My best friend has just lost her husband and wants to go back to England. She has offered to sell me her apartment at a very reasonable price, a lot less than the current value. My problem is i have my own apartment which i want to keep in the same block and i need to know what the tax situation would be if i go ahead and buy this property. There are so many horror stories out there it makes me wonder if this will be a good deal or not. Any advice would be appreciated. 

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It depends for what reasons you are considering buying the property wen?

1)  What is the bank value of the property?

2) How much is it offered to you at?

3) Are you planning to re-sell it straight away or within a few years?

4) Will you need a mortgage to purchase it?

5) Are you planning to rent it out?

Remember the market conditions suggest that there could be a further decline in property prices over the next 18 months.  I predict at least 20-25%. 

If you are buying in sterling, then with the current exchange rate at €1.27 = 1 GBP, you will have to find about 15% more than before Xmas to cover the lower exchange rate.

So the property could drop in value by 25% plus you need 15% to cover exchange rate plus 10% purchase costs. So even if the property is for sale at 40% below bank valuation, it could be several years before you can sell it and see a profit.

Remember wen, wise investors are not buying property in Spain at present, or in any country to be exact. They are not buying even at 40% below bank valuation.

It would really need to be 50% less than bank val before it was a real bargain, even then you would not see any real profit for a couple of years at least.

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 You will pay 7% purchase tax plus usual notary and legal costs to begin.  You would then be subject to capital gain tax at 18% of the increase in value at the point you sold it.

It would be the same for anyone owning a second property, you would not be affected until you sold it. 

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Hi Wen, I'm sorry your best friend is in this situation. Losing her husband will have been very hard on her. I can understand that she wants to sell her apartment with the least fuss & selling it to you, at what she sees as such a low price, may have seemed ideal, to you too. Lots to consider.

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