The Treasury closely monitors home purchase and sale operations in Spain in order to prevent tax fraud. Although homeowners typically try to sell their homes for the highest price possible, there are cases where sellers choose to set a symbolic price to avoid paying the Donation Tax when they transfer the home to a child or family member. This practice can be risky, since if the Tax Agency detects that the sale price is not in line with the market value, it could initiate an investigation and apply economic sanctions that far exceed the costs of the tax itself.
When a home is sold at a price significantly below the market price, the Treasury can suspect that it is an attempted disc fraud. If the State Tax Administration Agency (AEAT) detects this anomaly, it may request the owner to clarify the price of the transaction, which could result in a fine of up to 100,000 euros.
For this reason, when setting the sale price of the home, it is advisable to know what the limits that the Treasury establishes, and below which a home should not be sold to avoid fines.
The Treasury fines for selling a home too cheap
According to the Idealista real estate portal, the Treasury establishes sanctions based on the percentage of the reduction with respect to the market value. Violations are classified as minor or serious, and fines vary depending on the case:
- Minor violation: If the sale price is less than 10% of the market value, the fine will range between 1,000 and 10,000 euros.
- Serious violation: If the sale is made for a price less than 5% of the market value, the penalties can vary between 20,000 and 100,000 euros, and there could even be prison sentences of between 6 months and 2 years.
To better understand how the sanctions are applied, the example of a property that has a market value of 200,000 euros will be explained:
- If it is sold between 10,000 and 20,000 euros, the fine could be between 1,000 and 10,000 euros.
- If it is sold for less than 10,000 euros, the fine could be between 20,000 and 100,000 euros.