investment

Hi

We've bought into an offplan investment in Pinares de Mijas through a Spanish company. When we bought in July '07, we stressed that it was for an investment to sell on before key ready and they said that it would not be a problem as they could sell it on for us. This company are now telling us that they cannot sell it on for us because there is a new tax law just come in. We have been told that it has been known about for 2 years but we were not told about this at the time. We are not in a position to go for completion and we told them this at the time. Is there anybody who is going through a similar experience or has any ideas what to do? 

brookdale

Hi Brookdale,

I see your post has gone unanswered as yet, so suggest you PM our resident Lawyer Maria De Castro.

She will be able to point you in the right direction.

Good luck & kind regards,

you are in a very unfortunate position. if you do not complete you loss your deposite, if you sell before completion you obligated to pay transfer tax at 7%, the is on top of the purchasing tax of 7%. even you do not have a property to sell you are just selling a 'right to buy', spanish taxman will insist you pay the second set of 7%. this is the new regulation been put in place recently. even though it have been around for about 2 years, but a lot of local taxman only pick up now and enforce on it.

Unless your contract clearly states that you have the option to sell before completion, I don't think the developer is obliged to allow you to do so. Without the developer's consent, you cannot do it, as they have to cancel the original contract and effectively issue a new one to your buyer. It seems cruel and unfair that they told you it would be possible and now have retracted that, but unfortunately I don't think there is much you can do about it. In the current climate, the developer has probably realised that there is not much chance of them reselling the unit on your behalf and so would rather hold you to your contract.

The "new" tax law is a bit of a grey area that has been discussed somewhere on another thread by others more knowledgeable than me (try searching the forum) , but basically it is about the tax authorities getting wise to the former practice of contract "flipping" and undeclared profits being made, and now trying to treat selling before completion the same as any other property sale. This means the transaction attracts a 7% transfer tax, as with all resales, payable by the buyer. But, as it's a new build, when complete it will also attract IVA (VAT) at 7%. So it appears it's being taxed twice, which makes it nigh on impossible to sell (at least at a profit, anyway)

I hope someone will be able to add to this to either refute it or clarify it, and I wish you the best of luck with your situation.

we bought our apartment recently from a couple who bought at off plan stage 2 years ago and cannot go through with completion. To push the sell before completion they shared that second 7% with us because those days it is very difficult to convince developer to cancel the old contract and draft new one. Our developer is a big company which has made it clearly that they do not want to do so to save buyer's money but run a risk themselve be caught by taxman and in fact until the 7% transfer tax be paid they even do not consider grant 're-sell' to the couple.

So, yes, you can sell, but in current Spanish property market condition you are unlikely sell it without lost. For the vendor who were so keen to sell to us it is a small lost of 3.5% tax but they got their 30% deposit back.

Sorry, going off thread, but someone has to!

Flyingcat, I just LOVE your ID pic!

Sorree, peeps, pleeze don't tell me off!

I will be good from now on honest Guv!

Well, it depends..................my 1st cat Fibby, went to the angels at aged 11, so that's my ID..............

Fibby was a moggy, but had the look of an Egyptian cat, he was admired by many.

I miss him so much........................

He went to the cattery in the sky over 7 years ago, but if I call his name, my other cat 's ears prick up!

So, panther or running cat, I love them all!

I have two others, Edward (ok, no laughing!) he is black too but in the sunlight has hints of brown, and Chelsea.

(Ok you guys, no shouting)!

Chelsea is a tortoiseshell and supports her team brilliantly!

Come on you blues!

my cat was so human, he slept like one. face up with paw open, hence, my ID picture

we ought start another threat related to cat ...................when we tired to talk about properties, problems ........