The sale and purchase of real estate has grown substantially in recent years, and with it the amount of tax collected by the Autonomous Regions through the Transfer Tax and Stamp Duty (ITP-AJD), which is managed by the Autonomous Regions and is mainly levied on second transfers of real estate.
Actual value as the tax base
The regulatory regulation establishes that the taxable base of the ITP-AJD, in its modality of onerous transfers of assets, will be constituted by the the real value of the property or right transferred, Therefore, in cases of transfers between independent parties, normally equals the price agreed between the seller and the buyer..
However, as opposed to the valuation that the taxpayer may make, Article 57 of the General Tax Law establishes the different methods that the Administration may use to carry out a value check, among which is the method consisting in "Estimate by reference to values appearing in official tax registers".
Well, For several years, the Autonomous Community Administrations have been automatically applying this valuation method, without analysing the property in question in a concrete and individualised manner.In such a way that the administrations approved annual coefficients for the different municipalities in each province and this coefficient was multiplied by the cadastral value of the property.
In this way, Administrations ensured a "minimum prices"on which each property was to be taxed The Autonomous Communities even increased or maintained these coefficients in many cases during the economic crisis that brought down the brick sector, in order to obtain higher tax revenues.
Contrary to this approach, there were numerous the doctrine that doubted the legality of such a method, which did not analyse the property in questionThe value of the property, its surface area, level of deterioration, the specific street in which it was located within a municipality, its age, etc., made it almost impossible to assimilate this value".checked"The taxable value obtained by the administration is the real value that the tax regulations regulate as the taxable base.
The Supreme Court declared this valuation method, in the form in which it had been used, to be VOID.
Ehe Supreme Court established jurisprudential doctrine in 4 judgments handed down in mid-2018. (among others, Judgment number 2186/2018, of 23 May 2018), in which it decided that such a valuation method, in the form in which it was being implemented by the Autonomous Communities, was unlawfulby considering that "the method of verification consisting of the estimation by reference to cadastral values, multiplied by indices or coefficients (Article 57.1.b) of the General Tax Law). is unsuitable, due to its generality and lack of relation to the specific asset the estimation of which is concerned, for the valuation of immovable property in those taxes where the taxable base is legally determined by its real value, unless such a method is supplemented by the performance of a strictly verifying activity directly related to the singular immovable property being appraised'.
It adds that the interpretation of the valuation methods regulated in the aforementioned Article 57 of the LGT, must be made inseparably from the provisions of Article 10 of the ITP-AJD regulations, "...".which places the taxable amount at the actual value of the tax base, with the result that such a verification is possible only to the extent that the means of verification selected by the Administration is suitable and adequate, due to its capacity to singularise and individualise the economic valuation of specific assets, in order to achieve that real valueThis is not the case, for the valuation of real estate for the purposes of ITP, with the means consisting of the estimation by reference to the cadastral value, corrected with the use of coefficients or multiplier indices, if its application consists solely of the multiplication of the cadastral value by the single coefficient for the municipality".
In addition, the High Court concludes that the carrying out of a valuation "... is not a matter for the Court of First Instance.does not provide the administration with a reinforced presumption of veracity and accuracy of the values included in the coefficients, whether they appear in general provisions or not', as well as that "the application of such a method to rectify the value declared by the taxpayer requires the administration to give reasons why, in its opinion, the declared value does not correspond to the real valueThe mere discrepancy with the published values or general coefficients by which the cadastral value is multiplied is not sufficient to justify the initiation of the verification".
This implies that "the interested party is not legally obliged to prove that the value appearing in the tax return or self-assessment coincides with the real value, and it is up to the Administration to prove this lack of coincidence.".
Conclusions and effects of these judgments
These judgements allow to annul the value verifications that the Autonomous Communities have made based on the cadastral value by coefficient method.The Supreme Court has stated the following reasons for increasing the purchase price declared by the taxable purchasers:
- The Autonomous Communities cannot apply the method of cadastral value by the coefficient approved by the latter. automatically.
- Any verification of values carried out by the Administration requires that
- first, that the Tax Administration to disprove and justify why the valuation made by the taxpayer does not correspond to market valueThe burden of proof is on the latter and,
- after this, carry out an appraisal that allows the property to be individualised and singled out and their circumstances in question, and a generic assessment is not possible.
That is why if you have received a parallel TPO settlement from your Autonomous Community, which is intended to increase the value of your home, whether it is the valuation method consisting of multiplying the coefficient by the cadastral value or any other method, or the expert report that many administrations are now using, Please be aware that there are options to appeal if there has not been an individual valuation of the property, comparable witnesses in the area have been assessed, an ocular expert visit to assess the age, materials, qualities and deterioration of the same, etc,
In that case, you can contact us so that we can review the verification carried out by the administration and provide you with a legal opinion on the verification and possibilities to appeal it.
