if you want more info.

You will have minor bits and around 500 euros should cover that. At notary 3% of the proeprty price will need to go to hacienda and is deducted by the purchasers lawyer in case of further tax liability and this is refunded to you.

And of course agency fees if you use one! Usually 5% plus iva!

So on your figures if you have a mortgage outstanding of 217,000 then I estimate you need to try to ask for

217,000 mortgage + 2170 redemption fee + 2517.20 legal fees + 2000 misc fees = 223,678.20 net. Add agency fees on top (12,984.297 inc Iva - though you could try and negotiate this) totals 236,662.49. (now the CGT tax of 18% plus iva)

Only you will know what you declared on the escritura and therefore what your tax liability will be and then you need to add that on!

You can deduct the costs of any works you have done to the property providing you have the bills, and also the original costs of purchasing the property.

This should clear you but you need check with your lawyer in case there is anything else -

Question is do you think your property will sell at that if you bought it for under 200K a while ago.

Good luck.

This message was last edited by Rixxy on 10/9/2007.

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Has anyone heard of anyone that has had their property repossessed due to non payment of mortgage. I have had a property in spain for about 2 years, never really planned to keep it for that long. I can no longer pay the mortgage and  cannot sell because it does not have an occupancy licence even though my lawyer told me it had been granted and forced me to buy with fines for late payment. The bank lent me money on a property i am unable to sell and has already cost me a lot of money, I have missed one mortgage payment and have decided to stop sending money over as it seems this will never end and even if it does get the licence Idon't think I will be able to get back what I have already put in. How long do repossesions take? Can they force the electric and water to be cut off? Can they come after assets abroad? I really need to speak to a spanish lawyer as I don't trust my own and have no money left to get a new one I am kind of stuck?   

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It really depends on the bank. It starts when you have a delay of 15 days in the payment of your mortgage  instalment and, initially, a solution is tried between the bank and you. If a re-financing does not work, the bank starts a judicial procedure for repossession wich may take from 6 to 12 months. The final step is the selling of the house in a  public auction.

Best,

M.

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Best to speak with Maria de Castro the resident lawyer on this site.

The banks are taking quite a while now to instigate proceedings, it used to be after around 3 missed payments, not seems to be around 6. Then its a relatively quick process and the bank then retains control. Water and electric will be cut off by the providors if you dont pay them, not the bank.

Once you are repossessed this will be lodged onto the spanish credit files in case you ask for a future loan.

Currently they are not chasing people back in their home ountries, but personally I feel it will start to happen as more and more laos are defaulted on with banks being unable to sell them on for the loans outstanding. In this case they will possibly come after you for the remaining amount, but I guess you could tie them up with the valid argument that they should not have lent money on an illegal asset in the first place!

I suspect there will be many many more situations like this as even if you had a buyer - you couldnt sell the property anyway!

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HI Paolobrown, I am in a very similar situation to you and thinking about stopping mortgage payments after buying 2 years ago on one of these no deposit, all fees paid, rental will cover mortgage deals.  I am also in the situation where the apartment valuation was over inflated by the bank and now I have an apartment worth less then debt.  I am very close to bailing out but would like some advice on the downside of doing this, obviously I will lose the apartment )repo) to the bank (not too worried about this aswill be glad to see back of it), but what I would like advice on is can the Spanish bank come after UK assets? effect my credit rating?  If so what are the chances of this?  as from researching this is appears that they are not really doing this yet? 

Any advice or guidance would be appreciated.

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I'm sorry to hear about your predicament. 

If you didn't have to put a deposit down then you will have taken a mortgage out higher than the purchase price.  In the current market there is probably no way you could sell it  and pay back the mortgage.  I assume this is what you are saying.

So, if you walk away and the bank reposesses the property then they will auction it off.  They probably won't be able to get the full mortgage back so will come after you for the remainder.  I do know of some cases where this has happened.

Now, I don't belive a Spanish bank can go after your UK assets.  BUT, a bank can sell a debt to a debt collection agency in another country. 

Many people move to Spain leaving debts behind in the UK.  When their creditors get wind that they have left the country they "sell" the debt to an agency in that country and so that debt becomes payble in that country.  I know this happens too!

So theoretically a Spanish bank could do the same the other way, although I don't know anyone who's experienced it.

Maybe Smiley can shed some more light on this.

Justin

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Hi all, does anyone know how to protect UK assets from the Spanish banks. The bank has already told me thgat it will affect my uk credit file and that they will come after my uk home. they wont change my mortgage to interest only to make the payments lower and I have tried evertnihg to sell and rent the property. i am now looking at puting it in an auction.

Thanks

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Sorry to hear about your predicament.  Have you tried talking to a mortgage broker here in Spain to see if they can help reduce your mortgage payments? We have a good one on here who goes by the name of "smiley".

Best of luck

Justin

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Hi Folks,

I have a hardly used apartment in Almoradi, had it two years and now want shot as just not getting the use out of it i had imagined.  It was supposed to be a short term 'try out' of  Spain for me, but I already know it's not for me.  Now I am of course coming to the realisation that I am going to lose a lot of money on this should I be able to sell it  at all after a few enquiries with agents.  I am just about to go out  on Sunday and try and put it on the market, and  have left it a bit late to make enquiries, I am just so depressed about it!  But really I'm wondering if anyone out there has any recent information about trying to resell, and maybe the best way to go about it.  Unfortunately I have no keyholder at the moment in Spain, so haven't really the option of putting it  privately on a website as I have no one to show it for me should someone want to view - however, I will maybe try and sort this out while I'm over and see if I can find someone who actually is there all the time.  I'm also wondering if  anyone knows if it is better to use a big agent like MASA or someone, or whether I might have some luck with a local estage agent iin Almoradi?  I'd love to hear  from anyone with any recent knowledge of trying to resell, particularly in this part of the Costa Blanca.  Also - what are the general views on whether the market will recover in time, or if now we have  to face the realisation that there  are far too many apartments and they are worth nothing unless right on the beach or some other great location?  I know this is my view.  it's ok if you are intending living there or at least a good part of the year, I don't suppose it matters  too much.  I've been told by an agent that the market is not expected now to even get to the bottom until end 2009!

I don't know whether to hang on in there paying out even more on keeping it going, or  bale out and accept big loss!

Mojo, Belfast

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Hi Mojo, contact "Georgia" on here. (Put "Georgia" into search facilty).

He's an estate agent based in office in Guardamar. He'll advise. (Great guy).

This message was last edited by morerosado on 4/23/2008.

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Thanks for that, I've done that for now and will hopefully hear from him.  Wish I'd started this a while ago!

M

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Hi Mojo,

If you hang in then that is probably your best choice at the moment,the market here as everywhere at the moment is very poor and confidence is low.

There are very few buyers around at the moment and those that are looking to buy are looking for a very good deal.

If you must sell then you have to price it to stand out in the market,it must shout above all the other apartments in the area.

For example,i took a 100m2 apartment with garage and roof top pool on for 125,000€ in Almoradi and thought it would go really quickly,nope,not a sniff.

The only thing that is still selling is prime location property and even that has to be good value.

People are still buying for permanent residents but that is predominantly detached and semi detached villas within decent neighbourhoods.

I am sorry i cannot fill you with more joy but with running the risk of upsetting a few people there were so many people that bought indescript property within indescript towns nowhere near the beach for holiday homes and rental income that the market is now flooded with them.

This is not a slight on yourself or even Almoradi,i personally like Almoradi as a town but i wouldn't go on holiday there...

The prices will not rise there in the next few years as there is now an over supply from people that bought from large agents out of the back of a car on the promise of rental income and capital growth,i hate to break it to you but they were lying!!!!

Unfortunately the people responsible for the demise in the property market have made their money and are now in the next "hot spot" peddling their drivel to the next unsuspecting punter.

I guess to summarise you can try to sell it really cheap and put it down to experience or you can sit in and wait for the market to at least stabilise.

i am sorry their is no better news but i guess its better to know the truth, at least you can make an educated decision based on facts.

On a brighter note(for me only,sorrry) i spoke to a friend of mine in the UK today and they are suffering as well, as is said to him the only difference is that i am sitting on the beach front having lunch staring at a brilliant blue sky,listening to the waves break the beach.....

There are worse places to be when things are tough........

Good luck Mojo i wish you all the best,if you do need any help,just ask

Regards

Georgia

 

 

 

 

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Don't sell all of those Villas in good locations Georgia !!   

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Thanks for all your advice,  Georgia, it's pretty much what I thought the situation was.  I'll probably attempt to get shot of it, and if I haven't managed that by the time I retire in 8 years, then I might have to go and live in it!   I like Almoradi myself, but would much prefer to end my days in Devon!

Mojo

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me and the wife have walked away from our property in formentera del segura on the advice of a pro he said we would never sell it and if we was going to try and sell it to advertise it in england. we brought from atlas and the y are very good at telling you what you want to hear like its in a prime location and you will have no problem renting it . oh well you live and learn. 

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another hopeless seller

Buy it or the bank gets it.

www.freewebs.com/paradisenearbenidorm/index.htm

about the only place left where there is any upbeat news about real estate is Canada and that unfortunalty is on a bit of a time lag. I expect things to turn negative shortly.

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