Cadastral Valuation

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PavAmber
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Cadastral Valuation

Postby PavAmber » Mon Jun 26, 2017 10:57 am

Help!

We completed on the purchase of our house in January this year. This morning, I received an email from our solicitor with the following included (extract). After work we have had to do, we don't have a spare c€2,500 kicking around. I will go back to our solicitor as I am not clear on what he is suggesting(sounds like an appeal but may cost as much as paying?) but would appreciate any thoughts and guidance.

Message:

I am enclosing to this e-mail the communications sent to you and [wife] in which Tax Authorities are letting you know that they disagree the valuation given to the property for tax purposes. I mean, they think that although you paid 175.000€ for the property, its value for tax purposes is 204.012,44€. So the outcome of this situation is that they would like to charge you the difference between what you did pay as a transfer tax for this acquisition (8% on 175.000€), and the estimation made by them on the checked value, this is 8% on 204.012,44. On top of this they are adding a small interest for the delay, which is a total amount for the both of you of 25,76€. So, the total amount to be paid to Tax Authorities because of it is €1,173.38 each of you.
 
The main matter with the valuation given by Tax Authorities is that the Cadastral value of the property was raised up for the 2017 period from 45.553,48€ (2016 period) up to 58.660,62 for the 2017 period. On top of this valuation for the construction, the land has been valuated in an amount of 46.080€, which is quite high, although it has grounds for it.
 
I can perfectly understand that this situation can be quite shocking for you, although I must add that it is becoming quite usual... Anyway, before submitting whatever written/payment to Tax Authorities I would like to inform you that there would be a way to minimize this tax impact, although some legal work and a valuation from a official valuator is compulsory. At the end of the day you have, basically, two different options for proceeding, either affording the amount asked from tax Authorities in this sense, this is €2.346,76; or submitting allegations against this valuation given by Authorities on the basis of the report to be issued by the official valuator which can save you an amount of 700€ aprox. in total.

El Cid
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Re: Cadastral Valuation

Postby El Cid » Mon Jun 26, 2017 11:30 am

PavAmber wrote:
I can perfectly understand that this situation can be quite shocking for you, although I must add that it is becoming quite usual...



Sadly, he is absolutely right. The tax office uses a ridiculously outdated valuation system because they are too lazy to come up with a better one. It works both ways, depending on the area. In many localities the calculation often works out significantly less than the real price which effectively would encourage an underdeclaration as it would not be challenged.

You solicitor knows all this which is why he is professionally lacking by not warning you about this before the sale.

I am afraid you are between a rock and a hard place on this one.

Sid

AkoAko
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Re: Cadastral Valuation

Postby AkoAko » Mon Jun 26, 2017 11:36 am

I would pay the difference between whats referred to as the declared purchase price and the Hasiendas valuation which is based on the registered Catastral valuation . In the past it was common practice to make out the property was sold to you at a lower price , the seller might save Capital Gains tax depending on their situation and you would save 8% of the under declared sum . The practice was abused and declared valuations were well under the actual price paid or the value of the propertys sold for many years so many years ago the Hasienda decided to look more closely at sales charging the difference on many properties to stamp out the practice .

You can appeal the Catastral valuation but is it worth the saving should you be successful , it wont be cheap and you also need to consider the valuation from the point of view of later selling , you might wish it had a higher purchase cost to offset a possible Capital gain yourself , the rate for capital gains should you or your heirs be liable is far in excess of the tax on the purchase that you will save now .

PavAmber
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Re: Cadastral Valuation

Postby PavAmber » Mon Jun 26, 2017 11:59 am

Thank you El Cid and AkoAko.

Clear thoughts and advice, much appreciated. My suspicion is that it could cost a fair bit for the valuation and accompanying advice which would reduce the €700 saving which I am guessing is only a potential saving in any case. Is that how you would read it?

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Enrique
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Re: Cadastral Valuation

Postby Enrique » Mon Jun 26, 2017 12:18 pm

UNIX is basically a simple operating system, but you have to be a genius to understand the simplicity.

PavAmber
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Re: Cadastral Valuation

Postby PavAmber » Mon Jun 26, 2017 12:50 pm

Thanks Enrique
Seems to confirm that much if not all of any potential saving on tax would be eaten up by valuation/legal fees.

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Flexo
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Re: Cadastral Valuation

Postby Flexo » Mon Jun 26, 2017 4:22 pm

I was in a similar situation, they wanted me to pay an extra 17000 EUR for my property. I had to hire two tercero peritos and a lawyer to file an objection to reduce it. I managed to get it down to around 9000 EUR but it was expensive.

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gus
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Re: Cadastral Valuation

Postby gus » Mon Jun 26, 2017 7:14 pm

That's a fair-sized increase in the valuation Flexo! An expensive purchase.


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