When we consider selling a property there are many factors that we must take into account. Contracts, clauses, registration… One of the factors that we must take into account are those related to the value of the property and the different taxes that we must pay for it.
In this sense, when we are going to sell our property, we establish a price that we consider appropriate based on the market situation, we negotiate – if necessary – with the people who are interested in acquiring the property and we make the agreement for the sale. This is what we commonly call the market price, but it differs completely from the tax value of the property.
Why is it important to know the tax value of a property?
When we refer to the fiscal value of a property, we are talking about the value that the Tax Agency determines for the payment of taxes related to the sale, purchase or inheritance of a house. It has nothing to do with the cadastral value or the market price.
This tax value of the property is used to calculate, for example, the Transfer Tax, which is always payable when a sale is made between two private individuals. It is also necessary, based on Spanish taxation, to calculate the Inheritance Tax when there is an inheritance.
The calculation of its value is granted to each Autonomous Community and on that value it applies the corresponding taxes. Important aspects are the value of the construction of the property, the value of the possible land (in the case of a single-family house, for example) or the rate of use between the two.
In the case of a possible sale of a property, each local authority should be asked to take the necessary steps to determine the value.
In addition, it is important to note that the calculation of the fiscal value is, in Spain, the responsibility of each autonomous community, and the cadastral value of the property must be required for this purpose.
It is important, when preparing the tax return, to establish the correct tax value, as, if there is a large difference between the tax value and the sale price, the Inland Revenue may open an inspection for this.
Please do not hesitate to contact us if you have any questions or if you think we can help you.
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