Mallorca real estate - tax implications of the new cadastral reference value
Among the main points of the law passed by the Spanish government to combat tax fraud, one of the most relevant changes is the introduction of a mandatory cadastral reference value for property owners from January 2022. The intention of this measure is to clarify the previously controversial situation when assessing the value of a property for tax purposes.
In future, the reference value of a property will be determined by the respective cadastral offices of the municipalities on the basis of an annual price analysis of all property purchases and sales made before a notary. When determining this value, other criteria are also taken into account, such as differences in building quality, age and the current condition of the property.It should be noted that this reference value has no effect on the amount of property tax (IBI) to be paid each year. In future, however, it will serve as a basis for determining the amount of any transfer, inheritance and property tax payable.The new legislative decree also establishes a minimum tax base based on this reference value. And implies that if the declared value or the consideration paid is higher than the reference value of the property, the higher of these values will be used as the tax base.
With regard to property tax, the reference value can only apply to properties acquired from January 1, 2022, but not to existing properties.
The respective reference values will be available on a website of the national land registry authority from 2022, as soon as the necessary steps have been completed.On this website, property owners can also view all the criteria information that was used in the individual determination of the reference value of their property. In addition, they can obtain a certificate of the method used to determine the reference value at any time, so that they have all the technical information used to determine the value.
Property owners also have the right to appeal to the relevant authorities against the reference value determined, for example for the purposes of determining land transfer tax or inheritance tax. Furthermore, in the event of discrepancies regarding the description of the property in the cadastre, the cadastral procedures provided for in the regulation can be initiated for registration or revision (correction of discrepancies, correction of errors, etc.).
It should be noted that until now there has been considerable controversy, as taxpayers declare a value and, in the event of disagreement, the administration must verify it and prove the difference, which has led to numerous legal disputes over the years. With the entry into force of the regulation, this situation will be reversed and the taxpayer will have to prove that the reference value indicated in the cadastre does not correspond to the actual value of the property, which also opens up the possibility of litigation with the administration.
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