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Legal Questions Podcast With Maria de Castro

Every month, in association with Maria de Castro of Costa Luz Lawyers, we're going to be bringing you a recorded podcast where Maria will be answering your questions relating to Spanish law. Be informed!

LEGAL PODCAST WITH MARIA DE CASTRO
28 March 2014 @ 21:49

 

Here are the questions received for this month's podcast.  We have selected 10 questions for this month's podcasts,  but Maria has kindly supplied us with written replies to all questions posed. They are as follows:

 

1.     INHERITANCE AND WILLS

 

Name: Ray 

 

Comment:  would appreciate your help with the following 3 questions relative to inheritance tax. I am also writing on behalf of friends who need advice.

 

1. We are all Ex Pats. and registered for tax purposes in Spain.

Is it only the assets in Spain that are involved in inheritance tax calculation? we all have English and Spanish wills. 

2. Is the property value for tax purposes, that which is shown on the Cadastral records? 

3. After the recent Modelo 720 is any declaration of overseas assets involved in Spanish inheritance tax.

 

Answer:

It will depends on personal circumstances of your heir and type of assets and its location

 

If they are Spanish tax residents when they will receive your inheritance, they will declare, as every Spanish resident, their worldwide assets here.

 

Law governing Inheritance Tax in Spain contains certain rules to avoid double imposition but there is no bilateral agreement between Spain and Uk, USA or Ireland. Just with France, Greece and Sweden.

 

It is the aim of the European Union to unify tax criteria, tax concepts for IHT, but that is still a project and the only positive legislation on that is a Recommendation by the European Commission dated 2011, which has nit be implemented by many of the countries.

 

720 has nothing to do with IHT. Your heirs will declare allassets received worldwide by Inheritance to the Spanish Treasure, if they are Spanish residents by that moment.

 

The advise is always to check with a good lawyer expert.

 

RELATED COSTALUZ LAWYERS GUIDE: 

 

http://www.eyeonspain.com/blogs/costaluz/12266/Legal-tip-1104-Inheritance-and-taxes-in-Spain-simple-picture.aspx

 

 

 

2.      3% RETENTION WHEN SELLING PROPERTY

Name: Dr. Peter F. Cole.

 

Comment: We sold our house in Spain in September 2013 and our lawyer has not yet been able to get a figure of the tax we owe, if any. Is this six month delay normal for a house transaction???

Regards

Peter Cole

 

Answer by CLL:

 

Dear Peter:
The buyer must have deposited a 3% in the treasure within 1 month from Notary signing date. 

You as vendor need to declare the income within 3 months since the buyer deposit the 3% at the Treasure

Treasure will make a provisional liquidation of the tax within 6 months from your declaration.

 So it can take even 10 months for the Treasure to do this.
 

 

3.       TAXES WHEN SELLING A PROPERTY

     

Name: Barbara

 

Comment: What are the tax implications of selling a property way below what it was bought for, given the depressed housing market?

 

Answer by CLL:

 

Dear Barbara:

There are two taxes that the buyer pays when selling a property:

Income tax: If there has not been any income and you fully document it, there should be no tax involved.

Plusvalia: Same reasoning as above.

In any case, the declarations need to be made and documented.

 

 

4.        ENERGY CERTIFICATE

Name: Kenny

 

Comment: I'm thinking of selling my property in Spain, can you please clarify at what stage I need to get an Energy Performance Certificate? Is it before the property can be marketed by an estate agent or when a buyer is found? One estate agent is saying one thing and another something else! Also costs seem to vary wildly from €100 to €250!

 

ANSWER: Dear Kenny:

You need to have it available as part of the way to show the quality of the object you is offering for renting/selling. But as far as you are managing it, you cannot be fined. Of course for the moment of contract signing or deeds signing, this is essential to your liability.

Kindest,

María

Related informative posts: 

http://www.eyeonspain.com/blogs/costaluz/9849/legal-tip-922.aspx

http://www.eyeonspain.com/blogs/costaluz/10231/Legal-tip-946-NEW-Royal-Decree-on-Energy-certificates.aspx

 

5.        SELLING A PROPERTY, SELLING IT TO THE BANK

Name: Derek Coundon

 

 

Comment: I would like to know the amount we should be charged to sell our house. We paid €90,000 for it but are having to sell it at far less and we owe most of this to the bank. We may be lucky to sell it and pay the bank and fees and come away with nothing.

 

Dear Derek:

As far as I am aware, it is the easiest way to sell the property as market values are generally lower than pending mortgage (price you need to sell it for). Unless other way around, and you a sale price at the level of market places.

If your debt is around 70% (if first residency) or 50% (if not first residency) OF AUCTION VALUE of the property, the Bank might accept your property back.

Kindest regards,


Maria L. de Castro

 

Related Forum Thread: http://www.eyeonspain.com/forums/posts-long-18217.aspx

 

 

6.        INSURANCES LINKED TO MORTGAGES

 

Name: Elizabeth Armstrong

 

Comment: I have been paying a life and house insurance policy with Sabadell (previously CAM) thinking it was a condition of my mortgage.  I have since been told by a financial adviser that this is not correct.  I can buy insurance policies on the open market, and as long as I make Sabadell the beneficiary on the event of my death, that is acceptable.  But Sabadell won't accept this.  And my annual policy costs rise and rise.  What is the legal situation?  Can Sabadell force me to continue with their exorbitant life insurance against a very small mortgage?  Thank you for your assistance.

 

ANSWER:

 

Dear Elizabeth:

I would need to see the mortgage that you signed and how those insurances were linked to specific mortgage conditions. Then we will be able to see if the clause is abusive as if you already have a life insurance, you can claim that the existence of this is enough for the purposes agreed on the mortgage. 

 

Only legally obligatory insurance is the Home Insurance for risks of fire, flooding and earthquake.

 

Kindest,

María

 

RELATED BLOG POST: http://www.eyeonspain.com/blogs/costaluz/12255/Legal-tip-1102-Mortgage-and-related-products-Obligatory.aspx

 

7.         IHT REDUCTIONS FOR SPOUSES

 

Name: Doug & Fay Beattie

 

 

Comment: We own our own house here in Spain & have got a Spanish will done we have NIE & Residencia & were on the Padron we have heard you have to make provisions with a Lawyer so that the government don’t take a big slice of our money when we die?

 

ANSWER:

 

Dear Doug:

Nor your wife or you will have big bills as being spouses and keeping the house as first residency, there are big reductions to the taxable amount.

There is nothing you can do at present to minimize this.

Kindest,

María

 

We are preparing an updated guide on IHT for all regions in Spain

 

 

8.        REVISION PROCEDURES

Name: Fiona & Peter Hammond

 

Comment: We would also like to comment on the Complementary Tax  problems.  We purchased a 80 sq mt villa in Alicante Provence last summer and last week received a bill for this so called tax for over €7000.  We purchased the property for just under €100,000 and now the local tax office has valued the property at €188000.  Like others posting information on Eye on Spain we do not understand why we are being asked to pay tax on money we have not spent.

 

We are going to first appeal and our legal advisor has told us that the valuation is under a new system introduced three weeks ago, however he also states the valuation is far too high for a small holiday villa.

 

What is the new system and what basis are they using to make this valuation and where has this information been made public?

 

ANSWER:

 

Dear Fiona and Peter:

I am not aware of that new regulation but I have searched and see that High Courts of Justice are passing decisions against these valuations by the Administration. My advice is always to contest them.

Kindest,

María

 

 

9.         SPANISH WILL

 

Name: Debbie Devaney

 

Comment: We own an apartment in Almeria on a complex and use it for holidays. We have a will in the UK that states if either I or my husband dies the other inherits all, including the Spanish apartment. If and when we both die all our worldly goods go to our two children. 

Is the UK will enough to sort out matters of this nature or do we need to make a Spanish will?

If we do need to make out a Spanish Will, how do we go about this and is it expensive?

Thank you in advance

 

 

Dear Debbie:

IN theory, the UK will is enough but, having a Spanish title of will makes the process much easier for inheritors. A will in Spain costs around 60€ at the Notary. Lawyers’ fees for the wording depend on how simple or sophisticated the will is.

Kindest regards,

Maria L. de Castro

 

 

10.        RENTAL CONTRACT

Name: Ruth Carter

 

 

Comment: I have to return to UK for health reasons, I have a 1 Year rental contract which ends in September, I have given my landlord 7 weeks notice in writing, is this acceptable, or am I liable to pay the full years rental.

 

 

Dear Ruth:

Yes it is correct, as you have been under the rental contract for 6 months and are noticing the leaving with more than 30 days. Compensation rights of the landlord for this case will depend on if you agreed something on this in the contract. Did you?

Kindest,

Maria

RELATED POST: 

http://www.eyeonspain.com/blogs/costaluz/11328/Legal-tip-1029-NEW-Spain-Rental-Act.aspx

 

 

11.  REDUCTIONS TO TAXABLE AMOUNTS IN BALEARES

 Name: Susan Edwards

 Comment:

I want to add my daughter as third owner to my and my husband's apartment in Majorca and I understand that there will be a new law which will make it less expensive to do so in 2014.  Is this the case and can you explain the advantages in doing so when obviously we will both die in the future.

Answer by CLL: 

Law you refer is a possible extension of reductions of taxable amount when the new owner is a direct relative of deceased. At present there are some reductions if the house will be the habitual dwelling of the receiver: under certain age, certain incomes, certain price…. 

 

12. IHT FOR SPOUSES

Name: Dolly Ford

Comment:

My husband died at home in Spain last Saturday. Everything we owned, house, bank accounts were in joint names and I am terrified that the inheritance tax will wipe me out. Can you give me some guide as to what to expect please?

 

ANSWER:

Dear Dolly:

In terms of Inheritance taxes, it is very likely that you, as being the spouse of the deceased, has very high reductions on the taxable amount. 

After your death, it depends on who will be the heirs.

Kindest,

María

 

13. UNFINISHED WORKS

Name: David painter

Comment:

We had a villa built under contract with a Local Builder. We paid all monies due under the terms of the contract and even gave the builder a bonus because we were so pleased with his work. All the work was set out in a specification prepared by ourselves and attached to the contract along with the contract terms.

The Builder went bankrupt shortly after he finished our villa and had not paid some of his contractors. We have been threatened by the lawyers of one contractor that if we do not settle the outstanding monies owed they will seek to place an embargo on my villa as the debt is owned by the property. The work carried out by this contractor is contained in the build contract as part of the contract with the builder.

What is my position in Law?

 

ANSWER: 

Dear David:

As you tell, your contract relationship was with the builder. It is him who needs to cover those debts. You have no contract relationship with those contractors so no debt exists or can exist in the future.

Kindest,

Maria

 

14.  BANK INFO

Name: Ann Wragg

Comment:

Is it possible to force a bank to disclose the recipient/s of bills of exchange paid thru them from my private account

 

ANSWER:

Dear Ann

They need to confirm to you that the operation has concluded satisfactorily and if you need details of the receiver account for legal reasons, you can also request this information from them.

Kindest,

Maria

 

15. SPANISH TAXES

Name: Richard Ansley+

Comment:  (reply in blue bold)

Estimada Maria,

I would like your opinion on the legality of two of your Spanish taxes. I am considering making an application to the European Court for their consideration as to whether

these taxes are inequitable.

Firstly, the IBI is calculated on the cadastral /value of the property which seems to be, on new properties, the purchase price. // IBI is always the result of factoring cadastral value with a local percentage. // Current property values on our resort are approximately one third of the original purchase price.

Secondly, The IRNR or income tax is claimed against all non-resident foreigners owning property on the assumption they are letting it out. How on earth is this fair? Not many owners on our resort let out their properties but we all pay this tax. // Reason for this tax is not the letting out but ownership itself. // It just seems an easy way to collect an unfair tax?

Saludes cordiales, Richard

 

16. OFF PLAN PROPERTY

Name: Norman Savage

Comment:

I have been locked in dispute / legal proceedings with Corvera golf and country club the matter has been going on since 2007. On Jan 27 the courts have ruled Corvera must repay all deposits including interest within 20 days.  Corvera have ignored the court no payment has been made. What are my options now do I have to take Corvera back to Court and wait another 2 years for the trial? Can you offer any advice on the way forward?  

ANSWER:

Dear Norman:

After the firm decision, just an enforcement procedure starts. You do not need to restart any legal proceeding.

Kindest,

María L. de Castro

 

17. CLAUSULA SUELO

Name: Ken Gleeson

Comment: In view of the Supreme Court ruling relating to Clausula suelo in my mortgage agreement can I now claim back the monies paid under this clause from my Bank. My Bank is Banco Popular and all the emails I have sent to them relating to this matter have been ignored.

Thank You

 

ANSWER:

Dear Ken:

Of course you can claim on undue amounts.

We wrote a post on this today: 

http://www.eyeonspain.com/blogs/costaluz/12458/Legal-tip-1122-Steps-for-Floor-Clause-removing.aspx

My advise is for you to hire a lawyer for this.

Kindest,


María

RELATED BLOG POST: http://www.eyeonspain.com/blogs/costaluz/12458/Legal-tip-1122-Steps-for-Floor-Clause-removing.aspx

 

Thanks for participating! We will let you know next week when you can start sending in questions for next months podcast.

 



Like 1




2 Comments


mollusc said:
30 March 2014 @ 12:32

Re: INSURANCES LINKED TO MORTGAGES
Name: Elizabeth Armstrong

I had exactly this problem with Banco de Valencia a few years ago - ie they insisted I have a card which I didn't want and had to pay for, and house insurance that was VERY expensive.
There was nothing in mt mortgage about any of this - it was just their way of making extra money from me.

I wrote to the EU Commission and got a trelephone reply almost immediately from a guy in Brussels. He also sent me a very nice letter asking if I would like the EU to investigate the bank practices. As soon as I showed this to the bank they backed down immediately.

Under EU Law it is illegal to tie such things to a mortgage - it is classed as unfair trade.

You might have to search around the EU Commission website for the right place to make a complaint but it is worth giving it a go.

I have another friend with Sabadell and they are doing exactly the same to her. Her insurance is €100 more than she could get elsewhere.


mariadecastro said:
30 March 2014 @ 19:42

Mollusc:

Well done!

These are great news as they prove effectiveness of European Institutions for Consumers Protection. Keep them coming!

Maria


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