Property in Spain | Cash payments in property purchase

Why do the builders of our new property in Spain want us to pay the first interim payments in cash?

Section for people wanting to buy, sell or rent property in Spain.

In Spain some building companies prefer payments in cash to avoid paying taxes. "Black money" is not then declared to the Spanish Inland Revenue (Hacienda). The company uses the black money to pay, its own undeclared expenses (undeclared wages to illegal workers, purchase of materials...) which, in turn, reduces the overall company costs. If you pay by cheque, the building company has to pay the cheque into its bank account, which means the money becomes visible, which means it has to declare it to the Spanish Tax Office.






If you decide to go ahead with your purchase, it is very very important that before handing over any cash at all you sign a formal, and legal, private purchase/sale contract (checked by an expert) which clearly specifies the following basic elements of the purchase and the sale agreement:

  • Identification of the seller as the legal owner of the property you are going to buy
  • Exact description of the property which is going to be built - squared meters, closed price (total amount), materials to be used in the construction
  • Form of payment. This is particularly important, because if you agree to hand over certain sums of money at certain stages of the building process, the builders will only be legally bound to keep to the dates of completion if the dates and amounts are reflected in the contract.

It is also highly recommended to ask for a receipt each time you make a payment and, if possible, a bank guarantee to cover these payments.

Other useful links
Latest news on the property market in Spain Selection of news articles related to the real estate market here.
Mortgages in Spain, a brief introduction to the Spanish mortgage market, how it works and interest rates in Spain
Spanish banks, before applying for a mortgage, find out more about Spain's most popular banks and Spanish savings banks.
Property taxes in Spain, description of taxes involved in purchasing property and yearly property taxes in Spain.
Useful Spanish vocab for buying a house - you should learn at least the basic terms. Check out our pronunciation guide too.
Renting property in Spain - if you want to buy to rent, then read this section and our free notice board of property to rent in Spain.
Spanish lawyers - information on lawyers fees in Spain for property transactions
Houses for sale in Spain - take a look at the kind of houses available. Or check out our free Spain property for sale board.
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