18 de abril de 2017
18.04.2017
English Training Club

The Tax Agency will change the way of valuing real estate, key in the payment of taxes

The cadastre value, which in Asturias rose on average 60% during the crisis, will be replaced by another variable according to market conditions

18.04.2017 | 08:38

The General Directorate of Cadastre is working on a new valuation model for real estate with the purpose of replacing, at least in part, the cadastral value that is now used in the settlements and checks of the main local and regional tax: property tax and capital gains in municipalities, and inheritance taxes and on transfers of assets in the case of communities. The project its aimed at obtaining a more flexible type of assessment that can be updated on an annual basis depending on the changing circumstances of the real estate market, in order to avoid, according to the Cadastre, situations of tax injustice such as those that have been frequent during this crisis.

The use of cadastral values for the payment of taxes affecting housing or other real estate has generated paradoxes such as the following: the buyer of a second-hand flat pays 100,000 Euros for the dwelling, but it taxes as if the price would have been 120,000. This has been possible because the cadastral value or the coefficients applied on it (to verify the taxable base of the autonomous communities tax for capital transfers) have not often reflected the fall of prices in the market. This means that real estate value decreased, but the related tax burden on a sale was actually greater than during the real estate bubble. In Asturias, the Principality tried to correct this effect by modifying the municipal coefficients (multipliers of the cadastral value that are applied on it and that vary according to each local government).

The gap between cadastral values and market values has also affected inheritance taxpayers in recent years, because housing is present in almost all inheritances, and municipal property taxpayers (owners who sold dwellings or other assets and heirs, mainly).

????"It becomes necessary to undertake a reform of the valuation systems, seeking simplification and flexibility, to get to know the market value of real estate, a value that becomes the basis of a fairer tax policy," says the Directorate General of Cadastre, under the Ministry of Economy, Industry and Competitiveness, in a summary of its "Objectives Plan for 2017". It reflects that the development of a new valuation model is one of the great strategic issues of the Ministry, but does not specify a date on its use for tax purposes. Other technical texts outline that the new value would be updated each year according to the areas and urban planning of each municipality, to reduce the "rigidities" and costs of the current system, based on collective reports (cadastral revisions), which are usually performed every ten years or more.
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The Tax Agency already introduced an express procedure in 2013 so that the municipalities would update their cadastres by multiplying the values in force by a coefficient common to the entire municipal territory and depending on the date of the last general review. In general, this option has been used, inside and outside of Asturias, to raise the cadastral values, not to reduce them, although some cases of price reduction have been registered (Gijón, among them). The use of this mechanism, coupled with conventional revisions and anti-fraud policies to detect undeclared constructions (regularization procedure), has caused the average cadastral values to shoot up in the middle of the crisis (see chart above). In the case of housing, this increase has been 60% in Asturias, with the consequent increase in the tax burden.

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