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| F.A.Q.
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General Conditions |
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Why the price on the title deed is always lower than the selling price? |
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Due to capital gains tax, the seller will try to have this value as low as possible whilst it is in the buyers interest to increase it as much as he can because he will have to pay it as the future seller of the property. The buyer must consider wether he is buying with plans to resell it soon or to keep it for a long time. If reselling is the case, he must bring the escritura value as high as possible but if he plans to keep it, it wont be so important.
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Could you give me an example? |
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Mr. B (buyer) and Mr. S (seller) agree on a final selling price of 120,000 for a village house.
Mr. S original escritura value when he purchased the property shows 70,000. If he agrees to put the negotiated price on the escritura, he will pay to Hacienda 5% of the difference, that is 2,500.
His profit will be 117,500. It is in his interest to lower the escritura value as much as possible so he ends up negotiating 100,000 on the escritura and the rest 20,000 will be in furniture. He will then pay 5% on just 30,000 of difference, that is 1,500 and keep a profit of 118,500.
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