Seek advice when buying a property in Spain

Anyone thinking of buying a second home in Spain should beware of ancient tax loopholes which could have a serious impact on their finances, says the National Association of Estate Agents (NAEA).
Overseas purchasers are often unaware of a tradition of misquoting property prices in order to avoid high tax payments, says Ian Tonge, chair of the NAEA International Working group. “The value of a home can have been shown on Spanish land registry documents as a lower figure for decades, in order that less tax is paid,” he explains. “This means that if the local authority wants to purchase the land today, as has been highlighted in recent cases in Valencia, proving how much it is worth can be very difficult.

“Historically, people have been reluctant to put in the full price on their documents because that would force them to pay more tax than the gain they had made on the property,” he continues. “If their property is then needed for road widening purposes, for example, they will only receive the government’s recorded value on it, and will be unable to prove that they are owed more. Purchasers in Spain must be careful to declare the true value of their property to protect themselves.”

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