Questions About 1099

The recent property boom has revealed a dark underbelly in the sale of property in Spain. A lot of lawyers, constructors and various middlemen have been exposed as negligent and even fraudulent and have thus caused misery for those seeking a dream home in the sun.

One of the many ways in which a person may be deceived in the purchase of a home in Spain is with regard to the taxes that are due. The fraud in this case is usually carried-out by making a person liable to pay the tax where they are not legally obliged to pay at all.

One of the first questions that many newbie’s ask about investing in tax lien certificates is, are they safe?

Lien certificates aids the government in allowing them to recover tax revenue that is lost more easily. They were created so the government would be able to collect on those back taxes and not have to take possession and ownership of that property.

You will need to put together some sort of record of the prices of real estate in the area as evidence to support your claim that your property taxes need to be lowered.

Next you need to get in touch with a local property tax assessor. You should ask them what the criteria is that they use to come up with how much you home is worth. If anything that they say doesn’t seem to be in line with what the current market is showing then you need to challenge it. Make sure all the details that you have on your home is correct. It’ not very uncommon for an assessor to make an estimate on your home about features you may not even have just to inflate the value.

Of course where the vendor is resident in Spain and reinvests the capital gain in another primary residence then there is no liability for plusvalía or capital gains tax. That said, the assignment should still be reported in the annual tax return to avoid any difficulties further down the road.

When however the vendor is a non-resident then the purchaser is compelled to hold on to 3% of the purchase price and pass on this to the Spanish tax department. Evidence of payment of the levy is illustrated with a stamped copy of form 211 and the vendor can then reduce the same amount from the purchase price.

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