Spanish Government Clamps Down On "Black Money" In The Resale Housing Market.

November 3, 2006

This practice of using 'black money' to make cash buys 'under the table' for resale property is still rife in Spain – but the government is finally starting to address the problem. Paying money 'under the table' is part of Spanish culture. If, for example, a prurchaser buys a resale house for EUR 150,000 but only declare EUR 100,000, and the real value increases to EUR 200,000, the buyer will be liable for capital gains tax on the difference between the two declared figures (EUR 100,000 not EUR 50,000). Unless they can convince the next buyer to under-declare in the same way, they will pay for the capital gains tax of the previous owner. Would-be expats, who want to buy a home in Spain and move here, are most at risk because they are injecting 'black money' into the system. The authorities will not find it hard to check bank accounts and match them with the purchase of a house. There are increasing numbers of fines being handed out for this kind of tax avoidance, following the government's tougher approach. The problem is far less acute with new Spanish property, since the price is set and published by the developer - making the whole process more transparent and less open to abuse. For an extensive choice of new and off plan property for sale in Spain on the Costa Blanca and Costa Calida, visit the Novocasa website.