1. What is the property reference value?
It is a new property value from January the 1st 2022 applicable to some taxes. It is a value that the Catastro (properties tax office) gives to each property whether urban or farming. It is based on the values of all the conveyancing signed before a public notary and other property details that the Catastro has. It is like a standard value of the property taking into account the municipality, the area, the construction age and other objective data. So the reference value sometimes can be very different from the real proeprty value. The property reference value must not be higer than the market prices. Actually, every year the government sets the percentage of reduction to apply to the properties reference value to secure that they will not be higher than the market prices. In 2022 reference values are supposed to be 90% of the market values. You can find more information on reference values on this FAQs.
How to find out the property reference value.
You can find which is the reference value of any property in this link. You will need the property Catastro reference which you can find in your council tax receipt. You will also need a valid digital certificate to find out the reference value.
What if I disagree on the property reference value?
There are are two options to object:
(a) When there is a tax bill that affects you which uses the property reference value and you disagree with it you can object against that tax bill,
(b) If you wish to object against your propertites reference value you can do this directly addressing to the Catastro.
2. Which taxes must use the property reference value?
NOTE: this post will show the taxes that might affect individuals mainly.
The taxes that must use the property reference value:
(a) Transfer tax. For example when you buy a property you have to pay taxes according to the reference value or to the purchase price whichever is higher. But the minimum tax to pay is on the reference value otherwise you can be fined and you will have to pay finally the tax on the reference value anyway,
(b) Stamp duty. For example in a new building declaration deed of an existing construction,
(c) Inheritance and Donation Tax,
(d) Wealth Tax: only to properties acquired from Januery the 1st 2022,
The following taxes must not use the property reference value:
(b) Plusvalia. You can read these articles for more information on the Plusvlia tax in here
(c) Capital gain tax on the Income Tax. In order to find out is there is a real net gain when transferring a property we have to compare esentially the acquisiton value and the sale price. The comparison between the values have to be between the real values and not the property reference value,
(d) Income Tax. The implicit income for properties which are not the main residence of anybody or properties which are not linked to any business. You can find more information on this tax you can find it here,
(e) The 3% retention on the price when a non tax resident sells a property is based on the real price and not the property reference value. This retention is made when a non tax resident sells a property in Spain and the buyer must pay that 3% directly to the national tax office and not to the seller. This retentin is prescribed by law in order to secure the payment of the eventual capital gain tax of the property seller. If the seller made no net gain at all then they have to apply for the correponding rebate.
3. So it seems that there is different property valuation rules depending on which tax it applies.
Exactly. In Spain the valuation rules of property for different taxes could be different. The Supreme Court has said that this makes no sense when the valuation rules are similar even for different taxes but the tax office sicks on the independence of the property valuation rules for each tax. This is the principle.
An important thing to remember is that the tax office can always double check the real value of the property.
Thank you for your time and attention and I hope this information is of use.
Please, note that this is general information. This is not specific legal advice. It is recommended to seek legal advice for any specific legal issue.