Real estate property purchase and payments in cash.

Real estate property purchase and payments in cash.


Dear lawyer,

I have signed a purchase contract for a property in Moraira (Alicante, Costa Blanca). Next month we will go to the notary office to sign the title deed of sale ( escritura). The seller has asked me to pay the rest of the money to be paid in cash. Is this legal ?.

Dear reader, thank you for your enquiry.

 Making a payment in “cash” is not in itself necessarily illegal, be it payment for a property, a car, or consultation or visit to the doctor, lawyer, etc. as long as this payment is properly declared,  invoiced, etc.

 Once that is clarified, you should know that the cash payments are limited by law, for example the Law 7/2012, of October 29, states that in a transaction where a professional / business person is involved, any payment in cash could not exceed € 2,500.

In your case, if your purchase is between individuals, and you pay part in cash, you may be required to declare the cash payment to the authorities, by means of the forms like the S-1 or other appropriate documents, depending on the amount paid in this way.

This should not be confused with payment in “black money ” or “B money” which certainly is not legal. That is, when the person from whom you are buying the property wants you to pay part of the price in cash with the idea of ​​not declaring it at the notary, only declaring on completion of the purchase deed the part of the price “officially paid” by checks or transfers, with the aim of not declaring this cash part of the price.

The seller cannot enforce you to act in this illegal way. Plus, besides the illegality, if there is a problem with the property you could not prove what you actually paid for it. Also, from the fiscal and tax point of view, whilst you would pay less transfer tax at the purchase of the property (10% in the province of Alicante) due to the lowered declared price, when you sell the property and get capital gain, the capital gain tax is at a higher rate than transfer tax, and also would be based on the less than the real original price (note that the capital gain is about 20%).

Therefore, we advise you not to pay significant amounts in cash, and always ask for a receipt for the amount paid, and / or an invoice.  You can pay in cash with the limitations foreseen in the law but it is essential that the payment is properly declared, so if needed, you will be able to claim in case of a problem with the good or service purchased.

If you need legal advice please contact us.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

Carlos Baos (Lawyer)

Spanish Law firm solicitor attorney barrister.

Alicante, Denia, Costa Blanca Marina Alta

White & Baos 2015 – All rights reserved

4 thoughts on “Real estate property purchase and payments in cash.

  1. Hola.

    I am interested in buying an apartment for 60.000 euros (in the province of Valencia.) The real estate agent has suggested that I pay a small amount in cash. I’m OK with that, but is it legal?

    How much, in your opinion, could I pay? (maximum)

    If the cash amount is legal, declared and invoiced, what difference does it make to the owner if they receive a small portion in cash or the full amount once my small mortgage is approved and I pay the full amount?

    Thank you.

    1. Thank you for your message.

      Pay in cash is legal as far as the payments is not hidden to the authorities.

      But in any case, you must consider that there are limitations in the payments to be done in cash. This limitation must be checked.

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