As every year the BOE publishes a new law on measures and prevention against tax fraud. More specifically, Law 11/2021
Well, in this post we will explain what is going to happen from January 1, 2022 and how it affects anyone who wants to buy or sell a second-hand home, inheritance or donations.
How does this change affect you?
The value on which the taxes are calculated will no longer be the sale value of the property, as today, but must be at least the reference value published by the Cadastre Registry annually.
What does this mean? In general, it will mean an increase in the taxation of taxes such as: the Tax on Patrimonial Transmissions in resales, the Inheritance and Donation Tax in inheritances or donations and the Wealth Tax in acquisitions after January 1, 2022 as the experts warn.
And one of the most frequently asked questions: Is the reference value the same as cadastral value?
No, the reference value is the one that will be calculated from the real estate transaction prices that are made before a notary public, as well as based on the cadastral characteristics of each home. And this value is defined year by year in all municipalities.
With the new law, the appraisal of two homes, regardless of their characteristics, will be totally the same.
And in the event that the taxpayer signes the transaction before a notary for a lower value, the Tax Agency will oblige him to pay the corresponding tax for the new value given by the Cadastre Registry.
Why this change now? What has happened?
Until now, the tax base referred to the real value of the properties. A real value that was directly related to the market value.
And here is the heart of the matter. The estates have been applying “theoretical” values to real estate for years, which in some cases were not entirely true. They came to be higher than the real prices of the real estate appraisal. This usually happens in periods of falling prices in the market. Curious right?
Well, the courts repeatedly declared this mismatch in values and that is why in many cases the Tax Agency made visits to find out the status of the property and if those assessments were true.
Therefore, the intention of the Treasury right now is to end this problem of misalignment of values towards the appraisal of the home. And that is why they have created a new value that they have called it as a “reference value” using it as the minimum tax base for the ITP and the ISD.
What can I do if I don’t agree?
If we do not agree with the “reference value”, it may be claimed, when it has been used as a tax base to settle taxes, before the corresponding regional administration.
How? Requesting the rectification of the self-assessment submitted by himself, or appealing the settlement that is notified, in case you have not submitted self-assessment, or have done so by declaring a lower value than the reference.
As the administration presumes that the Cadastre Registry reference value corresponds to the market value of the properties, it will be the taxpayer who must prove and demonstrate that this reference value has nothing to do with the market value of the property.
Now we ask you a question: Are you thinking of selling or buying a property and you don’t know where to start?
Ask us what you need to do and we will advise you.
Follow us for more tips and advice.