New Reference Value for Real Estate Transactions

The new Reference Value affects Transfer Tax, Stamp Duty, Corporate Transactions Tax and Inheritance and Gift Tax, as well as indirectly Wealth Tax.

As of January 1st, 2022, the new map of "Reference Values" of all properties with cadastral reference has been incorporated in the Cadastre database, where it can be consulted.

From now on, this new Reference Value will have the status of proven value for the purposes of Transfer Tax (for real estate purchases and sales, swaps, etc.), Stamp Duty (groupings and segregations of plots, declaration of new construction, division of horizontal property, division of common property, etc.), Corporate Transactions Tax (transfer of real estate to shareholders due to liquidation), and for Inheritance and Gift Tax (for free transfers, either by inheritance or donation), constituting from now on the minimum value that must be declared if you do not want to incur corrections by the Administration.

The reason for the introduction of this new scale is that it is intended to be more in line with market reality, given that the Reference Value is obtained using a database of real estate transactions reported by notaries, with respect to other properties that are considered comparable due to their location and characteristics.

However, there are already complaints in legal forums that this method of valuation suffers from serious deficiencies. This is because the properties have not been visited by the Administration's technicians, nor has been taken into account the particular characteristics of each property that could affect its real value or that could have influenced the price of the comparative transactions that appear in the database, such as the state of the construction, the existence of squatters, etc.

In general, this will lead to an increase in the taxation of real estate transfers, especially in inheritances and donations, in which, unlike sales and purchases, until now the declared value was not usually dictated by the market itself, but by rules published in each case by each Autonomous Community, which often fell short of the market reality.

Other noteworthy particularities are:

The new Reference Value also indirectly affects Wealth Tax, which provides in its regulations that the value to be declared can never be lower than the value verified by the Administration. However, this will only apply to properties acquired from January 2022 onwards, not to those already in taxpayers' estates as of 31 December 2021.

In principle, it should not affect Personal Income Tax, except to the extent that the taxpayers themselves "obey" and voluntarily declare this Reference Value as the sale price, even if the market gives them a lower real price. However, although it is not regulated in this way for now, it remains to be seen if the Treasury or some tax inspectors will not resist taking advantage of such a "sweet" candy and will try to somehow redirect the value for Personal Income Tax purposes to this Reference Value.

The new regulation significantly increases the effort of taxpayers who disagree with this reference value. Unlike the previous scenario, in which it was the Administration who had to provide an expert opinion to correct the values declared by taxpayers in their transactions; now the taxpayer will have to prove the veracity of the declared value when the Treasury simply sends them a letter correcting the price of the property based on the reference value.

The different Autonomous Communities have already published their own valuation scales for 2022, based on the application of multiplier coefficients on the cadastral value. However, these scales will only be applied, in a subsidiary manner, when it is not possible to obtain the Reference Value from the Cadastre. In line with this, we have noted in these early stages of 2022 that on many occasions the Cadastre's web page certifies that it is unable to calculate the reference values for "technical reasons". We will keep an eye on what happens, but we can suspect that this is because the new system is still being implemented, and it is possible that in the medium term the database will become more complete.

Should you need any clarification or have any questions, we will be happy to assist you.

Balagué-Sala Lawyers