2024-01-08 11:34:21
Cash payment is the satisfaction of the entire purchase price of a good or service at the same time of completing said sale, without postponing the disbursement of part of it to a later time, leaving the seller fully paid.
In this sense, the purchase of a property for which the buyer takes out a loan, usually with a mortgage guarantee, would be a cash purchase, as long as there is no part of the price pending payment. But in practice, the expression is associated with the fact that the buyer has the necessary money available at the time of purchase, without the need to resort to external financing.
From this perspective, the basic premise to be able to buy the property for cash is obvious: that the buyer has the money in his pocket, for which he will normally give a part to the seller as a deposit, which should always be formalized in writing.
However, we must take into account the limitations established by law regarding means of payment. Thus, if any of the parties has the status of businessman or professional (whether a natural or legal person), it is not possible to pay in cash for operations whose amount is equal to or greater than 1,000 euros (before July 11, 2021 it was 2,500 euros). ; However, when the payer is a natural person, without tax domicile in Spain and who does not act as a businessman or professional, the limit is 10,000 euros (previously 15,000). Cash is basically understood as currency or cash, national or foreign, and effects, titles and means of payment to the bearer (such as a promissory note to the bearer).
If these limits are violated, there is a financial penalty proportional to 25 percent of the amount paid in cash. And with respect to operations that exceed these cash payment limits, the parties involved have the obligation to keep the payment receipts used for a period of five years.
For purchases in which a businessman or professional is not involved, up to 100,000 euros can be paid in cash, since natural persons who, whether on their own account or on behalf of a third party, carry out cash movements within Spain for an amount equal to or greater than 100,000 euros are obliged to communicate them in advance to the Money Laundering Prevention Commission by presenting the S-1 form. The amount being 10,000 euros for movements of money or checks or bearer bills entering or leaving Spain.
In another vein, we have said that cash purchase requires that the buyer have the money at the time of purchase; But sometimes to obtain said liquidity you need to carry out other businesses previously or simultaneously. Let’s think, for example, of parents who want to leave their child the money they need to buy their home; In these cases, it would be advisable to document this act, either a loan contract (if the money is returned) or a donation (if the money is given free of charge). For these cases, notarial advice is always advisable, due to the different requirements and tax consequences that each route entails.
Likewise, as we pointed out, the buyer can have the full price at the time of purchase, but because at the same time he grants a loan with a financial institution, normally with a mortgage guarantee on the property to be acquired; and this whether you necessarily need said amount to cover the agreed purchase price, or if you have the necessary liquidity but do not want to become decapitalized and prefer to finance the investment. In these cases, notarial advice is equally desirable, practically mandatory – and always free – as a consequence of the Real Estate Credit Contracts Law.
In short, for the purchase of a home, whether it is done in cash or not, the work of the notary is essential, controlling the legality and providing the act with full legal security, as we already explained here.
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