Spanish vendor wants 100K under the table

[joeExpat]

So I'm looking to buy this house in Spain overlooking the sea, and the asking price has been dropped 20% since last year. I saw the property for a second time on the weekend & met the owner.

He then reveals that he's only interested in selling with 100K under the table to reduce his capital gains tax. The agent is also there & totally agrees & says this is normal, & if I want to pay legally I have to add his capital gains tax to the offer price, & I should acquire the 100K Euro out of the country so the government can't see it transferring through the bank accounts.

No wonder Spain is in a spot of bother .. this would rip off the government by 21K cap gains tax (21% for residents, 35% for non-res) & 8K stamp duty (8%). Anyway I've made him an offer but I'm not going along with this. Suppose that means I won't get the house.

Anyone else had this sort of proposal put to them ?

 

[luce.rocks]

It's totally normal. Sometimes they even ask you to keep that 100K outside of the country, e.g. put it in an Australian bank account for them, so they don't have to worry about sneaking it into the country.

Where abouts are you looking at this house? My fiancee is a licenced RE agent and valuer over here (and ex-developer and local councilor), if you need an extra opinion!

*edit - just noticed you're in Switzerland, so yeah, maybe a Swiss bank account instead of an Australian one!

 

[Player]

Hahaha.

I can understand it occuring in Southern Europe. We were selling our PPOR in Melbourne not so long ago and one of the offers was $ X plus $200,000 cash. I asked our selling agent do you mean a separate wire or EFT of the 200 K or actual folding stuff.

T'was the latter

I told him to thank the person offering such however was curious if he was stupid. Personally I have no need for 200 K in Ca$h, nor any gain from tax perspective (CGT) as it was a PPOR. So, the potential buyer was saving $12,000 stamp duty and laundering funds. What he didn't think of was that I am unknown to him. I don't enter contract fraud

When I deposit those funds into my bank, the red flags will be waving at the ATO and probably other criminal agencies. When I get a please explain, I would and advise of the origin of said funds.

Had he any common sense, he would have offered fair contract price and at least renovate the house slowly, here and there with the cash funds or purchase furniture, etc., although ATO can always audit proof of improvement it is still a little more protective to him and somewhat easier to hide.

Ya live and learn every day

 

[Piston Broke]

It's just another complaint that the price is too high.
A price is a price, and cash is still legal tender.
I am entitled to ask 100% cash for the sale of any property.
That someone else may resent that is their problem.
And what I do with the money is irrelevant and my bizness.
You pay the price or you don't.

 

[evand]

It's cash, you dont put in in your bank account.

The thing here is that you and the prospective buyer were speaking different languages and you were having trouble understanding.

When I deposit those funds into my bank, the red flags will be waving at the ATO and probably other criminal agencies. When I get a please explain, I would and advise of the origin of said funds.

 

[Macca]

Reading about the problems within the Euro zone I think I would be waiting until the Sovereign debts crisis is resolved.

If Greece defaults it is likely that others will follow and the prices of RE in Spain could drop 50% overnight if they leave Euro.

Swiss money will be very strong if the whole Euro thing collapses

 

[Sunfish]

Hey Joe! how's things in Spain?

I would love to live in Barcelona or Costa Brava but couldn't afford it. Are prices likely to come back to earth any time soon?

 

[Player]

It's cash, you dont put in in your bank account.

The thing here is that you and the prospective buyer were speaking different languages and you were having trouble understanding.

Not at all. He was nowhere near the price we sold for anyway. His offer was unattractive in all apsects. I get the premise with smaller items but not assets in seven figures that are reported to state govt departments upon transacting.

In the first instance, I did not ask for cash. Secondly, contract fraud is not something that I would enter into.

 

[evand]

yes, you already said all that in your first post. As i said, you guys were speaking different languages. Regardless of the offer price.

Not at all. He was nowhere near the price we sold for anyway. His offer was unattractive in all apsects. I get the premise with smaller items but not assets in seven figures that are reported to state govt departments upon transacting.

In the first instance, I did not ask for cash. Secondly, contract fraud is not something that I would enter into.

 

[bene313]

He then reveals that he's only interested in selling with 100K under the table to reduce his capital gains tax. The agent is also there & totally agrees & says this is normal, & if I want to pay legally I have to add his capital gains tax to the offer price, & I should acquire the 100K Euro out of the country so the government can't see it transferring through the bank accounts.

The other thing to consider is that if the contract is priced a 100k lower than what you actually paid, how will you substantiate your cost base when you come to sell the house and pay CGT yourself? If you sell you could potentially be paying CGT on an extra 100k.

 

[joeExpat]

Where abouts are you looking at this house?

The property is on the Costa Brava north of Barcelona. My offer is about 25% below what it first listed for last year, & today he's almost accepted it, but not quite, still got still the small issue of black money. It does look like some amount of black money is unavoidable & expected in Spain.

I know a lot of people say don't buy now in Spain, it will drop further, but it already has dropped a lot, and sometimes when everyone is gloomy it is the best time to buy, but it takes some nerve
(e.g. stockmarket March 2009)

To put it in perspective this 3 bed 2 story house with great views over the Med is worth less than my 1 bed flat in Sydney with no view.

 

[luce.rocks]

Well, if it doesn't work out, or you'd prefer to buy something that doesn't involve black money, my fiancee has some houses for sale in Sant Feliu de Guixols (Costa Brava). They're high end houses, some with pools, but the ones that are built so far don't have ocean views. Down to around €700K from 1mil a few years back. There are also unbuilt blocks that would have ocean views. Anyway, hope I don't get into trouble for spruiking. Just mentioning it because it's kind of relevant to this thread

 

[Sunfish]

Well, if it doesn't work out, or you'd prefer to buy something that doesn't involve black money, my fiancee has some houses for sale in Sant Feliu de Guixols (Costa Brava). They're high end houses, some with pools, but the ones that are built so far don't have ocean views. Down to around €700K from 1mil a few years back. There are also unbuilt blocks that would have ocean views. Anyway, hope I don't get into trouble for spruiking. Just mentioning it because it's kind of relevant to this thread

I think spruiking is acceptable here.

I loved Barcelona. As I said earlier I doubt I could afford to live there though. Costa Brava would be wonderful: Close to Andorra, France and Europe generally. Got a Lat/Long so I can check the area out on G Earth?

 

[luce.rocks]

I think spruiking is acceptable here.

I loved Barcelona. As I said earlier I doubt I could afford to live there though. Costa Brava would be wonderful: Close to Andorra, France and Europe generally. Got a Lat/Long so I can check the area out on G Earth?

Well, I found it on google maps and these are the coordinates: 41.787545, 3.040048 but it's an old pic because they got a few more houses up before the crisis hit.

I've attached some pics from the brochure as well but I could only attach 3. Plenty more if you want them! Richard probably has real pics of the finished houses somewhere too. I can ask him when he gets home, if you're keen

 

[Aaron Sice]

The property is on the Costa Brava north of Barcelona. My offer is about 25% below what it first listed for last year, & today he's almost accepted it, but not quite, still got still the small issue of black money. It does look like some amount of black money is unavoidable & expected in Spain.

does he want the sale or not?

he makes it sound like he's doing you a favour by selling it.

just walk away, and listen for the call the "come back come back i sign i sign".

 

[Property Meister]

With all respect, it may be just how things are done over there?????

eg in thailand, police will deliberatly pull a tourist over if they are riding a bike, and threaten to arrest them on some bogus offence, and all they want is a $20 bribe, which is like 2 days salary!

imagine what would happen by refusing to cough up the $$$ on principle

 

[luce.rocks]

Some other first-hand examples of 'how things are done in Spain':

Fiancee put in a sell order for some stock. His banker thought it was a bad decision, so he didn't sell it. Stock went down.

Fiancee's holding group has different companies registered for different developments because these different developments have different partners, stockholders, etc. One company needed to pay 300K in backdated taxes and the money wasn't in the account, so his banker just went ahead transferred money out of a different company's account. And couldn't understand why this was a problem!

Fiancee sold his PPOR 2.5 years ago (the legal way), payed all CG taxes, etc. Government decided, over a year later, that their valuation (theirs, not his) of his apartment had been too low, and, without notice, they took an extra 3000 euros out of his account (yes, they can do that).

Fiancee is on the local council for a town just outside of Barcelona. He knows of at least 3 councillors who 'borrow' money from the city accounts and then make the debt disappear. And countless others who take bribes.

Spain is crooked, crooked, crooked. At least as far as bank and politicians go!

 

[Belbo]

And that crookedness corrupting everyone and everything is largely why it, and its neighbours, are in such a massive financial black hole. Someone always has to pay the bills in the end.

 

[start-up]

That is horrible! Scary stories, I don't know how it's tolerable to live with those financial 'irregularities' being the norm.

It's a shame as it's an attractive dream (living there) visited Barca recently and loved it.

Some other first-hand examples of 'how things are done in Spain':

Fiancee put in a sell order for some stock. His banker thought it was a bad decision, so he didn't sell it. Stock went down.

Fiancee's holding group has different companies registered for different developments because these different developments have different partners, stockholders, etc. One company needed to pay 300K in backdated taxes and the money wasn't in the account, so his banker just went ahead transferred money out of a different company's account. And couldn't understand why this was a problem!

Fiancee sold his PPOR 2.5 years ago (the legal way), payed all CG taxes, etc. Government decided, over a year later, that their valuation (theirs, not his) of his apartment had been too low, and, without notice, they took an extra 3000 euros out of his account (yes, they can do that).

Fiancee is on the local council for a town just outside of Barcelona. He knows of at least 3 councillors who 'borrow' money from the city accounts and then make the debt disappear. And countless others who take bribes.

Spain is crooked, crooked, crooked. At least as far as bank and politicians go!

 

[VYBerlinaV8]

Some other first-hand examples of 'how things are done in Spain':

Fiancee put in a sell order for some stock. His banker thought it was a bad decision, so he didn't sell it. Stock went down.

Fiancee's holding group has different companies registered for different developments because these different developments have different partners, stockholders, etc. One company needed to pay 300K in backdated taxes and the money wasn't in the account, so his banker just went ahead transferred money out of a different company's account. And couldn't understand why this was a problem!

Fiancee sold his PPOR 2.5 years ago (the legal way), payed all CG taxes, etc. Government decided, over a year later, that their valuation (theirs, not his) of his apartment had been too low, and, without notice, they took an extra 3000 euros out of his account (yes, they can do that).

Fiancee is on the local council for a town just outside of Barcelona. He knows of at least 3 councillors who 'borrow' money from the city accounts and then make the debt disappear. And countless others who take bribes.

Spain is crooked, crooked, crooked. At least as far as bank and politicians go!

And this is why they are in trouble, and why I would not do business in such a place. It's hard to feel sorry for them when they behave so dishonestly.