has confirmed today the ‘catastrazo’ that had been suspected since the entry into force of the Anti-Fraud Law, by raising the reduction factor to 0.9% so that urban and rustic real estate do not exceed market value.
This means an increase in the contribution bases of real estate for the taxation of Transmissions, Inheritances, Donations and Patrimony, of up to 80% with respect to the factor up to now in force, which was 0.5%.
Every year, before October 30, the Cadastre is obliged to publish this data in order to determine the reference value of each property by applying the average value modules and the corresponding reduction factors.
Treasury sources have told elEconomista that with this measure there is no tax increase, even though the reduction factor has been modified.
With the entry into force of the Law on measures to prevent and combat tax fraud, the valuation of real estate for Property Transfer Taxes (ITP), Inheritances and Donations (ISD) and Patrimony (IP), so that the tax base will no longer be the real value of the properties, but their market value.
Law 6/2018, of July 3, on General State Budgets, has introduced the so-called market reference value into our legal system. The new Third Final Provision of the Consolidated Text of the Real Estate Cadastre Law defines this value as “the result of the analysis of the prices communicated by the notaries public in the real estate transactions carried out, contrasted with the other sources of information available” and sends to a regulatory norm the way of determination by the General Directorate of the Cadastre of said value.
Aware of the difficulty in accurately determining the real value, the Consolidated Text of the ITP-AJD Law grants the Tax Administration in its article 46 a power to “verify the real value of the assets and rights transferred or, where appropriate, of the corporate operation or documented legal act”. Many have been many assessments that have been rejected by the courts for lacking foundation or for being insufficiently motivated by being based on simple generic mentions or conventional or stereotyped formulas.
The change in valuation
The Autonomous Communities devised a system for determining the real value of real estate through the application of a multiplying coefficient that varies according to the Municipality on the cadastral value, a formula that the General Tax Law itself ended up accepting. It was a system that has been working for a long time, but which the Supreme Court ended up repudiating based on two judgments of May 23, 2018, considering that this verification method was not suitable, due to its generality and lack of relationship with the property to be valued.
As a consequence of this jurisprudential doctrine, the new reference to market value was included in the Law on measures to combat tax fraud that will affect the aforementioned taxes on Inheritance and Donations, Patrimony and Patrimonial Transfers and Documented Legal Acts, thus replacing the value real.
The IBI and the cadastral value
This index does not directly affect the Cadastral value that is applied in the Real Estate Tax (IBI). It cannot exceed the market price, it is usually in the middle. The cadastral values can be updated every year by means of a coefficient. The cadastral value of all the properties of a municipality can also be updated in a general way. This review is carried out by the General Directorate of Cadastre after a prior request from the municipality in question. The coefficients range from 0.4% to 1.3%.
To calculate the cadastral value of a house or a farm, the location of the property, the age of the building, the quality of the construction, the expenses and aptitude for production, the cost of the land or if it has a historical character are taken into account. artistic, among other things.
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