3% Tax?

I'm after a bit of advice if anyone is able to help. For many reasons (including being posted overseas and trying to let but having 2 long term non-payers) we have had to give up our Spanish house. We have already lost over 100K on the house and the bank have agreed to take back the keys as long as we pay another 30K. We have managed to secure a loan on our UK house to pay this. 

However the bank have now said that we must also pay 3% of the total amount of the transaction as this is the "3% retention that by law has to be done and deposited with the Inland Revenue".

I questioned this with my lawyer and his reply was "I know how you feel and I complained when he called me this morning as they can get this 3% back from the Inland Revenue with a POA as I have done with other banks. The explanation he gave was that they had little liquidity.

And that was it! So I'm now left having to find even more money to pay out for a house that I don't have or want. 

Maria del Castro - do I need to change lawyer and should I have to pay the 3%? Also do you think the banks will chase people to UK for the surplus - for our particular house there have been many circumstances when we should have pulled out and could have early on but were advised against it by the same lawyer.

Very grateful for any advice.

Are you a tax resident of Spain?  If you are paying income tax out here, or even if you don't have enough income to pay tax, and are making yearly nil tax declarations, the 3% won't be witheld. That is one of the advantages of registering with the Spanish tax system, which people should realise, is not a choice but a legal liability.

 Thanks campasol. So as a non-resident (in the EU even) I will get the amount back? No doubt there will be a charge for this though.

 The retention tax is to ensure you don't owe anything like captial gains tax etc.  As you are not making a property on the sale, you will receive that back after all checks have been done,  Be aware, though, that this can take a couple of years depending on how quick the area tax office are.  

 Thanks bobaol

Yes, you should get it all back but unfortunately it's unlikely that they'll call you up in a few months and tell you that they've got some money to return to you.

From my understanding, you do have chase it.

Best of luck and sorry to hear about the bad experience you've had. 

18 months it took me to get my 3% back  in Murcia, they did not teel me i had got it, it was put into my Spanish bank acc

 Most owners where we live simply leave the keys and walk away from Spain and their property.  They don't even bother to ask the bank to take back their property.  Eventually some bank does take it back but it often leaves the rest of us paying the communal fees for a long time before any bank steps in.

Oh dear, have you in fact paid the £30k and why?

When in Rome etc etc

Pay sod all  - as per the Spanish.

Shame about the 30G  -  no Spanard would have paid it !

Hi potblack, you speak sound common sense.

daveandnicky are simply facing a (horendous, I admit) decision.       But it's a decision that hundreds, if not thousands, of foreign buyers have already faced, and conceivably hundreds of thousands of foreign owners will face in the future - to the detirment of the Spanish economy..

The Spanish banks (& developers, Government etc)  have brought this on themselves: lending/subscribing to lending  huge amounts on properties priced 500% above their true worth.       None of them ever thought that the bubble would burst - it had never done so before, so why now?       But it has imploded, and there are hundreds of thousands of foreign buyers now in negative equity.

Add to mortgage costs ridiculously and unjustifiable urbanisation fees - fees that were set by the (invariably Spanish) admin companies/the developers who rigged everything so that the buyers would pay for every conceivable outlay, there is no wonder thatso many people are now questioning whether it is justifiable, or even possible that they should shell out some (possible) €1,750 - €2,000 per month, for a property that they use perhaps for 4 weeks per year: cannot get any help from the banks: cannot find tenants and worst of all, they're paying out this money for a property that they cannot sell - even at perhaps 1/5th of what they paid for it.       

The banks & the government have so far suffered a blast from a grenade, there's a thermo nuclear device going to explode shortly.

I have surrendered keys for 2 personal friends who eventually, albeit very sadly, bit the bullet and accepted reality.     It took one bank 2+ years to actually acknowledge that they had an extra property,although they're still trying to contact the owner in UK.

The other keys were surrendered 2+ years ago, and the bank concerned still haven't even visited the property - all  they did was to try to telephone the owner in UK - without any success, as she's now uncontactable, and has transferred all of her assets elsewhere.

If it's any consolation to daveandnicky, in a previous life, I worked for a similar organisation in UK, and I attended Court to attempt to recover the losses made on a re-possession/surrender of keys.  The Court Registrars were so unsympathetic to my company -  accepting offers from the ex Borrowers to repay a loss if perhaps £80,000 at £1 per week (1,500+ years to repay) that in the end the company made a acommand decisiont o stop pursuing losses - it simply cost them even more.  They started to write off the losses against pre-tax profits, and they could well afford it.   I cannot see a UK Registrar bending over backwards to nail a UK citizen who has (in so many instances) simply been ripped off by a combination of unscrupulous banks, developers & Agents, and presnted with nothing of what they were promised when they initially bought.          Sad, but true.

I anticipate that the stream of re-po's and surrenders of keys currently happening, will trun into a raging torrent before too long.

Just my opinion.

This message was last edited by finkies on 09/06/2012.

 I do hope you guys find the correct solution.

Does anyone actually know of any case where a Spanish Bank chased an owner to UK and successfully got their claim through the UK courts?

Hi Frank,

Well I certainly don't - I don't even think that the Spanish banks are geared up to do this yst.

It's not going to be long, if indeed it hasn't alady happened, that some opportunistic debt collecters in UK start touting their dubious expertise to the Spanish banks.

Although having spent a few years working for one of these "Debt Counselling" companies, they're paid strictly by "results" - and the results entail recovering money.      If the people concerned haven't any money, or they blunty refuse (always the best option) to be "counselled", there's little the counsellor can do but to slink away: he too os lucky to cover his expenses, if no money os forthcoming.

Theres' no stigma (or even anything adverse) in having a UK CCJ now - even voluntary bankruptcyis only for a couple of years.

The law is heavily slanted in favour of Joe Citizen,   

 I read some time ago that a couple of Spanish banks did try to attach assets of Brits who had returned to the UK without paying their mortgages and community fees, but the banks were not successful.  The British courts were not sympathetic and the Spanish banks retreated.  I think they realize that it's not worth the time, money and effort that would be involved in a case which they probably would not win anyway.  Especially after the way many British citizens have been treated by the Spanish government ... homes demolished, evacuation orders within 24 hours and so on.  Won't make the British authorities or courts very sympathetic to Spanish bank losses.

 I have heard they have followed people having obtained a judgement in Spain and asking for it to be rubber stamped in UK which then gives them the right to get bailiffs to act on their behalf in UK.

Does anyone know if its true?

Does anyone know people who work in Spanish banks?