Authorities say I 'underdeclared' 3600Euros!

Hi all!

I am new to this site having recently bought in San Pedro Del Pinatar.  We did everything as recommended by the solicitor, including declaring the actual purchase value of the property.

Now the Ministry of Finance has sent my solicitor a letter saying that I underdeclared by around 50,000Euros, so, they want 3600 Euros by way of 'fine'.  Solicitor says that it will cost me 1500 Euros for them to go to court to prove that I did not underdeclare (as I am totally innocent).

I have asked solicitor to send the information to Ministry to show them that it is unfair to do this as I have legitimately declared.  In addition, even if the Judge agrees that I am innocent I will still have the bill for 1500 Euros.

Not much fun since I have been out of work for over a year!

Anyway, it seems to me that this is going to be a common problem since prices in some areas have dropped significantly in recent years, and the Ministry is comparing 'current' declarations with 'historic' declarations!

Anyone got any ideas, experience or advice would be appreciated?  Thanks.

This seems to happen a lot lately due to the decrease in property value, you can try and argue it but most of the time will end up paying it anyways.

I do know that in some cases they will give payment facilities.

Joan

 You can of course claim and I have heard of succesful claims of this type.

Lots of examples here

Buy cheaply and the Junta Andalucia reassess by reference to multiple of catastral value.

Sell cheaply and the Hacienda/Tax Office reassess based on websites selling property and instead of a refund of the 3% retention they say you owe them money.

Catch 22 situation as to whether to appeal or just pay and really it depends on the amount of assessment as there is no guaranteed outcome.

I started a thread on this topic a long time ago and I was hoping more would share their experience but I think no one responded which was disappointing......

I know of someone who won a claim against thetax administration. I can send to you his contact details so that you can exchange points of view.

Hi Mariadecastro (&Faro)

Thanks, yes I would like that please and thanks for the information both!

What I can not understand is that it is either Law, or it is not, if it is Law, then why do the Lawyers not tell us so?  If it is not, then why can they even expect to get away with it?

Anyway, if youi can send the details then that would be useful?

Best regards

 Minimum tax value of a property can be known by lawyers. These other ones " market" valuations of the Tax Office are something that, as far as I know, are out of discretionary decissions, which is forbidden by Spanish Law.

You can also check on line yourself if you know the catastral value of the property in question.

The mimimum acceptable value is a multiple of the castastral value. The multiple varies from one Town Hall to the next depending on when the catatral values were last revised. Most estate agents know the multiples for the areas in which they actively sell property.

Most conveyancing solicitors check prior to completion and if value is below mimimun acceptable value to declare warn you to expect a letter/demand in due course.

If your solicitor did not check and warn you then I would complain to him but it won't get you anywhere in terms of compensation as they have a very limited duty of care compared to their UK counterparts.

http://www.juntadeandalucia.es/economiayhacienda/apl/surweb/consultas/bienesUrbanos/valUrbana.jsp

Faro/Mariadecastro

Thanks for the replies! So, to distil this:

Is my tax demand based upon the Authorities' valuation, or what I actually paid (assuming I can prove that)?

Best regards and thanks again!

their calculation is based on the difference between what you paid and the deemed value which is based on a multiple of the rateable/catastral value.

Example

Catastral value = 50,000

multiple = 3

Deemed value = 3 * 50,000 = 150,000

Declared price as per escitura = 120,000

Difference = 30,000

additional tax = 30,000 * 7%

Your lawyer should explain all this to you!!!!

I imagine this distrust from the tax man stems from all the years of under declaring and black money. Doesn't make it any easier to accept though.

Mark

Marksfish - You right that's where it all goes back to

The problem is some Town Halls re-valued their catastral values at the peak of the property boom and will not now accept the market has collapsed.

At one time you would have had no problem as declared price would nearly always have exceeded deemed value.

But now in some areas such as Benalmadena the actual price in almost all cases is less than the deemed value.

The Junta Andalucia is desperate for cash and are scrutinising returns submitted and seeing if anywhere in the chain there is a cent due to them and going back as far as permitted and placing embargos on bank accounts etc etc

Real nasty stuff pay up or else we'll embargo + surcharge + interest

It's a case of wake up and smell the coffee!!!!!!!!!