SPAIN: AT BREAKING POINT? A political and economic analysis for 2013 IBERIANS OF THE YEAR: The most influential people and groups of 2012

Archives

| Category: Expats, Spain Expat | |

Calculating complimentary tax on Spanish property

The real sting to complimentary tax is that many Spanish house buyers don’t know it exists and it creeps up just when they think everything is paid for. After four years of living in a property you don’t suddenly expect to get a tax demand that dates back to when you bought it.

By



Of course, more research might have unearthed the possibility of this tax. But many purchasers expect the information to be given to them. Unfortunately, those keen to sell property are not always as keen to inform you of the taxes you can expect to pay. Ironically, this lack of transparency is one of the reasons so many possible purchasers are anxious about buying in the first place.

However, complimentary tax need not be a skeleton in the closet, provided you prepare for it. This tax, levied on purchases up to five years after the purchase date, consists of 7% of the difference between what you declared you paid and what the Tax Authority claim it is worth. Plus interest, of course. It originated because the full cost of the house purchase was not always declared in a bid to reduce Capital Gains and Transfer tax.

So how much should you put aside if you’re thinking of buying a bargain? The problem is working out what the Tax Authority will estimate the property to be worth. We have found it very difficult to come by the exact calculations to enable us to predict this. On the plus side, the rather fluid and complex formula they use is one of the reasons we’ve been able to win so many appeals.

All we can advise is that if you are considering buying a discount property you check what any previous purchase prices have been. This can be a useful guide especially if the price was paid at the height of the property boom (around 2004). Calculating 7% of the difference between this and what you pay should give you a rough idea of how much the tax might be.

Once you’ve bought your property, set the money aside and don’t be tempted to dip into it. Not for five years anyway. By then, if no tax demand has appeared you’ve got a nice little bonus for being prepared.





Related stories:


Next:
Previous:

Abaco Connect

Ábaco Asesores

Ábaco Asesores is a firm of lawyers and tax advisers established on the Costa Blanca in 1999. We have clients all over the world and provide legal and tax advice in seven different languages.
Website: http://www.abacoconnect.com/

Copyright: Ábaco Asesores
Category: Expats, Spain Expat
Short URL: http://iberosphere.com/?p=5468
You can follow any responses to this entry via RSS 2.0
Tags: , , , , ,

You must be logged in to post a comment Login

Recently Commented

  • Tim: From my point of view, girls working in a brothel are not forced,...
  • tom scott: sorry, but after having known someone for only one evening you...
  • tom scott: really stupid article! of course there are other options! the fact...
  • Matt: I am English and my girlfriend is from Madrid. My girlfriend’s ex...
  • betty: I hope that these comments will be read by new afa press applicants....