House Value Analysis
As everyone may know, when we buy a property in Spain we must pay the Transfer Tax (ITP). This tax is 8% to 11% of the value of the property and we must pay it within a maximum period of one month from the date of purchase / sale.
When we file the declaration, we calculate the value tax declared in the deed. However, the Illes Balears Tax Office (ATIB) has four years to review these values and, if a value lower than that known as real value is declared, we will be required to pay taxes on the difference.
For example: if a property has been purchased for 100,000 euros, the amount of 8,000 euros will have been paid by ITP. If the real value of the property is 140,000 euros, the ATIB will request the payment of 8% of 40,000 euros, plus interest and fines.
These verifications infrequently take into account the physical state or location of the property, since the actual value is calculated based on other information, such as the property registration value or the surface of the property. Therefore, it is often unfair to have to pay more when you get a good deal for a property.
Recent judgments of our Superior Court have established that this calculation is not correct unless there is also a direct verification by the Administration of the property being inspected. Specifically, the Supreme Court ruling dated May 23, 2018, explains that the valuations must include this addition, “in order to assign a specific final value, of a true individual verification, motivated and based on an observation. direct and immediate ownership of the verified property. “The same sentence mentions that,« as the Constitutional Court recalls, the expression of real value obliges the Administration to limit itself, within an area of evaluation, to certain opinions of a technical nature. which cannot be avoided […] (STC 194/2000) ».
On the other hand, who has to approve that the real value is above what is stated is the Administration itself and not the citizen. The burden of proof will therefore fall on the ATIB. The same sentence of the Superior Court mentioned above specifies that, “The act of setting the real value of the properties verified by the Administration – which, therefore, corrects or verifies the values declared by the interested party as the price or magnitude of the completed Legal Business – must be: a) individual; b) motivated; and c) result of an examination of the property, usually through a visit to it. »Later it is stated that« the interested party is not legally obliged to prove that the value that appears in the declaration or payment of the tax coincides with the real value, since it is the Administration who must prove this fault ».
What can we do if we disagree with the assessment made by the Administration through the application of rates? There are several options, which must be studied in each case, but whatever it is, the client can appeal to any means of proof accepted in the Law, such as a notarial act that shows the status of the property. It is not necessary, as until now, the use of a contradictory expert assessment. Moreover, this method is not at all intelligent to challenge an act motivated solely by an arithmetic operation.
It is, without a doubt, an interesting and more interesting question for all professionals dedicated to the real estate and planning sector in the Balearic Islands and, obviously, we could analyze this issue much more, therefore, for any questions, do not hesitate to get in Contact with our lawyers in Mallorca and Ibiza.