Squatted house for sale with great discounts: “You cannot visit it and only cash payment is accepted”

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“This home is currently squatted, it cannot be visited and only cash payment is accepted.” It is the warning, in capital letters, that a real estate agency makes in the advertisement for the sale of an apartment in the Madrid district of Vallecas. It has three bedrooms, 57 square meters and costs 84,990 euros. It is less than half of what housing in that area would be worth if it were not illegally inhabited. House squatting is a limited phenomenon in Spain — in 2022, just under 17,000 complaints were registered, 0.06% of the total park real estate, the majority in unoccupied properties, according to official data—although it is a gigantic disruption for the owners who suffer from it. So much so that there are many who, after months or years of misfortunes, end up putting it up for sale. “For small owners who have been suffering from this situation for a long time and do not want to incur legal costs, the sale of the home may be advisable, because in addition to saving they obtain liquidity,” they indicate in KLJ Abogados. The counterpart is the price, since the reduction It has to be attractive enough for someone to buy the house under those circumstances. The discount usually ranges between 50% and 70%. “It depends on the possibilities of sale, the state of the property, whether the squatter has previously proven his or her situation of vulnerability or not; In short, of all the circumstances that make the sale difficult,” they indicate in Vilches Abogados. Of course, some owners warn interested parties that if at the time of signing the sale the home was vacant, the current price would not be maintained, that is, it would rise and adjust to the market. The seller must inform potential buyers that The home is illegally squatted, something that must appear in both the deposit contract and the deed of sale. “In the event that one of the parties notifies the notary of this situation, it must be recorded in the public deed of sale that the seller has communicated this circumstance to the buyer and that the buyer is perfectly aware of it. It will also be recorded that the buyer is subrogated in the legal actions that are underway or reserves the right to initiate them,» they detail in the General Council of Notaries. Owners usually resort to platforms such as Milanuncios or small local real estate agencies to sell a property. house with problems. One of them is JM, which sells several squatted apartments in Parla, a municipality in the south of Madrid. For the cheapest one, with three bedrooms and 94 square meters, it asks 79,990 euros, 851 euros per square meter. Some of the brands with the most weight consulted say they do not have this type of property in their portfolio. “These operations are residual and not generalized among the usual agencies,” they comment on the National Federation of Real Estate Associations (FAI). Who is willing to buy a house with squatters? They are investors and auctioneers. Some offer to purchase squatted apartments in 48 hours with a single payment that includes supplies. “It is usually a form of investment for companies that are dedicated to the purchase and subsequent rental of homes or small investors who do not need to immediately dispose of the house,” they indicate from the KLJ office. Juan Ignacio Díez, from Peninsular Asset Management, who is familiar with these operations, says that “they search the Property Registry for assets from banks, investment funds or individuals with difficulties in dealing with the situation and they also monitor the advertisements of real estate agencies or web portals. «These transactions have infinite dangers and can pose a multitude of problems, especially for inexperienced individuals or investors who do not have legal advice. “Although housing can be purchased at a lower price, it has additional costs associated with it,” they warn in KLJ. To begin with, the buyer purchases the apartment blindly. Since he cannot visit it, he is unaware of the state of conservation it is in and the money he will have to invest in its renovation. Another important issue is that no bank is going to finance apartments with squatters. Therefore, you have to pay in cash. Furthermore, it is essential to appraise the property, something that is also not possible. In the event that the bank agreed, «the amount to be financed would be very small, around 20% or 30%,» they say in Vilches Abogados. Once the home has been acquired, the new owner will have to file an eviction lawsuit. or wait for the launch to occur in the event that the procedure had already been initiated by the previous owner. “It is from then on that the expenses derived from the legal process itself and the attorneys' fees arise,” they remember in Vilches. But eviction can be a long and complex process. For this reason, some investors choose to negotiate with the squatters for financial compensation in exchange for abandoning the property. The final objective of these companies and investors is to renovate the home to rent it at market prices or sell it for double or triple what they expected. have disbursed. “If the sale is carried out through public auction, it is generally considered a good investment. If it is directly, it will be beneficial if it is acquired for 60% of the market price,” they calculate in Vilches. And they add: “Any investment above 70% can be dangerous.”

How to pay taxes

Whoever buys a squatted house cannot forget about paying taxes. From January 1, 2022, the property transfer tax (ITP) must be paid in accordance with the new Cadastre reference value and not in accordance with the actual purchase value of the property, that is, for a higher value in most of the occasions. If the property does not have a reference value assigned, it can be taxed at its actual value without having to submit to an administrative value. The problem is that, in both cases, these properties are purchased at prices much lower than those prevailing in the free market. This would be a serious problem for the buyer if it were not for the fact that there is a situation in which taxpayers could be exempt from paying taxes on the Cadastre reference value, recalls José María Salcedo, managing partner of the Salcedo Tax Litigation law firm. The resolution of December 10 November 2021, of the General Directorate of the Cadastre for the determination of the reference value in the year 2022 (and replicated for subsequent years), indicates that in the case of properties with administratively limited sales price, or when the owner cannot freely dispose of the property, without there being an agreement or contract with the occupant, the properties may not have a Cadastre reference value. “We are facing a true exception to the general rule of assigning a reference value to all urban properties that can be invoked by taxpayers to avoid paying taxes in these cases according to the reference value,” adds Salcedo. On the contrary, if The property does not have a reference value, the taxpayer will comply with paying taxes in the ITP for its real value. And, if applicable, if you receive a verification of values, you can always argue the situation of occupation of the property, so that it is taken into account by the Administration when valuing the property. Follow all the information from Economy and Business on Facebook and xor in our weekly newsletter