On numerous occasions, buyers or vendors of properties are informed that if part of the sale price is allocated to the furniture, that amount is free of taxes. This is totally incorrect: in the Valencia region, the purchase of second-hand furniture and white good is taxed at 6% and ruled by article 13.3 of Valencian Law 13/1997
On the other hand, under article 13.1 of the same law, tax on the purchase of properties is 10%.
Taking these figures into account, it could seem like a good idea that if a house is sold for, say, 600.000 euros and furniture and white goods are included in the sale, if part of the price is given to the house (for instance 550.000 euros), and part to the furniture (50.000 euros), the house price would be taxed at 10% and the furniture price at 6%.
With the figures given in this example, that would mean a tax saving of 2.000 euros.
But we should take in consideration that it is not possible to fix the furniture price randomly, original invoices of the furniture or white goods are required, and very often the vendors do not keep them. Even if they did, if they were bought some years ago the depreciation rules would give them very little value nowadays.
The Spanish Tax agency has four years from the date of the sale to start an inspection, this is ruled by article 66 of Law 58/2003
In practice, tax agency starts this inspection two to three years after the sale, and it requests the buyers to provide the evidence (invoices) of the original value of the furniture purchased.
When then happens, in most cases, or to be more precise, always in our personal experience, tax agency rules that there is not enough evidence to support the value given to the furniture and it ends up taxing everything at 10%, adding penalties and default interest charges.
On the other hand, the “tax saving” pursued with this approach is not a good idea if the house is sold some years later, as the “saving” would be of 4% of the furniture price, whilst capital gains tax is between 19% and 24% of the gain, and the furniture price would not be taken in consideration as part of the original purchase price. In summary, we would never advise to allocate part of the house price to furniture, and in the event that you did decide to do it, we strongly recommend you seek advice of a tax lawyer or a qualified tax adviser.