Reference Valuation of Real Estate for Purposes of the ISD, the IP and the ITPAJD

The Act 11/2021, of July 9, on measures against tax fraud, has also modified the regulations of the Inheritance and Gift Tax (ISD), the Wealth Tax (IP) and the Tax on Property Transfer Tax and Stamp Duty (ITPAJD) concerning the valuation of assets, substituting the concept of “real value” for that of “value” or “market value”. This has implications for the taxation of real estate in different taxes.

Inheritance and Gift Tax (ISD)

With the new regulations, in the case of real estate, it will be understood that the “market value” is the “reference value” provided for in the regulations governing the Catastro. However, if the declared value is higher than the market value, that former will be taken as the tax base.

Wealth Tax (IP)

The valuation of real estate in this tax must be made for the highest value of the following:

a) Cadastral value.

b) Value determined or verified by the Administration.

c) Price or acquisition value.

The wording of article 10 of the IP Law is very similar to the previous one, although it adds the concept of “determined value” that previously did not appear. The “determined value” is understood to be the new “reference value” of the Catrastro.

For the IP, it must be specified that this modification will only have effects for acquisitions made as of 01-01-2022, therefore, for the pre-existing wealth on that date, the previous rule will continue to apply, without taking into account the “reference value” of the Catrastro.

Tax on Property Transfer Tax and Stamp Duty  (ITPAJD)

In the same way as in the ISD, from now on the valuation of real estate must be done at “market value”, which will be the “reference value” of the Catrastro.

It is established that the General Directorate of the Catastro will enact each year, based on the prices of all the real estate purchases made in the area, an annual report of the real estate market with the new reference values. To prevent the “reference value” of real estate from exceeding the market value, a reduction factor of 0.9 has been approved by ministerial order.

It is considered that the new regulations might lead to a higher valuation of real estate for the ISD, the IP and the ITPAJD, therefore carrying out an operation before the end of the year could imply some tax savings for the taxpayer.

The new individualized reference values ​​will be available at the Electronic Office of the Catastro as of January 1, 2022.

In case of being dissatisfied with the new valuation of the property, the taxpayer may appeal it by requesting the rectification of his self-assessment where this reference value appears, or by appealing the liquidation that is practised by the Administration.


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