The new real estate valuation system
The “Anti-Fraud Law” creates a new system for the valuation of real estate that will be applied to the main taxes
The “Anti-Fraud Law” creates a new value for real estate. This is the so-called reference value. This will be determined by the General Directorate of Cadastre as a result of the analysis of the prices of all real estate sales and purchases made before a notary, depending on the cadastral characteristics of each property.
This reference value will be included in the cadastral description of the property. It may not exceed the market value of the property (as a reduction factor will be applied to determine the reference value). It will be a value that does not replace the cadastral value; and therefore the cadastral value will continue to exist and will be applied in the taxes that have the cadastral value as a taxable base (such as the IBI). This value will not be protected (contrary to the cadastral value) and will be permanently published in the Electronic Headquarters of the Cadastre from 2.022.
The cadastral owner of the property will also be able to know the elements that have been applied in the individualised determination of the reference value of his or her property. The reference value will affect the following taxes: Inheritance and Gift Tax, Wealth Tax and the Tax on Onerous Property Transfers and Documented Legal Acts.
Inheritance and Gift Tax
With effect from 11 July 2021, the taxable base, in the case of real estate, will be the reference value, as provided for in the regulations governing the real estate cadastre, on the date of accrual. However, if the value declared by the interested parties is higher than the market value, that amount will be taken as the taxable base. When there is no reference value, the taxable base will be the higher of the value declared by the interested parties or the market value.
With effect from 11 July 2021, the reference value is added for the valuation of immovable property. Therefore, real estate will be valued at the higher of the following three values: the cadastral value, the value determined or verified by the administration for the purposes of other taxes (the reference value) or the acquisition value of the property. However, the reference value will only be used as the taxable base for wealth tax when this value has been the taxable base for the tax levied on the acquisition of the property. Therefore, the reference value will only affect Wealth Tax in respect of properties acquired on or after 1 January 2022. It will not affect pre-existing properties owned by the person.
Tax on Onerous Transfer Tax and Stamp Duty
With effect from 11 July 2021, the taxable base for transfers of real estate will be the reference value provided for in the regulations governing the real estate cadastre, at the date of accrual. However, if the value declared by the interested parties is higher than the market value, this value will be taken as the taxable base. When there is no reference value, the taxable base (without prejudice to administrative verification) will be the higher of the value declared by the interested parties or the market value. It is important to highlight the novelty that the Administration will not be able to check the value if the taxable base declared by the taxpayer is the reference value or a higher value.
With regard to Stamp Duty Tax (AJD), in the case of deeds whose objects are real estate and the taxable base of the AJD is determined on the basis of the value of this real estate, the value of the real estate may not be lower than the reference value.
The AddVANTE Financial Tax Department remains at your disposal for further information or to resolve any queries that may arise in relation to this article.