Selling your Vacation Rental as a Business

[donnylu]

Hi Guys,

Have major complications with the purchase of a casa rural and wondered if anyone has bought or sold their vacation rental as a business rather that a house. The taxes that you would pay are far less if is sold as a business rather than the higher taxes you would pay for a normal house purchase. Don't want to get too much into the details but revenue are viewing the house as a house and our accountant devised away to sell it as a business which is not working out that way. Major stress

Thanks,

Donny

[costa-brava]

Not sure what you're asking here Donnylu.
Whether your property sells as commercial or dwelling goes by how it is previously registered in the Property Register (via the original escritura) and the Catastro. If it's house it carries transfer tax. If it is a "local" commercial property it carries IVA (VAT). The buyer can reclaim VAT but not the transfer tax.
While you are the owner it is totally legal to conduct a business from a dwelling house subject to local conditions.
It's not about the tax authorities so much as the Notary conducting the sale. He has to write a new escritura that corresponds with the last one and with the details in the property register and the catastro.
Here is the link to check the catastral situation of your property https://www1.sedecatastro.gob.es/OVCFra ... O=consulta
It will also depend on whether the registered owner of the property (and the buyer) is buying as a commercial entity or what the Spanish call "una person a fisica" i.e. a private individual.
A "clever" accountant can't change these things.
You don't want to give details but the "stress" is in the detail.

[Gordo]

Tried to follow that link costabravarent and I'm getting security alerts relating to invalid certificates etc. Tried starting from top level domain was ok but soon as clicking links to catastral getting warning messages.

Might be nothing but was enough to put me off!

.

[CSE]

Gordo that is normal for a Spanish government website. Just add an exception. No harm has been done to our PCs for over 15 years now.

[donnylu]

Costabravarent, thanks for your reply and what you makes a lot of sense. Unfortunately we ended up with a very incompetent gestoria and hence the reaching out for some help. Thanks again for your feedback. Very valuable and appreciated.

[costa-brava]

Casa is right. I'm not sure why it happens but it's a government site, totally secure.
Donnylu: You may also be interested in a post I did a few months ago. viewtopic.php?t=25012
Most people didn't really pick up on what I was saying but it really can save you a packet in taxes if you have all the documents from when you bought the property and for any improvements you made. I think you are stressing about the taxes the buyer will pay but you will have a ton of taxes AFTER THE SALE unless you are selling at a loss.

[CSE]

Costabravarent, thanks for your reply and what you makes a lot of sense. Unfortunately we ended up with a very incompetent gestoria and hence the reaching out for some help. Thanks again for your feedback. Very valuable and appreciated.

Could never have helped with original question as we purchased this business os long ago things will have changed.
Getting stuck with a Gestoria like that is not good.
Hope things are ok now.

[costa-brava]

Casa wrote:
Could never have helped with original question as we purchased this business so long ago things will have changed.

There are many things that have changed especially in the last couple of years. But I think that the crux of Donnylu's situation is going to be the case for many people and as people sell off their holiday rentals and "casas rurales" they will tend to sign off on LMH so there won't be many around to tell of their experience. Practically all of us own dwellings, not commercial properties even though we are conducting a business from them. Check your escritura!
It also counts for properties that will pass down in inheritance.

For Donnylu one thing that may work could be "traspaso". Lots of businesses change hands this way in Spain. There isn't an English equivalent really but it's like selling the lease. So if you want to sell at €200000 you might sell the business at, let's say. €50000 in a sales contract, not in the escritura. The property would then be "escriturado" at €150000 so the buyer would pay 25% less in tax etc. My understanding is that this would be totally legal and the seller would declare both sets of income. You would be able to discount all your business investment from the €50000.
This is a good discussion that Donny has started. I hope he gets more input even if it's just in little bits.
[/b]

[CSE]

...and there was us thinking it was nothing related to the purchase of the building the business operates in. This says it is the owner of the building remains just that. ie it confirms what we thought.
http://www.serautonomo.net/traspaso-de-negocios.html
We would not suggest to anyone to purchase a business this way things like debts move on to the next owner.

What ever you do and we are still unsure if you are purchasing or selling. However you can be rest assured the tax man will have is cent or two.
http://www.serautonomo.net/los-impuesto ... ocios.html

[costa-brava]

Other way to separate the business value from the property value is with the fixtures, fittings, electro-domestics and furnishings. In a good going Casa Rural these should total a few thousand € and there is no tax that I know of on second hand stuff. So by taking a few thousand for the value of the business plus a bit on top for furnishings you can do these in a private sale.