SELLING A VILLA

[mikey]

Hi Nigel,
I hope you are well and looking forward to Christmas.
I am in the process of selling a property and have been told by the selling Agent that if I opt to sell via an assignment contract I will have to pay a tax to the Government of half a per cent of the original purchase price.Also I am told that whichever contract is used to sell a fee will have to be paid to the Developer,which can be disputed.I want to sell at the cheapest option available without fees and taxes.Can you kindly advise the best and cheapest option available.Thanks Nigel

[Nigel Howarth]

Dear mikey

Assuming that you do not have the Title Deeds to the property registered in your name, a 'new' law was introduced in 2011 that introduced the concept of assignment/vesting contracts that removes the opportunity for the vendor to rip you off by charging you 'contract cancellation fees'.

The new law enables you to assign your rights and obligations contained in your contract of sale to your purchaser. In effect it is the same as crossing out your name on the contract of sale and replacing it with theirs.

The developer cannot intervene in this arrangement.

What does it cost?

Apart from the legal fees involved, you will have to pay any Capital Gains Tax arising from the sale and obtain a tax clearance certificate from the Inland Revenue - and this has to be deposited at the Land Registry at the same time as the assignment contract. Capital Gains Tax is levied at the rate of 20% on the chargeable gain you make, which is adjusted for inflation (and less certain allowances). There is an individual allowance of €17,086 (so if you bought in joint names you'd have a minimum allowance of €34,172 before you became liable for tax.

The fee for depositing an assignment contract is 0.5% of the sale price in the original contract of sale of 0.5% of the sale price in the assignment contract (whichever is higher). The minimum fee is €50 and maximum fee is €3,000.

If your contract makes you liable for taxes relating to the property from the date you took delivery, you will have to repay the developer any OPT and other local taxes he has paid on your behalf. However, the developer has to supply you with records of the amount paid as Immovable Property Tax (IPT) and a certificate showing the rate of IPT applicable to the property. (Please refer to this letter from the Interior Ministry). Note that as you are selling the property you will be unable to reclaim any legitimate IPT overpayments you may have made.

I'm afraid that you cannot sell without paying fees and taxes.

Regards,

[mikey]

Hi Nigel,

I appreciate your advice and as usual it was very helpful,especially the 0.5% fee payable for depositing an assignment contract,which I was not aware of.I was naive and hasty to think that no taxes or fees would be payable.!!A VERY MERRY CHRISTMAS.

[Nigel Howarth]

Unfortunately mikey there are only two things certain in this life - death and taxes.

Best wishes for Christmas.

Regards,

[mikey]

Hi Nigel,
Sorry Its me again.I have now been told that it is the buyer who pays the 0.5% fee for depositing the assignment contract not the seller.Can you please confirm it is the seller and not the buyer.Many thanks.

[Nigel Howarth]

Hi mikey

Who pays the fee for depositing an assignment contract is open to negotiation.

One of the benefits to the vendor is that they do not have to pay Property Transfer Fees, but the downside for the purchaser is that they have to pay significantly more than the €50 it costs to deposit a 'normal' contract of sale.

Regards,

[Pantheman]

Hi Nigel,
Sorry Its me again.I have now been told that it is the buyer who pays the 0.5% fee for depositing the assignment contract not the seller.Can you please confirm it is the seller and not the buyer.Many thanks.

We have discussed this before and it is the seller that is liable to pay the 0.5%.
the buyer pays just €50, anything else is just plain wrong.

So, either the seller pays the developer cancellation chare, his transfer fees ir tye assignment cost, you choose. As a buyer i would not agree to pay this .

[mikey]

Hi Nigel,
I have had the IPT calculations from my Developer and wanted to ask you if you or anyone from the forum would check to see if the calculations look correct.I tried to email you but it failed.My email if you can oblige is m.j.phelan (at) hotmail.co.uk.
Regards
Mikey

[Nigel Howarth]

I've sent you an email Mikey.

Cheers,