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Regional inheritance tax

Regional inheritance tax finally reduced after public pressure

The new rules mean that children and spouses who inherit up to one million euros in Andalucía won’t pay regional inheritance tax to the taxman

Regional inheritance tax
Regional PSOE and Ciudadanos politicians celebrate the lower-tax deal.

The Junta de Andalucía has finally agreed to change the rules over local inheritance tax this week.

The level of the regionally controlled tax, known as the Impuesto de Sucesiones y Donaciones, has been at the centre of public controversy for some time as Andalucía charges significantly more than some other parts of Spain.

Opposition politicians, buoyed by public petitions and demonstrations, have been calling for it to be reduced, as they say it is unfair on people on modest incomes who inherit property and wealth from parents.

In many examples, families have been forced to sell property as they haven’t been able to afford the tax on it, while other people have taken to falsely registering their place of residence as another region of Spain to avoid the levy. 

As part of a parliamentary-support deal with the Ciudadanos party, the PSOE-controlled Junta de Andalucía government has agreed to change the rules.

Ciudadanos had said that it wouldn’t support the Junta’s annual budget unless the tax was repealed.

From 1 January 2018

From the start of next year children and spouses who inherit up to a million euros won’t need to pay any inheritance tax and those who inherit over that amount will only be taxed on the difference.

This, and other new measures, mean that 95 per cent of inheritances in Andalucía won’t have to pay tax.

The region now charges less inheritance tax than the Madrid area, which was cited as proof of the success of the public campaign to reduce it.

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Important Spanish Mortgage Update

IMPORTANT UPDATE – ABUSIVE MORTGAGE CLAUSES

 

A new court resolution has been issued this week relating to abusive clauses in a Deed of Mortgage.spanish mortgage update

The resolution makes certain clauses included in the mortgage loan null and void as they are considered to be abusive for the borrower.

The default clause; if you default on any of the clauses especially if you miss a payment the mortgage lender could recall the mortgage loan; this is now declared null and void.

For example the bank could recall the mortgage in the case of nonpayment of one installment, which is considered abusive.

According to the law now at least three mortgage installments should be outstanding before the bank can start proceedings through the court executing the mortgage to claim the debt.

Also the clause that applies high interest rates for delayed payments are now null and void.

They are considered to be abusive as it appears to be compensation to the bank because of the nonpayment of the mortgage installment on the due date and the interest levied is disproportional for the borrower.

Example case, a bank was charging interest rates for non-payment, 4% above the normal agreed interest rate.

The new judgement forbids this practice, based on the legislation normal interest rate should be for personal loans, which provide for a maximum of 2% above the normal agreed interest rate in the case of non-payment of the loan on the due date.

Judgement is also applied to the clause in the Mortgage where the borrower is made responsible for the Notary and Land Registry fees.

These are now made null and void as the bank is the only interested party to sign a public Deed, register the mortgage and to have a guarantee set up on the property which could be executed if the loan is not paid.

The borrower is only interested in receiving the loan.

Finally the only item where the latest judgment resolves in favour of the bank is with regards to the payment of the tax.

This is in connection with the Deed of Mortgage i.e. Stamp Duty to be paid to the Autonomous Region, the resolution confirms that the borrower should be responsible for the payment of this item.

If you feel you have been a victim of the above clauses, please contact us as per the judgement a claim can be made to recover the costs for you.

This is a translation of the original judgement issued by the Madrid Court written by Rafael Berdaguer Abogados.

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Subletting Contract Clause

Property Rental

Subletting Contract Clause

Subletting Contract Clause

As you will have seen in the media, there have been many cases of tenants, who have been subletting their property they are renting to tourists. 

What! You say, but do you know what your tenants are doing?

Sub letting. Lately there have been many cases of tenants who, after renting a property to use for their own home, then later rent it out as a holiday let to tourists.

This is without the consent of the landlord, so making a nice profit for themselves.

Stop! This is serious; the requirements for renting a property long-term and renting as a holiday let are completely different see Holiday Home Rental in Andalucia

If the authorities find out your property is being rented as a Holiday Let and not registered as one, or even worse a complaint is made by a tourist renting your property as a Holiday Let, then the penalties will be levied against you the owner of the property.

This article addresses some precautions you can take to protect yourself from this risk, and how to act if you are in this situation with your tenant.

Enforcing the Subletting Contract Clause

The Contract: Before signing the lease, check the tenant’s solvency and verify that the documents that they provide to prove it are authentic (for example, contact the company that appears on the payroll and the employment contract).

Get references from previous owners of properties they have rented and check them out.

Likewise:

  • Include a clause in the contract that prohibits the total or partial subletting of the dwelling.

It is true that the LAU allows partial sub-lease of the dwelling provided it is authorized in writing by the landlord.

However, expressly prohibiting it in the contract will make it clear from the outset that you are opposed to subletting.

  • Add in the contract that the house cannot be used for tourist rental or published in any newspaper/magazine or website.

Also indicate that if the Tenant breaches this clause, any fine or sanction imposed by the Administration (for breaching the regulations on tourist accommodation) will be charged to the tenant, and that you will report the facts if you have knowledge of it to the appropriate authority.

What if the Tenant ignores the clause?

 If in spite of the clause you have verify that your tenant has sublet your property, start by sending a Burofax notifying them that you are terminating their contract and require them to immediately move out of the property as per the clause in the contract. 

Then, report the facts to the appropriate Tourism Administration. In this regard, please note:

  • In case of non-compliance with the regulations on tourist accommodation, in some autonomous communities, it is considered joint and several liable to the owner (although the person who is carrying out the activity is the lessee).
  • But if you take all the precautions indicated, you can prove that you have no responsibility, as you forbade the subleasing and have opposed it as soon as you have knowledge of it.

The Eviction

 If after receiving the Burofax the tenant does not hand over the keys, you will have no choice but to file a lawsuit requesting the termination of the contract and eviction of the house:

  • In these cases, the landlord can terminate the contract for several reasons: because the property is no longer intended for the lessee’s habitual residence, for breach of any of the clauses in the contract and for performing annoying or illegal activities.
  • However, keep in mind that these types of lawsuits are processed by the “ordinary” procedure, so that the eviction of the tenant is not as fast as happens in an eviction for nonpayment (for example, in these cases the sentence to order the eviction can take at least nine months).

 

Summary

  1. Check the solvency of the proposed Tenant
  2. Ensure there is a very clear clause in your contract forbidding subletting
  3. Ensure it is clear in the contract the consequences of failing to comply with any of the clauses will result in the contract being cancelled.

Artículo añadido el viernes 8 septiembre 2017 –  Lefebvre – El Derecho, S.A.

https://lite.indicator.es

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Someone Auctioned My House Help!

The Case

Now this was an unusual case that came to us, our client is an astute property investor and has properties in Marbella, but lives in Abu Dhabi.someone auctioned my house

He purchased the property as a holiday home for him and his family and also owned several other properties in Spain.

As he does not live in Spain he has one of his trusted employees manage the properties in his absence, the employee lives in one property and is responsible for maintenance and upkeep of all his properties.

His employee had been living in the property since 2003, and had ‘Power of Attorney’ to pay all the bills associated with running a property.

In 2012 our clients’ employee took a holiday to visit his relatives over the Christmas period and returned 26th December 2012 and found the locks had been changed on the property he was living in.

The Problem

As an existing client of ours we stepped in immediately, and it soon became clear yes the property had been auctioned and had new owners.

On investigation there appeared to be an outstanding debt on the property that had not been paid, this had escalated to the point that it went to court and judgment was made that the property would go to auction to pay the debt.someone auctioned my house

BUT our client and his employee were unaware of the proceedings or the debt as nothing had been served to the address of the property. Remember his employee lived at that property so to serve any papers would have been easy.

On further enquiries there appeared to be a catalogue of errors in the whole procedure, which clearly showed that nothing had been served to our client. So our client was denied the right to defend himself as he was unaware he had to.

The Outcome

Due to all these errors the Judge ruled that our client had not had the right to defend himself so declared the sale of the property null and void.

The outcome was our client had his property back and was able to address the matter correctly regarding the debt and resolve it.

The moral of this story is, if you have had judgment made against you and you have not had the opportunity to defend yourself then employ a good lawyer to give you that right.

Written by Rafael Berdaguer Abogados – 28th July 2017

www.berdaguerabogados.com

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Know your boundaries

When buying your dream country property in Spain, you just have to be practical and do not take information at face value.Know your boundaries

So you have found that perfect property, you are going to live “The Good Life”, with chickens, horses and possibly some goats and don’t forget the dogs and cats.

The property described to you has 20,000m2 of land, a lovely 2 bedroom Finca and the most amazing views. You have been to see it and you are in love with it and are ready to put in that offer.

Now what do you need to check to ensure your dream does not become a nightmare?

  • Searches on ownership and permissions of planning
  • Boundaries have to be clearly pegged out
  • Services and supplies must be available
  • No proceedings in place to reinstate the planning legal order
  • If the construction is illegal, to what level can it be leagalised?
  • Is there any structural guarantee for the building?
  • No existence in place for rights of way over the land
  • Can you build legally on the land?
  • What minimum surface area is considered a farming unit?
  • Have any of your neighbours on your boundary currently have a perception of rights to the land?

Example

In a recent case a couple bought a finca with land, and in the buying process they relied on only the information they were given.Know your boundaries

Once they had bought the land they found out that there were boundary disputes with the neighbours, and in fact what was on paper was not what they actually had.

They came to us to find out what they could do, because as far as they were concerned the land belonged to them.

This is where country law can become vague; if someone has occupied the land for a number of years they may be arguing rights to the land.

This is why it is essential to use a lawyer like ourselves, who have expertise in Country Law; we can clear up issues that may be lurking in the background to ensure you have a safe investment in the sun.

Know your boundaries

Written by Rafael Berdaguer Abogados – 13th July 2017

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Claiming PLUSVALIA Tax

What is the Tax?

The Plusvalia Tax is presented to you by the local Council when you sell your property.

They assume your land has increased in value since you bought it and levies the increase in value of the plot on where the property is built when it is transferred by way of purchase and sale, inheritance, gift or other.

Three conditions have to be met in order to have to pay the tax:reclaiming Plusvalia tax

  1. That a property is transferred.
  2. That the property is urban land
  3. That there has been a real increase in value of the plot.

How is the tax calculated?

The tax is worked out by applying the rateable value of the plot with some coefficients and tax rates approved by the Local council.

Where the property is located and how much time has elapsed since the last transfer.

This form of calculation does not compare the real value of the land at the time of the purchase and sale, but just works it out taking the rateable value of the plot at the time of the transfer.

So the Council issue the Plusvalia Tax irrespective as to whether there has really been an increase in value.

Why is this tax being questioned now?

In this period of economical crisis a lot of properties have been sold at a loss by the owner and thus this tax is being questioned as result of the non existence of an increase in value.

However the Local Council keeps on charging the plusvalia tax.

Judgement from the Constitutional court.

In February 2017 the Constitutional court has resolved that the owners of property that sell at a loss are not liable to the payment of the Plusvalia Tax.

Reclaiming Plusvalia Tax

Therefore if you have transferred your property in the last four years at a loss, you can claim from the Local Council the full amount paid for this tax.

However, you will have to prove somehow that there has been a decrease in the value of your land and you may be required to produce a valuation of the plot.

 How to proceed in the future?

Nearly all the Local Councils keep maintaining this method of calculation for the plusvalia tax.

Therefore until there is a change in the law in principle if you transfer the property at a loss you will have to pay the tax and later apply for the refund.

 

If you need any further information on this subject please contact us  on

rberdaguer@berdaguerabogados.com.

 

Please note the information provided in this article is for general knowledge only and is not to be construed or intended as substitute for professional legal advice.

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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FLOOR CLAUSE IN YOUR DEED OF MORTGAGE

What is a Floor Clause?

A lot of mortgages granted by Spanish Banks for the purchase of property with variable interest are referenced to Euribor (Euro Interbank Offered Rate).

This means that the interest rate of the loan is fixed by adding two components, the reference index being the most common the Euribor and a differential margin (fixed amount) agreed with the bank.

In many Deeds of Mortgage given the fluctuation of the Euribor floor clauses were included which established that despite the downward fluctuations of this reference rate, the rate of interest applicable to the loan could not fall below a minimum.

Why are these clauses questioned?

These clauses have been questioned on the grounds that they have not been negotiated individually by you the customer, but have been imposed by the bank without you being  aware of the consequences of including this agreement in the loan.

When the Euribor started to fall, the Floor Clause was activated and you as the customer paid more interest than you would have paid if the interest rate applied had been established adding the two components, i.e.  Euribor plus the differential margin.

When this happened customers of the banks started to denounce this practice arguing that they had not been informed clearly.

What have the courts resolved on this matter?

In 2013 the Spanish Supreme Court declared this type of clause used by some Spanish banks, as null and void, this has come in to effect since May 2013.

However, a resolution from the European Court of Justice has confirmed that if the clauses are declared null and void this is applicable retroactively since the signing of the mortgage.

Therefore the banks legally have to refund all the surplus monies paid since the execution of the Deed of Mortgage.Floor Clause

Conclusion

Therefore customers who have such clauses in their mortgage loan can now proceed to claim the surplus amounts  charged by the bank since their mortgage was granted.

Although each case will be analyzed individually by the court to check  if the bank has informed the customer in detail about the consequences of this type of Floor Clause or not.

Procedure. Initiative of the Spanish Estate to make the  recovery of money easier.

The State wanted to regulate this matter in the Royal Decree 1/2017 of January 20th to expedite the refund of the surplus amounts paid through an out of court procedure.

Customers will have to present a claim to their bank requesting that the Floor Clause is made null and void and applying for the refund of surplus amounts paid.

If this claim is accepted by the bank they must remit to the customer the calculation of the money to be returned and the parties will try to reach an agreement to resolve this matter.

There is a term of 3 months from the submission of the claim for both parties to reach an agreement.

If an agreement is not reached, the claim will have to be made through the court.

 

If you need any further information on this subject please contact us  on

rberdaguer@berdaguerabogados.com.

 

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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COMPULSORY ONLINE COMMUNICATION WITH THE PUBLIC ADMINISTRATION

 

On the 2nd of October, 2016, Act 39/2015 Common Administrative Procedure of the Public Administration came into force. The purpose of the Law is, amongst many other issues, to regulate relations between Public Administrations and citizens, to implement an eGovernment and to improve the processing of administrative procedures. It is true that in tax matters companies already had to perform their actions with the Tax Agency by telematic means. However, as of October 2, 2016, the following subjects compulsory have to interact online with the Public Administration to perform any procedure. We refer to relationships with the Tax Office, Social Security, Traffic authorities, etc.

a) Companies.

b) Entities without legal personality, this includes civil societies (Sociedades Civiles), community of assets (Comunidad de Bienes), community of owners (Comunidad de Propietarios) and Estates which have not yet been accepted by the heirs (Herencia Yacente).

c) Individuals who exercise a professional activity for which they must be registered at a Professional Bar providing they act in the exercise of that activity.

d) Those that represent a person, company or entity that has to compulsory interact electronically with the Administration.

e) The employees of the Public Administrations for the procedures and actions they perform with the Administration as public employees.

All the documents to be presented, notifications to be received, allegations and appeals to be made can only be processed online.

Individuals may still use traditional means when dealing with the Administration, although they also have the right to choose to do so online.

All Administrations must have a General Electronic Register, in which they will make the entries of any document that is presented or that is received in any administrative body.

The non compliance of this obligation may entail the risk of the documents presented being considered to have been lodged out of the statutory term foreseen if they have to be submitted before a certain deadline such as the appeals. Also in tax matters this is considered a tax offence provided for in article 199 of Act 58/2003, of December 17, (General Tax Law), which establishes a penalty of 250 Euros, when not submitting the documents addressed to the Tax office online.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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SELLING YOUR PROPERTY IN SPAIN.

If you have already read our article, BUYING PROPERTY IN SPAIN and you have successfully purchased a property this is to give you an idea as to the SELLING YOUR PROPERTY IN SPAINtaxes that you may incur in as non resident when selling the same property which should be taken into account when establishing the sale’s price.

Plusvalia tax

The tax has to be paid to the Local Council of the municipality where your property is located.

The amount of which will depend on 3 items.
– The rateable value of the land on which your property has been built.
– The term that has elapsed since the purchase.
– The rate of tax to be applied by the local Council.
In general terms more tax has to be paid if the property is worth more and a long time has elapsed since the purchase .

Read more on Plusvalía Tax 

 

Capital gains tax

The capital gains tax will be the difference between the purchase price of your property plus expenses paid and the net sale price, i.e sale’s consideration less expenses paid in the sale (plusvalia tax, Real Estate Agent fees if applicable, legal fees etc).

With the difference between the two a tax of 19 % has to be paid. If the vendor is a non resident the purchaser has to retain 3 % of the purchase price to be paid directly to the tax office on account of the capital gains tax.

In Spain the purchaser is responsible for the 3% and it is lodged against the property, if it is not paid the property has the debt.

After the sale a capital gains tax assessment has to be presented and the balance of the tax to be paid or if the tax is less than 3 % a refund of the surplus paid can be applied for.

Selling your property in Spain other expenses

With regards to other expenses normally in a sales transaction you may decide to use the services of a Real Estate Agent and a solicitor.

The Real Estate Agent is the person you should choose to market the property. They will be in charge of advertising the property and showing it to potential purchasers. The fees normally will be in the region of 4 to 7 % of the purchase price plus 21% VAT.

The lawyer in turn will assist you professionally through the process and will give you the necessary advise and prepare all the documentation required to make a smooth process up to the sale of the property and receipt of sale’s proceed and make sure that you comply with all legal requirements.

You should allow costs for legal fees of 1% of sales price plus 21% VAT.

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.

www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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Holiday home rental in Andalucia

Holiday home rental in Andalucia

From 11th of May 2016 a new regulation came into force in Andalucía in connection with holidays rentals.

The law was approved on the 22nd of February 2016 and regulates the rental of Properties to tourists.

The objective is to put a stop to people trying to get away with undeclared rentals and thus avoid unfair competition with hotels and other tourist resorts that declare their income.

It will also ensure that there is a  minimum standard of quality and complies with health and safety regulations.

For owners who wish to rent their property (holiday rentals) they must register them at the Tourism Registry of Andalucía before letting them out.

Although if refurbishing works are required in order to comply, these can be completed in the term of 1 year.

PERSONS AFFECTED BY THIS LAW

Property owners who offer a tourist service and advertise their property by internet or other marketing systems such as travel agencies or real estate agents etc.

WHO WILL NOT HAVE TO COMPLY WITH THIS REGULATION

The Owners of the following properties will not have to comply with this law as they are subject to a different legislation.

  1. Properties that are occupied during the holidays without payment of any rent.
  2. Properties rented for more than 2 months to the same tenant.
  3. Properties located in rural areas.
  4. Properties in the same block (3 or more) owned by the same person.

TYPE OF RENTAL

  1. Rental of the whole Property – The property is fully rented out and it cannot have more than 15 occupants.
  2. Rental of part of the property (B&B) – This is applicable when the owners live in the property and rent it partially. In this case there should not be more than 6 occupants.

Requirements to be met for renting out your property for holiday rentals in Andalucia

  1. Registration of occupants by the owner.
  2. The property must have first occupation license.
  3. It must meet technical requirements regarding ventilation, air conditioning, furniture, etc.
  4. A first aid kit, brochures, instruction booklets, etc will have to be made available to the occupiers.
  5. There is an obligation to provide tourist information of the area, have a complaints book, and telephone contact for incidents.
  6. Specific reservation and cancellation terms are applicable to the holiday rental.

REGISTRATION AT THE TOURISM REGISTRY OF ANDALUSIA

Before renting your property out as a holiday home in Andalucia you have to first register your property at the Tourism Registry of Andalusia.

You need to sign a document with the particulars of the property and the owner and confirm that it meets the requirements set out in the law.

The property will be assigned a registration code which must appear in all the publicity that is made of the property.

FINES

If you rent your property as a holiday rental and it is not registered at the Tourism Registry or does not comply with all the requirements set out in the law, you as the owner can face fines which could go up to 150.000 Euros.

 

AGREEMENTS OF THE COMMUNITY OF OWNER THAT AFFECTS THE HOLIDAY RENTAL

Also since March 2019 the community of owners can adopt agreements by majority of 3/5 of the owners, to limit or condition the exercise of the tourism rental housing activity. Also with this majority the community of owners can resolve to increase the community fees of these apartments up to 20 % of the existing fees. 

 

DATE WHEN REGULATIONS FOR HOLIDAY RENTALS  CAME INTO FORCE

The regulation came into force on the 11th of May, 2016. From then  on all properties that are going to be used as holiday rentals in the province of Andalucia must comply with these regulations.

If you intend to rent your property as a holiday rental, our office can assist you in the compliance required.

We will assess your property and inform you of all requirements that need to be met by the legislation, documentation needed and arrange for registration at the Tourism Registry.

 

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved