From this year 2022, before a transfer of real estate we must pay special attention to the valuation made by the Treasury. And the fact is that many appraisals of the state body are exceeding the value that appears in the deeds by more than 60%, according to the newspaper El Economista. In some cases, the tax office's calculation is even double the deed value.
This is increasing the tax assessments to be made by taxpayers by affecting taxes such as ITP.
The origin lies in the new Cadastre reference value, a change that came into force in Law 11/2021 on measures to prevent and combat fraud. This reference value is the taxable base on which taxes such as Transfer Tax (ITP), Stamp Duty (AJD) and Inheritance and Gift Tax (ISyD) are calculated. In other words, it is a determining factor in the value of the taxes for the purchase, inheritance or donation of a property.
We answer the main doubts about the cadastral valuations of the Inland Revenue:
Why do some property valuations by the Inland Revenue double the market value?
It is important to know that any transfer of real estate, whether in a sale, inheritance or donation, is subject to taxation.
The taxable base of the tax is calculated according to the Reference Value provided for in the regulations governing the real estate cadastre. On an annual basis, the General Directorate of Cadastre will approve, by means of a resolution, the elements for the determination of this Reference Value which, although it is called market value, is an average value that does not take into account many of the specific characteristics of the property, such as the state of occupation, conservation or protection in the case of dwellings under some type of official protection. Therefore, there are cases of tax valuation that is above the true market value.
Among the causes of the miscalculation in the value of the Treasury's appraisals, according to the newspaper The Economist, In addition, there is the way in which the valuation is carried out, which, unlike an official valuation, the tax experts do not visit the property.
How does it affect tax payments?
The tax value calculated according to this cadastral reference value will be the taxable base of the tax and therefore the higher the tax value, the higher the tax payable.
Am I obliged to pay taxes first according to the assessment of the tax authorities?
Yes, the burden of proof has been reversed. In other words, we first pay the tax on the reference value calculated for the property and the taxpayer, if he thinks it is above the true market value, will have to challenge this value and prove it by means of an appraisal.
What steps do I have to take if I disagree with the tax assessment?
It is important to challenge the value that the administration has taken as the taxable base in order to lower the tax payment and for this it is necessary to present a contradictory valuation, which is sufficiently motivated, in which the interior visit to the property is made and which is capable of taking into account all the extrinsic and intrinsic characteristics of the property.
How can Gesvalt help me as a valuation company approved by the Bank of Spain?
Gesvalt is a company approved by the Bank of Spain with more than 25 years of experience in issuing valuation reports for different purposes, throughout Spain and for all types of properties. Gesvalt is the best option for carrying out contradictory valuations, adjusted to market value, which can be used to contest the tax.
Furthermore, you must have a valuation if you want to know the value of a property for any of the following purposes: advice on sales and purchases, tax inheritance, auction adjudication, divorces, and cadastral revisions, as well as finding out the value of a property at a given year, or mortgage guarantees for the elderly (reverse mortgage).
Gesvalt offers its Real Estate Valuation services throughout Spain, with offices in Madrid, Barcelona, Valencia, Vigo, Zaragoza, Bilbao, Seville, Granada, Palma de Mallorca, Murcia, Toledo, Valladolid, Las Palmas de Gran Canaria, Malaga and Santander. If you need advice and an official valuation, please contact us here..