Property Buying in Ibiza [Article 1]

stephen said:
btw you don't pay any tax at all on a house sale if you are using the cash to buy another bigger house which costs more - not a lot of people know that!
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Just to clarify that ... you may get away with a gain for tax not being assessed locally (in Spain) by transferring the gain into another home (I think that home can be anywhere in the EU actually if it's anything like Portugal, which was forced to extend the scope of similar provisions in its domestic legislation by the EU). The opportunities there ought to be pretty obvious to the "somewhat astute" ;)

However, if the Spanish property is an investment property that has never been your main home, most UK taxpayers purchasing (a second home) in Spain will still wind up being assessed to UK capital gains tax. So the tax break Stephen mentions benefits Spanish residents quite obviously, but can potentially help others with their worldwide tax exposures too, depending on their individual circumstances. In all cases seek professional advice ;) .
 
Many people will tell you that it is possible to reduce your purchase taxes by paying part of the purchase price in cash - this is tax evasion
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And usually money "washing" (as its known here) by the buyer, Still go`s on so I hear 8O To the notary with a cheque in one hand and a suitcase full of cash in the other, Check documents over, Notary leaves room while you count cash, Comes back, everything ok Gentlemen ? Yes, Docs get signed, Jobs a good un, Why else would we need €500 notes ??? hahaha

Tim
 
Purchase taxes

Dear all,

I am very aware that in the past it was possible to evade taxes by passing cash 'under the table'. No doubt due the current financial crisis this practice has come under the spotlight and has been almost eradicated.

You should NOT attempt to evade taxes as it could lead fines and even defective title to your purchase. No decent solicitor would suggest, or even tolerate such action these days.
 
Decent Solicitors in ibiza

The short answer is, of course, yes! but you do need to do your homework or get a recommendation from someone you trust.

Many solicitors do specialise in various areas of the law, just as in the UK, and may not be ideally suited to all aspects of legal work.
 
The problem with Solicitors in Ibiza is that you don't get any kind of client protection in Spain as you would in the Uk. This could simply mean that the guy you are using and paying to protect you is spending the evening with the person they are protecting you from in a local bar as they are mates, possibly a developer that is selling you a property that went to school with your solicitor. There is nothing to stop them having a chat over a beer or two. You just don't know.

I once had a chat with a Partner in a Uk firm of Solicitors that confirmed this, they had an associate office in Mallorca and if I needed representation in Mallorca then by going through the Uk firm, I would have the same client confidentiality as is under Uk law. Unfortunately he couldn't/wouldn't recommend someone in Ibiza.

On a happier note, back in the day, my house purchase on the Island which may/may not have included sacks of pasetas ;) went very smoothly I don't remember an Abagado being involved but then I am getting a bit forgetful.

I did use a local firm on another load of legal hassle, they were crap, I could have done better using google translate.

Personally, I wouldn't get too stressed about house purchase if you do your homework, it's the other kinds of legal stuff where I would tread carefully.
 
Solicitors

That is a bit a jaundiced view of the legal profession in Ibiza - many of whom are highly professional and some of whom are not from Ibiza, or even Spain.

I do though agree with you that you need to do your homework to make sure that you are not about to hire someone who is potentially 'conflicted'.

You really do need to hire a solicitor so that if they slip up, you can at least sure them - albeit that this process could be protracted.

I am currently using a great guy to help me with a boundary problem and he has been superb.

I could never advocate going it alone on a property purchase!
 
A good local lawyer can really protect your interests. We were lucky to have an ace one in Portugal who despite being very friendly with the developer acted at all times to protect our interests and opened doors which could never have been opened by someone who was not long-standing in the community.

I have come across several Barristers and Solicitors in UK who I would actually class as totally corrupt, worse than useless (actually kamikaze in some instances) and riddled with behind-the-scenes covert conflict they would never admit to. Not to mention 'sharp practice' at fee-maximization whilst at all times finding plausible excuses along the way. Those types make a complete mockery of the legal system. At least it's all more open in Hispanic countries so far easier to find out what/who you're dealing with by asking around.... and then manage accordingly.

The one thing to watch - in UK we are used to "client account" protection (i.e. deposit money with your lawyer and they keep it in a segregated interest-bearing account which can only be accessed for the purposes you authorize, in effect on bare 'Trust' for you. That concept is alien in some Mediterranean countries. Route money through your (local) lawyer and if they let you the funds are not automatically segregated from their own. So do not be surprised if when you sell a property in particular that it can take a wee bit longer that you expected to get your dosh forwarded on, for example if you choose to let your lawyer receive funds on your behalf as you are not physically there at completion. A different kind of 'trust' is called for in those circumstances !!!!!
 
So do not be surprised if when you sell a property in particular that it can take a wee bit longer that you expected to get your dosh forwarded on, for example if you choose to let your lawyer receive funds on your behalf as you are not physically there at completion.
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Simple way around the above, Have the Cheque made out in your name and pay it/ get whoever to straight into your bank, When I bought my house, I went to bank to get cheque and handed to seller at Notary personally, AFAIR it is part of the process, the Notary must see (the legal) payment change hands between the two parties, You may be able to do it electronically now? But when I bought mine it was "pieces of paper", Cash or Cheque did not matter,

Tim
 
Tim,

I too arranged for my payment to be made via paper. My Bank Manager came along and passed the cheque to the notary who passed it to the vendor and on to his Bank, and the deeds came in the opposite direction. All pretty straightforward if you are all there for the completion meeting.

Advice from us both appears to be - attend the completion meeting if you can!
 
Whilst I did attend the final "meeting" I also for some others gave my agent power of attorney which is very useful when not here pre move, Reasonably simple to do, Go to notary with "whoever" (I would recommend a good agent over a solicitor) fee was under 100€ afair, couple of signatures and he can act on your behalf,

Tim
 
^^ people are very trusting of those "pieces of paper". Let me tell you don't be so sure that Bank Certified Cheques are beyond being recalled or "lost" during processing after being paid in, especially if you don't run a local bank account :!:

One client got a Bank Draft from sale of a property (supposedly guaranteed and 'checked out' by the Notary and by his solicitor), paid it in and was horrified when 6 weeks later it was recalled and the proceeds debited from his account after signing over his house. He thought he'd been scammed by everyone involved and went into a complete panic attack ! Poor chap eventually got his money credited back but it took another 4 months. Meanwhile the purchaser had not benefited and it was all blamed on a 'correspondent bank' that had allegedly returned the cheque unpaid "in error".

Cheques paid in can be reversed by banks all too easily for a long time after they are meant to have "cleared". So even if you're there in person you have no electronic funds transfer between regulated solicitors' accounts to protect you knowing your lawyer is "in funds" on completion. No wonder people still transact in suitcases of cash with their bank manager there to check the money isn't fake !!!
 
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My purchase in Ibiza is a bit fuzzy now but I do remember the Notary was very helpful. She translated everything into perfect English for me and made sure I understood what was going on. That really sticks in my mind and I can still picture her now. Like a headmistress.

One bit of advice I can give is when travelling on a plane with a large holdall full of cash, get an Isle seat and put the bag in the head locker slightly in front of you and on the opposite side of the aircraft ;)
 
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